Learning to Spend in Retirement

When it comes to financial planning, we often spend a lot of time talking about saving: how much we should save, how long we should save, and how we can save more. Especially during the early, accumulating phase of life, we like to see clients who have made saving a habit. The clients best prepared for retirement are often those who have saved well.

Unfortunately, habits can be hard to break. It’s not uncommon to find clients who have done such an excellent job of saving that, when it comes time to retire, they find it difficult to transition away from a saving mindset and give themselves permission to spend.

Don’t get me wrong: saving is essential. Saving and investing for the future is how we chart a path toward our financial goals. But when we reach those goals, we also have to learn how to enjoy them.

We aren’t recommending that you make a complete 180 and spend without restraint. Still, just because you shouldn’t have steak dinners every night in retirement doesn’t mean you need to be eating peanut butter and jelly sandwiches. There is room for moderation and for enjoying the fruits of your hard work.

Start With a Plan You Trust

When it comes to learning to spend, it’s crucial that you first have a financial plan you are both comfortable with and confident in. If you aren’t satisfied with your financial plan, you won’t allow it to factor into your decision-making. And if you aren’t confident in it, you won’t trust what it has to say, which can make it much harder to spend the funds you’ve worked so hard to save.

Be honest about your relationship with your financial plan. If you’re worried that it isn’t conservative enough or isn’t factoring in everything it should, let your advisor know. You can have a great custom financial plan, but if you don’t believe in it or trust what it communicates, it won’t be very useful.

Check In Before the Big Decisions

Once you have a plan in place and an idea of what you can comfortably spend in retirement, continue to check in with your advisor periodically, particularly if you’re contemplating a significant, non-routine expense.

While we want to be careful not to overspend and deplete your portfolio’s ability to provide sustainable income, there is also a cost to letting life pass without enjoying it. If you’re unsure whether you can afford a particular expense, it doesn’t hurt to ask. Reach out to your advisor, let them run the numbers, and update your plan if needed.

Make Room for What Matters Most

Finally, allow yourself to dream about and enjoy what retirement could be. Take time to explore your goals and what’s important to you. Give yourself permission to transition from being a habitual saver to someone who can enjoy the benefits of that saving thoughtfully and within reason.

And if you find that what matters most to you is passing on your wealth to loved ones or supporting an organization close to your heart, make sure your estate reflects those priorities.

When you’ve worked hard to build a financial legacy, that legacy deserves to be both enjoyed and cared for in a way that reflects your values.