The saying, and what it can actually bear
You have probably heard some version of it: retirees die with more money than they retired with. It is said at kitchen tables and in golf clubs, usually with a rueful laugh. It appeals because it names something real. But as a factual claim about estates it is folklore, and I am not going to dress it up as research. No source I can point you to measures it.
The defensible version is narrower and more useful. Many retirees keep spending roughly flat in real terms while their income rises. That is a pattern you can plan around. It is not a promise about your estate, and it is not a reason to feel either smug or guilty.
What follows separates what the evidence shows from what it cannot show, then turns the gap into a practical question: if your plan can absorb more spending, what is stopping you?
What the spending evidence actually shows
The most useful UK work here is the Institute for Fiscal Studies report How does spending change through retirement? (Crawford, Karjalainen and Sturrock, May 2022), based on the Living Costs and Food Survey from 2006 to 2018. Three findings matter for this argument.
Spending stays broadly flat. On average, retirees’ total household spending per person remains relatively constant in real terms through retirement, increasing slightly at ages up to around age 80 and remaining flat or falling thereafter. For the 1939–43 birth cohort, spending at age 67 averaged £245 per person per week, rising to £263 at age 75 — a real increase of about 7%, or just under 1% a year.
Income rises with age. Average household income per person for retirees aged 62 and older is more clearly increasing in real, CPI-adjusted terms as people age. The IFS attributes this to private pension incomes rising faster than CPI and to more people receiving the State Pension and disability benefits as they get older.
The gap gets saved. For the 1939–43 cohort, 59% saved at age 67, rising to 69% by age 75. Over the same ages, the share of income saved rose from 2% to 15%.
Read those three together and you have the mechanism behind the saying. It is not that people are hoarding out of meanness. It is that income arrives faster than spending plans absorb it, and the surplus accumulates by default.
The caveat that keeps this honest
The IFS is careful about what its data can support, and so should we be. The report states plainly that it cannot say with certainty whether retirees’ observed spending patterns reflect their desired pattern of spending — or whether they would spend more earlier if they had more certainty about later-life costs.
That distinction is the whole article. Observed underspending may be a choice, a constraint, or a fog. The IFS also names the converse risk directly: some individuals may draw down too slowly and unnecessarily forgo desirable spending.
So the question is not “are retirees underspending?” in the abstract. It is: is your spending pattern the one you would choose if you had thought it through?
Why underspending is often rational, not a moral failing
The IFS report sets out the documented explanations for why people do not spend down wealth the way a simple life-cycle model predicts. They include the desire to leave a bequest, saving for medical or care expenditures in later life, and changes in how much satisfaction people derive from consumption as they age. The “retirement consumption puzzle” — spending falling at the point of retirement — has its own explanations: work-related costs disappear, people have more time to cook and shop carefully, and some retirements are forced by ill health rather than chosen.
None of that is irrational. If you are 60 and you do not know what care will cost at 85, holding a reserve is sensible. The problem starts when the reserve is never sized, never reviewed, and quietly becomes the whole plan.
That is the uncomfortable truth: uncertainty is real, but an unsized reserve is not caution. It is an unexamined default.
Anchor your spending to a published cost, not a feeling
Before you can decide whether you are underspending, you need a number to compare against. The Retirement Living Standards, published by the Pensions and Lifetime Savings Association, give three levels of annual spending for one- and two-person households. As at the figures currently published on the site:
- Minimum — one person £13,900; two people £22,500
- Moderate — one person £32,700; two people £45,400
- Comfortable — one person £45,400; two people £62,700
Two warnings, both stated on the source page. These are estimated costs, not income — you need enough after-tax income to cover them, and because retirement income may be taxed you may need more gross income than the figure shown. And the figures assume you own your home outright. If you have a mortgage or rent, your costs will be higher.
Used properly, the Standards are a sanity check, not a target. If your household spends £45,000 a year and you are a couple, you are at the Moderate level. The useful question is not “am I normal?” but “what would the next £3,000 buy, and is it worth more to me than the reserve it displaces?”
A permission-to-spend framework
Permission is easier to give when spending is categorised. I suggest three buckets, sized deliberately rather than by habit.
1. Essentials. Housing, food, utilities, transport, insurance, health costs. These are non-negotiable and should be stress-tested against a bad-market year. If a 20% fall in your invested assets would force you to cut essentials, your plan is too tight — and the answer is not to spend more.
2. Planned discretionary. Holidays, gifts, hobbies, eating out, the things that make retirement worth having. This is the bucket where underspending usually hides. Set a deliberate annual figure — not a ceiling you never approach, but a budget you intend to use.
3. Contingency reserve. Sized to the risks you actually face: later-life care, a survivor’s reduced income, house repairs, helping family. The IFS notes that the death of one partner affects per-person spending because shared costs do not fall — so a couple’s reserve needs to account for the survivor’s position, not just the joint one.
The test before increasing discretionary spending is simple: can the plan absorb this increase in a bad-market year without touching essentials? If yes, the constraint is psychological, not financial. If no, you have found a real limit, and that is useful information too.
Review annually, not never
A permission-to-spend plan is not a one-off decision. Set a date each year — the same month, so it does not drift — and ask four questions:
- Did we actually spend the discretionary budget, or did it roll over untouched?
- Has anything changed about our health, family or care expectations?
- Is the contingency reserve still sized to the risks we face?
- What would we spend more on this year if we knew the plan could absorb it?
If the answer to the first question is consistently “we didn’t spend it,” that is not discipline. It is a signal that either the budget is wrong or the permission has not been given.
The adviser relationship is part of the permission
If someone else holds the pen on your plan, giving yourself permission to spend runs through them. That makes the adviser check part of the exercise, not a separate compliance chore.
The FCA’s Financial Services Register is a public record of firms and individuals currently or previously approved for regulated activities. The FCA’s own guidance is direct: you should check the details of any individual carrying out regulated activities on your behalf, especially current roles and any disciplinary or regulatory action on their record.
One detail worth understanding: some firms on the Register are appointed representatives (ARs), carrying out activities on behalf of a principal firm. The principal agrees what the AR can do and is responsible for that business. The FCA warns that if an AR has gone beyond the activities the principal allowed, you may not be protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong. You can ask the principal to confirm what activities the AR is permitted to carry out and how you would be protected.
Checking the Register does not guarantee suitability, and it does not prevent loss. What it does is clarify who is accountable for the plan — and that clarity is what makes it easier to have the conversation about spending more.
If you are still some years from the stop-work date, the framing in The Question You Should Be Asking Years Before You Retire is a useful companion to this piece: the spending question is easier to answer when the funding question has already been faced.
A worked comparison, clearly hypothetical
Suppose a couple with no mortgage targets £45,000 a year of after-tax spending. That sits almost exactly at the published two-person Moderate figure of £45,400. Their essentials are £30,000. Their contingency reserve is sized at £150,000 for care and survivor risk. The remaining £15,000 is discretionary.
Now suppose their adviser’s cash-flow model shows the plan can absorb £48,000 a year in a bad-market year without touching essentials. The £3,000 gap is the permission question. What would it buy? A second holiday, more help for grandchildren, a hobby that has been deferred for a decade. Is it worth more than the reserve it displaces? That is a values question, not a maths question — but it can only be asked once the maths has cleared the way.
This is an illustration, not a recommendation. Your own essentials, reserve and risk tolerance will differ, and the point is the structure of the question, not the numbers.
What would change your mind
The honest close is not “spend more.” It is: know what evidence would move you. If a care needs assessment, a health diagnosis, or a change in the survivor’s income would change your reserve requirement, then the reserve should be reviewed against those triggers — not against a vague sense of caution.
And if nothing would change your mind, that is worth noticing too. A plan that cannot be updated by evidence is not a plan. It is a habit.
FAQ
Does the evidence prove retirees die richer than they retired?
No. No source I can cite measures estate values in that way. What the IFS evidence shows is that, on average, spending stays roughly flat in real terms while income rises, and the share of income saved increases with age. That is a pattern, not a proof about any individual estate.
Is underspending always a mistake?
No. The IFS lists bequest motives, later-life medical costs and changing consumption preferences as documented explanations. Holding a reserve against genuine uncertainty is rational. The problem is an unsized, unreviewed reserve that becomes the whole plan.
Are the Retirement Living Standards income targets?
No. The source page states clearly that they are estimated costs, not income, and that you need enough after-tax income to cover them. They also assume outright home ownership.
How do I check my adviser’s status?
Use the FCA’s Financial Services Register to check the firm and the individual, including current roles and any disciplinary or regulatory action. If the firm is an appointed representative, ask the principal to confirm what activities it is permitted to carry out and how you would be protected.
How often should I review my spending plan?
Annually, on a fixed date, with the four questions above. The point is to notice whether the discretionary budget is being used and whether the reserve still matches the risks you face.