On this episode of The long viewAnne Tergesen, a reporter who covers retirement for The Wall Street Journal, breaks down the current US retirement system, her research with real-life retirees, and whether we’re facing a retirement crisis today.

Here are some excerpts from Tergesen’s conversation with Morningstar’s Christine Benz and Amy Arnott.

Key trends in retirement accrual from the Employee Benefit Research Institute

Christine Benz: Discussing retirement decumulation more generally, you recently wrote about the age at which people retire and examine data from the Employee Benefit Research Institute. What are some of the key trends out there?

Anne Tergesen: I’ve covered that Employee Benefits Research Institute study for years. And the great thing about that study is I think it’s been going on since 1990 or so. And I ask many of the same questions year after year. So you have these directly comparable data points. And over time, I just started noticing that everyone says they want to retire later than they do on average. For me it was quite interesting. And I turned that into an article that really resonated with readers. And I think the data shows that people want to retire at 65, 66, but they’re really retiring at 63. And often, people talk about these unexpected things that happen, whether it’s layoffs, often health issues, whether it’s their own health or someone else’s health and having to provide care. I think it’s just a very, very persistent, common trend over time. Even in these years, since 1990, we have seen the US retirement age rise. But often, I think people are maybe a little over-optimistic about how long they can keep working.

The psychological hurdle of moving from saving to spending in retirement

Amy Arnott: A topic that has come up frequently on this podcast is how psychologically difficult it is for people to switch from saving to spending. Is this something you’ve come across when talking to current retirees?

Tergesen: Absolutely. I think for big savers, that’s a huge thing. And I think some of them are so interesting. I think it’s a habit. I talked to a guy who retired at 60 and had a decent amount of savings, close to $5 million. And he said that just because he lived so long, he lived very well, but he lived relatively modestly compared to what his means would have allowed. He had a nice house, but it wasn’t like the big huge house. He had decent cars, but they were, I can’t remember if they were used cars. He didn’t get into the big lifestyle. Instead, it saved a lot of money. And she said that when she started her retirement, she spent a huge amount of time running around, comparison shopping and just looking for the cheapest paper towels. And then, after a few months, he just thought, “This is ridiculous. That makes me miserable. I can’t pinch every penny. I have to have a little confidence that I saved adequately.”

And so, fortunately in his case, he actually did. Same thing with a guy I talked to recently who has a real estate portfolio that’s worth close to $10 million I think he said. It was just a habit. And he and his friends would sit around and have the kind of conversations where they were coaching each other on how to cut loose a little and have more fun. And now she’s starting to travel more, but she said it just took her time to realize she’d had enough.

How Retirees Approach Spending and Decruling Today

Tape: Another dimension of retirement savings is just figuring out how much you can spend. You and I talked about it. And also just figuring out how to extract cash flow from a portfolio. When you’ve been in saving mode and accumulating, it’s kind of a different problem than retirement spending. I’m curious, when you talk to actual retirees, do you hear from them that that’s something they struggle with, figuring out safe spending rates as well as how to build their decumulated portfolios?

Tergesen: Interesting. I feel like some people have a strong preference for income investing. I think it’s just because it does the job for you. So if you have stocks and bonds that pay dividends and so on, they live off income and social security. If they’re lucky enough to have a pension, that’s pretty much how they go. Other people have financial advisors who do this for them or help them with it. And then other people living on Social Security, that’s just the way it is. It is a monthly budget. So, in a way, no one comes to mind in terms of that problem. I feel like people have their paths guided, whether it’s income investing or a financial advisor, I feel like they’re looking for some kind of help often.