Spending in Retirement – Giving yourself permission to spend what you’ve saved.
One of the recurring themes in meetings with my retiree clients is having to give them permission to spend their hard-earned money. For decades, they’ve saved and invested to prepare for their future retirement. Then retirement arrives, and suddenly the goal changes. Instead of accumulating wealth, you’re expected to begin using it and for many retirees it is much easier said than done.
One of the most common concerns I hear as a financial planner is “Can I really afford to spend this money?” Even clients with substantial savings often struggle to shift from a saving mindset to a spending mindset in retirement. Years of financial discipline can make it emotionally difficult to draw from investment accounts, even when their plan clearly shows they can afford to do so.
Research has consistently found that most retirees naturally spend less as they age. After adjusting for inflation, spending generally declines by about 1% to 2% per year, meaning many retirees are worrying about overspending at a time when their expenses are likely to decrease on their own.
There are three often-used phases of retirement spending that you’ve probably heard from MainStreet if you’ve been a client for a while:
- The “Go-Go” Years: Early retirement is often the most active. Travel, hobbies, home projects, and time with family can make these some of the highest-spending years.
- The “Slow-Go” Years: As lifestyles become more settled, discretionary spending often decreases, even as healthcare expenses gradually increase.
- The “No-Go” Years: Later in life, travel and entertainment expenses typically decline significantly. While medical costs become a larger portion of the budget, total household spending often continues to trend downward.
Despite these natural spending patterns, many retirees spend less than they comfortably could. They worry about market downturns, inflation, healthcare costs, or simply running out of money. These concerns are understandable, but they can sometimes prevent retirees from fully enjoying the financial security they’ve spent decades building.
One of the most valuable roles of a financial plan is providing confidence, not just about avoiding financial mistakes, but about making the most of retirement. A well-designed retirement plan can help answer questions like:
- Can I take that dream vacation?
- Is it okay to help my children or grandchildren financially?
- Can I replace my car or renovate my home?
- Can I spend more now without jeopardizing my future?
Sometimes, the greatest value of a retirement plan isn’t telling someone they need to spend less. It’s showing them that they can responsibly and confidently spend more. I have recently “given permission” to clients to buy the business class ticket, buy the car they’ve always dreamed of and to get the nicer Airbnb on their European vacation.
So how do you start giving yourself permission to spend?
Here are a few simple ideas:
- Create a “yes” fund. Set aside a specific amount each year for travel, hobbies, or family experiences. When you’ve already planned for it, spending becomes much easier.
- Plan your spending with the same intention you used to save. At the beginning of each year, choose one or two experiences or purchases that would make retirement more meaningful, then commit to following through if your financial plan supports those decisions.
- Ask yourself one simple question: “If not now, then when?” If your financial plan shows you’re on track, remind yourself that your savings were meant to support your life, not simply grow your account balance.
The goal isn’t to leave retirement wishing you’d saved more when you already had enough. It’s to use your savings intentionally to support the life you’ve worked so hard to create. A thoughtful financial plan can provide something many retirees need most: permission to enjoy the retirement they’ve earned.
Source:
-The Go-Go, Slow-Go, and No-Go framework is generally credited to Michael Stein’s book “The Prosperous Retirement”
-Vanguard, The Vanguard Retirement Outlook: Strong National Progress, Opportunities Ahead (2025).
