“Our goal was to establish a research program and explore the nature of investor characteristics that impact decision-making during decumulation,” Sharon said.

The resulting survey involved roughly 750 wealthy investors who either are approaching retirement or are already there. It covered four main areas, one of which gauged people’s confidence level about their retirement. Eighty-three percent of survey respondents said they were confident or highly confident they’d meet their future needs. Another 88% said they were above-average investors, and most said they expect to live past age 90.

“Confidence is what we want. It’s desirable as long as it’s justified,” said Jennifer Gongola, Pimco’s behavioral science research manager. “But overconfidence is the behemoth bias. It creeps into our lives in many different ways, and you can see it here.”

She noted that 55% of wealthy investors who participated in the Pimco survey had an unrealistic plan for withdrawing money from their savings. That included 19% of respondents who said they didn’t have any plan to support their spending. Gongola said these people have a misalignment between their confidence level and reality, particularly since the majority of survey participants believe that longevity is on their side.

Another finding from the survey was that one in three respondents were susceptible to a loss-aversion bias, which means they’re more focused on avoiding loss than achieving gain. Gongola described loss aversion as an emotional reaction to risk that can impact retirement-related decision-making in various ways. For example, it can make spending from a nest egg feel like a loss, even when that spending is aimed at a retirement goal. And Pimco says loss-averse investors struggle to weather temporary market disruptions.

She added that some people are more loss averse than others. “Those who had a regular source of cash flow during this transition period [to retirement] had significantly lower levels of loss aversion. And at any stage of retirement, having a consistent cash flow makes an investor much more confident.”

Elsewhere, the survey examined how investors prioritize risk. Health and market risks topped the charts among both soon-to-be retirees and those already in retirement. But 60% of Pimco’s respondents said they’d be willing or very willing to cut back their retirement spending budget to accommodate the vagaries of the markets.

The survey’s final focus area was legacy planning. It found that those who didn’t prioritize a legacy goal for their retirement portfolio planned to spend down 67% of their total wealth. On the flip side, those who consider legacy planning an essential priority intend to spend down just 35% of their total liquid wealth.

The Pimco duo concluded that managing people through their retirement years isn’t just a numbers game. Rather, it requires input from the field of behavioral science.

“Things like the 4% spending rule can’t solve for the complexities of decumulation,” Sharon said.

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