Saving money for the future is a good habit. To do it means exercising the virtue of delayed gratification. So it’s only natural that disciplined savers often feel a sense of satisfaction as month-by-month they see their nest egg grow.
But being fixated on saving, especially when you don’t need to, can also be a sign of anxiety about running out of money.
Earlier this year, the non-profit Employee Benefit Research Institute (EBRI) conducted a survey to learn about the attitudes of retirees toward spending down their assets during retirement.
A surprisingly high number, 57%, said they planned either to spend down a little, spend down none, or grow their assets. This is a surprising finding, because the primary reason to save for the future is to spend that money in the future. And a responsible, even conservative, retirement plan will include converting your savings into cashflow over time.
Michael Bloomberg, founder of Bloomberg, says the ultimate retirement strategy is where you would spend down all your assets and “bounce the check to the undertaker.” All joking aside, your retirement funds are there to serve you. Not the other way around. And if you want to use up most them up before you go, you can plan for that.
To dig a little deeper into the reasons retirees might have for not wanting to spend, the EBRI survey asked further questions about why the respondent would use up as little of their nest egg as possible. The most common answers chosen centered around not wanting to find themselves in the position of not having enough money.
Finally, the surveyors asked the respondents to rate how strongly they agreed with the statement, “Saving as much as I can makes me feel happy and fulfilled.” Nearly two-thirds said they agreed somewhat or strongly.
Researchers wondered if someone saying, “Saving makes me happy,” could also be saying, “Not saving makes me unhappy.” Does seeing the amount in their account going down make them nervous?
The whole idea of having a personal retirement plan is to think through the contingencies ahead of time and have preparations in place for the challenges and changes that are sure to come. In other words, to plan for the unexpected.
I’m here to help you come up with a roadmap for achieving a fully funded retirement and then a plan to spend it wisely. So that during this new phase in life you don’t have to worry about running out of money.
If your goal is to leave as much money as possible to your heirs, that’s fine. But as a retiree you shouldn’t feel under constant pressure to keep saving.