Financial Crisis Drives Change Among Retirement Consumption

The impact of the financial crisis on retirees has varied widely depending on the types of investments and incomes those retirees had during the economic downturn, according to a recent research brief by the Boston College Center for Retirement Research. 

The research finds about half of retirees were not impacted, including the top 5% in terms of financial assets and the bottom 40% who depend largely on Social Security benefits and have very little in the way of savings. 

Consumption habits have reacted accordingly, BC writes. 

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“The broad middle class did experience declines in consumption: At one extreme, households that invested in short-term deposits and tried to live off the interest saw significant declines.” the brief states. “At the other extreme, investors in balanced portfolios who gradually drew down their wealth lost more modest amounts. Most middle-class households, though, combine some behavioral aspects from the two extremes, so the impact on their consumption lies in between.”

Read the full brief

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Written by Elizabeth Ecker

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