Why Retirees Underspend (and What Advisors Can Do About It)

Most retirees worry about outliving their money — but the data shows they often do the opposite: they underspend. In fact, many leave retirement with more assets than they started with, despite having saved for decades to fund their lifestyle. Why is this happening, and what can financial advisors and plan sponsors do about it?

In this episode, Brian Ullmann and Ryan Louie sit down with Ronnie Cox, Investment Director at Human Interest, to unpack the psychology behind retirement spending, the so-called “retirement consumption puzzle,” and the tools available to help retirees spend with confidence.

Ronnie brings his perspective from years of experience in retirement plan design and his recent byline in InvestmentNews, where he explored why retirees underspend and what advisors can do to help. He also highlights findings from recent research on retiree behavior and decumulation strategies.

What You’ll Learn in This Episode

• Why retirees spend 80% of their lifetime income but only about half of their accumulated savings.
• The psychological forces at work, including loss aversion, complexity aversion, and mental accounting.
• How Required Minimum Distributions (RMDs) nudge retirees into treating savings as income — and why this matters for future policy and plan design.
• The role of decumulation products like annuities, managed payout funds, and in-plan income solutions.
• How SECURE Act 2.0 and innovations in plan design could reshape the future of retirement income.

About Our Guest

Ronnie Cox is the Investment Director at Human Interest, a fast-growing 401(k) provider focused on expanding access to retirement savings plans. Ronnie has been at the forefront of researching participant behavior, retirement readiness, and the psychological roadblocks that prevent retirees from spending confidently in retirement.

Links & Resources

• Ronnie’s recent InvestmentNews article: Why retirees underspend and what advisors can do about it
• Human Interest: https://humaninterest.com

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