How does spending change through retirement?

Fuelled by changes to UK pensions policy over the last decade, an increasing number of people save for their retirement in 'defined contribution' pension pots. Due to the introduction of 'pension freedoms' in 2015, those saving in this way have a great deal of flexibility over the pace at which to withdraw income from their accumulated pension pot and how to vary this through their retirement. The way in which desired spending changes through retirement is a key factor in the kind of income profile, and therefore speed of pension withdrawal, that people should aim for in retirement.

At this event, IFS researchers presented the findings of new research on the spending patterns of current retirees. This research examines how spending on different categories of goods and services changes with age, how this relates to levels of income and saving among retirees, and how these patterns differ between different types of household. We will discuss the implications for those drawing on their pension income in future. Following this, Carolyn Jones, Head of Pensions Policy and Strategy at the Money and Pensions Service, gave a response to the findings of the report.