The problem isn't that retirees spent too much money. Most money gets spent by people in middle age who have kids, active income and no choice but spend the money. Retirees typically try to be prudent. This is why you see the large export numbers with comparatively low imports in countries with low birth rates in parts of Asia and Europe. Very productive people with no kids spending little of their money and soon stopping to contribute and cut down on spending to brace for the long haul. (source: numerous Peter Zeihan interviews and videos)

Still will lead to inflation though, as you point out, since production will drop.

I also wonder what that means for index funds and the stock market in general. Every month massive amounts of retirement savings get directed there because there is really no other place to invest. What is gonna happen when contributions turn into withdrawals?