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“How Will More Retirees Affect Investment Returns?”
Source: Center for Retirement Research

The brief’s key findings are:

  • Economic theory suggests that retirees draw down the assets they accumulated in their work lives, so a higher retiree-worker ratio reduces the supply of saving, thereby increasing investment returns.
  • However, research generally shows that retirees draw down their wealth much more slowly than expected, particularly the wealthy who hold most of the assets.
  • Therefore, as retirees retain much of their wealth, a higher retiree-worker ratio leads to a greater supply of savings and a decrease in investment returns.
  • To the extent that investment returns decrease, workers will need to save more to maintain their standard of living in retirement.

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