Many Americans spend decades saving for retirement. But far fewer have a plan for the equally important task of spending that money once they stop working.

That financial challenge, known as "decumulation," refers to how retirees draw down their assets to fund their lifestyles while ensuring they don't run out of money. Only 31% of Americans know what the term means, according to new research from Corebridge Financial.

The lack of planning may contribute to a retirement paradox: Some retirees are so worried about outliving their savings that they spend far less than they can afford. A May report from the Employee Benefit Research Institute found that one-third of retirees still had 100% or more of their initial retirement assets by their mid-80s, a finding the nonprofit group said could indicate "unnecessary underspending."

Planning to spend

Only 29% of workers age 55 and older have a plan for withdrawing money from their retirement accounts, according to Corebridge.

"The big takeaway is that the plan for decumulation is as important as the plan for accumulation," Jean Chatzky, a personal finance expert and co-founder of finance site HerMoney, who collaborated with Corebridge on the research, told CBS News.

She added, "Most people do not have a plan for spending down. But if you can get yourself to the point where you do have a plan, you're going to find the whole experience in retirement of actually using this money that you've worked so hard to save much more pleasurable and empowering."

The survey, which polled 2,210 adults aged 45 to 79 with more than $100,000 in investable assets, also found that only 6% of respondents said they would regret dying with money left behind. But 56% said they would regret running out of money before they die. 

"You can always prevent running out of money by doing nothing," said Bryan Pinsky, president of individual retirement and life insurance at Corebridge. "We want them to take action so they can live the retirement that they've always dreamed of."

Retirement pitfalls

To be sure, retirees face plenty of real financial risks. The two biggest concerns cited in the survey were the potential cost of health care in old age and the impact of inflation on people's purchasing power, with more than 7 in 10 retirees saying those factors caused them to spend less than they'd like.

One commonly cited withdrawal strategy is the "4% rule," which holds that retirees can spend 4% of their savings in the first year of retirement and then adjust that amount annually for inflation. That guideline has long served as a rule of thumb for balancing spending with the risk of running out of money.

But retirement experts increasingly view the 4% rule as a starting point rather than a universal solution. And it doesn't account for factors such as market volatility, taxes, investment fees or unusually long retirements, according to Charles Schwab.

The issue may eventually become more problematic for younger Americans. Unlike many older retirees, Gen X and younger workers generally lack traditional pensions that provide guaranteed retirement income, relying more on self-directed saving plans such as 401(k)s. Yet the Employee Benefit Research Institute's research found that retirees with pension income tend to report greater financial stability.

As a result, some retirement experts place greater emphasis on building reliable income streams in retirement, such as adding annuities to supplement Social Security income. In the Corebridge survey, nearly half of respondents said they would prefer a guaranteed $60,000 in annual income for life over receiving a $1 million lump sum at age 65.

"We all need money in the markets, we all need to be able to keep pace with inflation and we all need that kind of growth," Pinsky said. 

But guaranteed-income products can help retirees cover essential expenses and reduce the fear of outliving their savings, he added.