After decades of saving diligently, retirement flips the script, it’s time to spend what you’ve accumulated. You’d think that would be easy and fun (and it certainly can be), but many retirees find the transition tricky. The psychology of spending in retirement is complex: there can be guilt, fear of running out, or even confusion on how to strike the right balance between enjoying today and preserving for tomorrow. Let’s delve into some common psychological hurdles around spending in retirement and share strategies to manage them. The goal is to help you truly enjoy your retirement money without undue worry.
From Saver to Spender – a Tough Identity Shift
If you’ve been a saver all your life, you likely derived satisfaction and security from seeing your accounts grow. Spending down can feel wrong, like watching a garden you’ve tended get pruned back. Some retirees experience anxiety with each withdrawal: “I spent £2000 this month, is that okay?!” Understand that this is normal. Your brain has been trained to accumulate, and now it has to adjust to decumulate.
One thing that helps is to reframe the purpose of your savings. Recognise that you saved for a reason: to fund retirement. Now that goal is here. The money is doing what it was always meant to do, it is supporting you. It’s not “wasting” money, it’s fulfilling its intended job. A concrete step: create a retirement budget that shows you can spend X per month and still be fine long-term (we can project this for you). Having that plan on paper can give you permission to spend guilt-free up to that amount. Think of it as a “sustainable spending salary” you’re paying yourself.
Fear of Running Out
Many retirees fear they’ll outlive their money, especially seeing scary stats about longevity. This fear can lead to underspending, scrimping unnecessarily and depriving yourself of joys you can actually afford. The key is to find a balance. We tackle this by stress-testing your financial plan (e.g., what if you live longer than the average life expectancy, what if markets underperform?).
If the plan shows a high success probability, remind yourself of that when fear creeps in. It can also help to segregate your assets: for instance, keep 2-3 years of cash for short-term needs (so you know your near-term lifestyle is secure), have a pension or annuity covering basics (so essential expenses are met for life), and the rest invested for growth/inheritance. This bucket approach can mentally reassure you that the part you’re spending from is meant for spending.
Another trick: annual reviews. Rather than worrying daily, commit to reviewing your portfolio and withdrawal rate once a year with us. We’ll adjust if needed (which is rarely drastic). Have confidence that periodic check-ins will keep you on track so you can focus on enjoying day-to-day without constant “Will I run out?” panic.
Spending Guilt and Deservedness
Some people find it hard to spend on themselves because of guilt or feeling they don’t “deserve” luxuries. Perhaps you’re generous with family and modest with yourself. It might come from a lifetime of prioritizing others or a frugal upbringing. In retirement, though, it’s your time. If you deny yourself experiences or items you can afford and would love, it might lead to regret later (“I wish I had travelled more while I was healthy enough”).
Try to shift perspective: treating yourself now isn’t selfish, it’s the reward for years of hard work. You earned this. Also, if leaving a legacy is important, remember that taking care of your own happiness and well-being is one of the best gifts to your family – they want you to enjoy life, not just exist frugally until the end. Some retirees set aside a “fun money” fund, a certain amount explicitly earmarked for indulgences (like a dream cruise or new hobbies). Because it’s pre-planned in the budget, they feel freer using it.
If you struggle, start with small splurges and work your way up. Buy that new golf club or spa day, see that nothing bad happened (in fact, you feel great), and maybe next time it’ll be easier to book that bigger trip.
Changing Spending Patterns and Finding Purpose
On the flip side, some retirees overspend initially, treating retirement like an extended holiday, and then have to tighten belts later, which can be jarring. It’s understandable to want to celebrate freedom early on (the “go-go” years). The psychological shift here is pacing yourself. We often encourage a realistic budget: spending more on travel and activities in the first decade, tapering later as energy wanes. This is fine if accounted for. Trouble comes if someone spends heavily under the assumption “I can’t possibly spend it all” without checking reality.
We’ve seen clients excitedly make expensive purchases, second homes, or gift large sums to kids right at retirement, then feel financial pressure later, unexpectedly. The lesson is: check big splurges against your plan first. We can simulate how buying that expensive car or holiday home affects your future cash flow. Maybe it’s fine; maybe you’d need to adjust other plans. Knowing that prevents regret. Also, after the initial honeymoon, some retirees feel a lull, spending on leisure loses lustre if it’s aimless. That speaks to a broader issue: finding purpose in retirement. Those who find fulfilling activities (volunteering, part-time work, a passionate hobby) often find a steadier, more meaningful pace of spending as well. You’re not just killing time (which can get expensive out of boredom), you’re engaged in something that might even be low-cost or give structure.
Couples and Spending Clashes
Retirement can magnify money dynamics in a couple. Perhaps one spouse wants to renovate the house now that they’re home more, while the other wants to preserve funds for future healthcare. Or one is a spender, the other a saver. Communication is key. It might help to set some shared goals (travel annually, help grandkids with uni fees, etc.) so you’re on the same page for big items. Then allocate personal spending allowances for each partner to use as they wish, judgement-free.
If conflicts persist, involving a financial planner as a neutral third party can ground the discussion in facts (what’s affordable) and find a compromise. We sometimes almost “mediate” between different risk appetites and help couples see each other’s perspective. The psychological tip is to remember you’re a team, the money is there for both your enjoyments and needs, and you likely both want the other to be happy. Regular, calm talks about finances (maybe monthly coffee chats) can avoid one partner stewing silently while the other spends or vice versa.
Retirement Spending Should be a Pleasure, Not a Source of Stress
By acknowledging the psychological hurdles and actively managing them, you can shift to a healthier mindset. It’s about confidence and balance: confidence that your savings can support you (with our guidance ensuring that), and balance between living it up now and safeguarding your future.
Whenever you feel that twinge of worry or guilt, circle back to your plan: it’s the anchor that tells you what you can comfortably spend. And if your heart dearly wants something that the plan doesn’t currently allow, talk to us, maybe we can adjust things to make it happen, or find a halfway solution. After all, the whole point of the money you’ve saved is to enhance your life. We often remind clients: you can’t take it with you, so within reason, use it to create memories, comfort, and joy.
So go ahead, take that trip, fix up the garden, enjoy a nice meal out, just keep an eye on the bigger picture. And if anxiety nags, share those feelings (with us, with loved ones) rather than letting them silently spoil your fun. With a solid plan and the right mindset, you can spend smartly and happily, making your retirement everything you envisioned. You’ve earned this time, now it’s time to enjoy it, money and all.
Disclaimer: This article contains information from sources believed to be reliable but no guarantee, warranty, or representation, express or implied, is given as to its accuracy or completeness. Howard Wright Ltd does not undertake any obligation to update or revise any future statements. Past performance is not a reliable indicator of future results. Investments can go down as well as up and actual results could differ materially from those anticipated. This article is for information purposes only and has no regard to the specific investment objectives, financial situation or particular needs of any person as such, the information contained in this article is not intended to constitute, and should not be construed as, investment or financial advice. Appropriate personalised advice should be taken before entering into any transactions. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. Howard Wright Ltd is Authorised and regulated by the Financial Conduct Authority.