Fear of running out of money makes many retirees leery of spending down their nest egg—guaranteed income may help.
Retirement planning often focuses on risks: not saving enough or outliving hard-earned savings, enduring a sharp market downturn and possible surprise expenses. While these pitfalls are very real, it’s understandable that they may make individuals hesitant to spend their savings in retirement—instead, conserving assets at the expense of the lifestyle they imagined. Approaches to delivering guaranteed income throughout retirement have the potential to unlock that confidence—and enable more rewarding retirements.
A Persistent Problem: Fear Holds Retirees’ Spending Back
How much can fear stand in the way of a comfortable retirement? The Employee Benefit Research Institute (EBRI) put some numbers to that question.
In its 2024 Spending in Retirement Report, EBRI notes that retirees are becoming less inclined to tap into their retirement savings for spending needs. In 2020, 43% of retirees planned to spend down all or a significant portion of their financial assets in retirement; by 2024, that share was down to 38%. Also, according to EBRI, a growing percentage of retirees don’t plan to spend any of their assets—or spend only a small portion of those savings.
AB’s own research highlights some reasons for this reluctance. In our 2025 Inside the Minds of Plan Participants survey, only 37% of participants said they were very confident or confident that they would live a financially comfortable retirement. Even when unexpected expenses arise, EBRI points out that only 21% of retirees withdrew additional money from their retirement or investment accounts. Instead, they cut back on other spending and expenses. In our view, some of this caution is behavioral: after decades of saving, retirees struggle to shift into “spending mode.”
Lifetime Income May Bolster Retirement Confidence
We think these insights reinforce the need for solutions that address those fears and offer the freedom for participants to live the retirement they worked for. Lifetime income solutions within defined contribution (DC) plans have the potential to transform retirement from a time of uncertainty into a time to spend with confidence. Guaranteed income may go a long way toward reducing uncertainty about how much retirees can withdraw from their savings without running out of money. In our view, that uncertainty is a big reason why retirees underspend.
A separate EBRI study on the relationship between health, wealth and retirement satisfaction suggests the extent of the confidence boost from guaranteed income. It’s also been suggested that households that have more money in guaranteed income solutions may spend more than those with a greater share of their savings in investments.
Also, 61% of people in households with access to a guaranteed income stream in retirement reported being very satisfied with retirement versus 45% of those in a household without it. Households with annuities or pensions spend more freely, especially those with lower retirement wealth, according to plan and consumer data. It seems that the psychological benefit of knowing that their income is secure frees retirees to enjoy their hard-earned savings, not hoard them.
Looking at the Big Picture: From Fear to Confidence
Retirement shouldn’t be defined by fear and restriction. Lifetime income from a DC in-plan option has the potential to help participants refocus from worrying about running out of money to pursuing the life they’ve worked for. As we see it, empowering participants with lifetime income isn’t just risk management—it’s the key to unlocking the confidence to live life fully.