Future retirees in the UK are likely to have a state pension and a Defined Contribution (DC) pension pot to support them through retirement. Policymakers are currently looking at new rules to require pension providers to set up post-retirement 'defaults' as to how the money will be accessed, but there is currently little data on what pensioners actually want.

This paper – authored by Dr Aida Garcia-Lazaro, Dr Ricky Kanabar and Steve Webb – uses a specially constructed dataset covering the detailed spending patterns of over 100,000 pensioners surveyed between 1968 and 2019 to shed light on this question. It examines the profile of real spending through retirement for the sample as a whole, and then separately for different birth cohorts and different housing tenure groups.

They find that, amongst more recent retirees, real spending tends to be frontloaded, put another way, gradually falls as people age, but that this was not always the case. The paper also shows that homeowners tend to have a sharp decline in real spending in the early part of retirement, whereas social renters tend to have much flatter spending patterns through retirement.

A key conclusion is that proposed 'defaults' for post-retirement drawings on DC pension pots need to be tailored, and that housing tenure could be a key differentiator.