Industry News

On May 24, 2022, the Center for Retirement Research at Boston College (CRR) released its report, Can We Predict Boomers’ Drawdown Behavior from Earlier Cohorts? CRR examined the trends of past generations of retirees that have slowly used their financial wealth based on data from the Health and Retirement Study (HRS).

Generally, these retirees had Defined Benefit (DB) pension plans that paid retirement benefits for life. However, the same behavior may not continue for new retirees that may rely on Defined Contribution (DC) plans such as 401(k)s rather than DB plans. CRR cautions that, “The analysis suggests that many new retirees could deplete their 401(k) assets by age 85, meaning that they face a greater risk of outliving their savings.”

The brief concludes, “past generations’ access to a DB pension was associated with slower drawdown of their financial assets. Thus, forecasts for the Baby Boomer generation based on the drawdown of past generations likely underestimate their drawdown speed. The results suggest that Baby Boomers without DB plans may be drawing down their assets faster, leaving them with more risk that they will outlive their savings.”

The brief is available here.