IRIC says only 28% are comfortable drawing down, and 38% underspend on purpose
Only 28 percent of American pre-retirees and retirees say they are comfortable watching their savings decline to cover living expenses.
The Institutional Retirement Income Council (IRIC) opens its August 2026 report, The Last Mile of Retirement, with that figure, arguing the industry engineered saving successfully while leaving spending unmanaged.
Auto-enrollment, auto-escalation, and target-date defaults turned inertia into an ally during accumulation, executive director Kevin Crain writes, and no equivalent architecture exists for turning a balance into income.
Roughly 4.18 million Americans are turning 65 each year during the 2024 to 2027 Peak 65 zone, and more than half arrive with US$250,000 or less in assets, IRIC reports, citing the Alliance for Lifetime Income.
The council flags that source as an advocacy organization funded by annuity manufacturers.
Just 29 percent of pre-retirees aged 55 and older have a plan for withdrawing their money, and only 14 percent of retirees have a detailed strategy for required minimum distributions (RMDs), according to IRIC, drawing on a Corebridge Financial and Greenwald Research study of 2,210 US adults aged 45 to 79 holding US$100,000 or more in investable assets.
IRIC discloses that survey as sponsor-commissioned.
Fifty-six percent of respondents fear running out of money while six percent fear dying with a surplus, per the same study, and 38 percent said they have spent less than they wanted to in order to preserve their nest egg.
Five behavioural hurdles sit behind those numbers, the report says: the saver-to-spender reversal, the absence of a paycheque or plan, decumulation biases including sequence-of-returns risk and underestimated longevity, the annuity paradox, and the loss of identity and purpose that follows leaving work.
Retirees spend roughly twice as much from annuitized wealth as from an equivalent amount of non-annuitized savings, citing the 2021 working paper Guaranteed Income: A License to Spend by David Blanchett and Michael Finke.
Around three in four respondents said guaranteed lifetime income beyond social security would improve their spending happiness or insure against longevity, the council reports.
Recordkeepers should redesign statements and portals to lead with a projected monthly paycheque rather than an account balance, build systematic withdrawal and RMD automation, and extend defaults into the decumulation phase, IRIC recommends.
Plan sponsors, the report says, should remove barriers that push separated participants toward rollovers, extend advice to the 55-plus cohort, evaluate in-plan income products through a documented fiduciary process, and measure projected income adequacy instead of participation rates and average balances.
Quebec amendments permitting variable payment life pensions under defined contribution (DC) plans and voluntary retirement savings plans took effect January 1, Blakes reported in its 2025 year-in-review bulletin.
Ontario is targeting January 1, 2027 for its variable life benefit (VLB), with enabling regulations still required and stakeholder consultations planned for later in 2026, according to Hicks Morley in its analysis of the 2026 Ontario Budget.
A variable payment life annuity (VPLA) needs at least 100 participating members to be viable inside a defined contribution plan, the Canadian Life and Health Insurance Association estimated in its white paper on annuity flexibility.
At roughly five percent annual uptake, that means only plans with more than 20,000 active members qualify.
Torys wrote in its budget commentary that a VLB component will likely appeal only to larger plans with enough electing retirees to sustain a risk pool.
Dynamic pensions give retiring Canadians "a decumulation option that looks like a defined benefit pension, where running out of money is no longer a risk," said Bonnie-Jeanne MacDonald, director of financial security research at the National Institute on Ageing at Toronto Metropolitan University, in comments published on Sun Life's website.
Evan Howard, chief pension officer at CAAT Pension Plan, told Benefits and Pension Monitor in a previous report that variable lifetime benefits let members convert all or part of their savings into a lifetime income stream on an affordable basis.
Some decumulation products are neither insurance products nor pension plans and fall outside its jurisdiction even though they make payments resembling retirement income, the Financial Services Regulatory Authority of Ontario said in information guidance effective January 2024.
Crain closes on the ecosystem point, writing that the largest gains come from income-first framing, paycheque tools, smart defaults, and accessible retirement income solutions applied together rather than by any single provider.
