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Created: November 11, 2019
Modified: July 3, 2023

Retirement: Lessons On Saving Versus Spending Expectations


During the years leading up to retirement, individuals are constantly told to save, save, save and then to save some more. Once they reach retirement, it becomes very difficult for many to flip the switch from saving to spending. I have been helping clients for over 30 years with their retirement planning and have seen this over and over again. In November 2017, BlackRock, one of the world’s largest asset management corporations, funded a survey to better understand how retirees feel about spending during their retirement years. Their in-depth analysis of over 1,500 individuals validates what I have experienced with our clients during my 3 decades working in this industry.

  •  Retirees prefer to keep assets untouched

Many retirees want to hold onto their funds, sometimes out of fear and other times because they are being thrifty. They have spent so many years saving and now many just don’t feel comfortable spending money, often feeling guilty. Reducing assets is an uncomfortable feeling and according to the BlackRock study (‘Spending retirement assets … or not?’) completed by Greenwald and Associates, only 32% of individuals are comfortable with this idea. Retirees have the most control over spending and therefore, over 50% of them plan their spending so that their balance doesn’t fall below a certain amount.

  •  Retirees retain their accumulation mindset

As I mentioned above, there is a real inner battle happening between saving and spending. Often times, it comes at the expense of enjoying retirement – I’ve seen couples, who have the financial means, forego a vacation because they haven’t yet switched their mindset. It is important when working with a financial advisor, for couples to set a desired asset level goal.

  •  Men and women have different financial approaches

Not surprising that gender differences affect one’s overall retirement outlook, investing and also spending. In general, women worry more than men and are often more risk-averse. According to the study, close to three in ten men (28%) are comfortable with investment risk while only one in six women (15%) can say the same. Women go with the more conservative approach of mutual funds and annuities while men may be more apt to invest in stocks. Women often live longer than their male counterparts and also enter retirement with fewer assets due to pay gender differences that still exist. Therefore, it is understandable why gender affects your monetary approach in retirement.

  •  Recent retirees are less optimistic

The volatility of the market, concerns about ongoing health care costs and worrying about long-term care cause recent retirees to feel more anxious than individuals who have been retired for more than ten years. For example, the study looked at this dynamic and found that those who have been retired for 10+ years are more comfortable than recent retires with investment risk (25% vs. 18%).

During your working years, think about your income and what percentage you can save or put away for later years. Work with a financial advisor who can guide you through the retirement planning process, helping you make the right decision for your future goals. Know that the plan you make may slowly evolve as life changes and adjustments will happen along the way.

As you move into retirement, the focus from saving to spending becomes a psychological shift for many. Preconceived notions from your upbringing along with gender differences affect how freely you will spend during these years. And, many come into this phase of their lives with an accumulation mindset. With individuals living longer and the costs of long term health rising exponentially, retirees will have to focus on moving their mindset from saving to spending.

Joel Johnson, CFP®
Managing Partner at Johnson Brunetti
Joel Johnson, CFP®
Joel Johnson, the Managing Partner of Johnson Brunetti, has been in the financial services industry since 1989. As a CERTIFIED FINANCIAL PLANNER™ professional, Joel and his team have helped thousands of families develop their own individualized retirement plans based on the unique needs of those approaching the second phase of their lives. Starting from humble beginnings but developing a strong work ethic early on, Joel’s grandfather taught him by serving others first and creating value for someone else, you will never have to worry about money. These important life lessons were the driving…
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