The last mile of retirement is a spending problem

The Institutional Retirement Income Council calls the gap between saving and spending in retirement “the last mile.” A new white paper argues the retirement system’s behavioral architecture stops short there, and no new investment product will close it. PLANADVISER reported the paper’s release on Aug. 18.

The paper names five behavioral barriers that stand between saving and comfortable spending. It starts with an uncomfortable consequence: underspending can erase the comfort those savings were meant to fund. Without a spending plan, participants default to fear-driven choices or leave the system entirely through rollovers, walking away from institutional pricing and fiduciary oversight.

The remedy, IRIC says, is “behavioral infrastructure for decumulation”: defaults, education, guidance, planning tools, and retirement income, delivered by the providers closest to the participant. That phrase moves the argument from “talk to clients about spending” to “build systems that make spending feel safe.”

The first barrier is the accumulated “save more, spend less” mentality. A Corebridge Financial survey cited in the paper found only 28% of pre-retirees and retirees are comfortable drawing down their savings. The same survey found 38% deliberately underspend to protect their savings. The two numbers describe the same worry from opposite sides: retirement looks like preservation, not receipt of income.

IRIC’s answer is to reframe drawdown as a personal paycheck, giving participants permission to spend their assets. Kevin Crain, the council’s executive director and author of the paper, suggests advisers separate expenses into categories, so essential and discretionary spending occupy different mental accounts. With one big number replaced by manageable categories, Crain says, clients can make the discretionary purchases they prioritize and spend relatively “guilt-free.”

The second barrier is mechanical: how to self-fund that monthly paycheck. The same survey asked pre-retirees 55 and older whether they had a withdrawal plan. Only 29% did. That gap makes the rollover decision a moment of risk. IRIC argues plan sponsors can add scheduled withdrawals and retirement income options to the plan menu, removing the reason to roll assets out. Crain adds a sponsor-side reason to keep assets in: more participant money in the plan keeps recordkeeping prices lower.

For advisors, the paper treats the last mile as a planning project rather than a distribution event. The paycheck and spending conversation belongs before retirement, and it belongs in the plan document, not merely in the annual review. The providers who build the infrastructure—sponsors, recordkeepers, and advisors—hold distinct jobs. The advisor’s job is the most personal: giving the client a reason to believe that spending the money is the point.

The white paper’s most useful provocation treats oversaving as an infrastructure failure. That is a reframe advisors can use directly. Willpower has little to do with it. Build the paycheck, label the spending categories, put the scheduled withdrawals in writing, and revisit them when the client hesitates. The last mile should have as much structure as the decades that came before it.