Dick Matthews likes to get up in the morning and review his savings and investments online. They don’t change much from day to day, but that doesn’t matter to him.
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It’s a habit formed over years and years as an accountant. Besides, it gives him something to do.
He’s almost 90 years old and financially secure. He’s saved over a lifetime and has the financial means to do almost anything that he wants to do. But he’s not going to do anything different with his basic financial plan than what he’s done for the almost 30 years he has been retired.
It’s like window shopping, he told me. He likes to look even if he’s not going to buy.
“I just like to see how the stock market is doing even if I’m not going to respond to it by making changes in my portfolio,” he said. “Sometimes I think about ‘what ifs,’ and sometimes I just sit back in my chair with a sense of satisfaction.”
Having enough in retirement
In many ways, he’s not alone. Research suggests that many Americans who have saved for retirement find that after years ofthe hard work of saving forretirement, it is difficult to spend their savings while in retirement.
They simply can’t flip the switch. While retirement opens up the chance to spend more than in the past, often people just can’t do it. The so-called “millionaire next door” who has saved for years may find it difficult to open the checkbook and take that dream vacation or buy the boat for the lake or get a cabin in the woods.
A study by Prudential Financial showed that many baby boomers who retired with robust nest eggs are living far below their means. These average but comfortably well-off retirees (not wealthy billionaires) are only withdrawing an average of 2.1% annually from their savings and investments — nearly half the traditional 4% safe withdrawal rate. They are living frugally not because they have to but because something in their long-established mental wiring won’t let them change.
Of course, there are plenty of people who don’t have this problem and face considerable financial difficulties in their retirement years. For some, there’s never been very much coming in. For others, they may grapple with lifelong struggles of spending more than they can afford.
And to be sure, there are many uncertainties about living 30 or 40 years during retirement and having enough for healthcare, inflation, taxes and unexpected expenses like insurance or house repairs. With life’s uncertainties and without a regular paycheck, retirees may feel a sense of guilt or irresponsibility about spending anything significant from their retirement savings.
Even planned expenses — like helping a child or grandchild, buying a new car or taking a dream vacation — can leave some people second-guessing their decisions, wondering:
- What if inflation kicks up again?
- Am I limiting a child or grandchild’s independence if I help them financially?
- Will I have enough money for unplanned medical expenses if I make this big purchase?
- What exactly are my financial goals in retirement?
“The biggest question that people miss is the goal-setting and lifestyle for retirement,” says Michael Crews, a financial planner. “In retirement, you still have to figure out what’s really important to you.”
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And most people just aren’t very deliberate in clarifying that for themselves. So, the most important retirement question to answer isn’t your net worth, your marginal tax rate, your gift-tax exclusions, your possible medical expenses or expected longevity. Instead, it’s this:
How do you plan to spend your time?
Viewing retirement savings as a tool for living shifts your focus from chasing an arbitrary financial score to funding a secure, meaningful lifestyle.
The scorecard trap
When you treat retirement savings like a scorecard, money becomes a game of win or lose.
- You fixate on a big number.
- You compare your savings either to peers or to national averages, which often creates unnecessary stress and anxiety.
- You hoard your savings just like some people hoard items.
There are plenty of slogans like “You can’t take it with you” and “Whoever dies with the most toys wins” that may help nudge savers toward becoming spenders, but there’s nothing like a good plan to turn ideas into action.
Rather than freely spending what you’ve saved, create an intentional plan based on your values. This is hard work and is best done with a trusted financial planner and steadfast family members.
While many retirees worry about the unknown cost of medical expenses during retirement, consider measuring the typical out-of-pocket costs during retirement and work back from there. Research shows that the typical costs for healthcare in retirement (including Medicare premiums, out-of-pocket prescription drug costs and the like) are about $185,500 for a person retiring this year. While that may look like a big number, if spread over a 20-year period, it is only $9,275 a year. If spread over 30 years, it is $6,183 per year.
While medical expenses may not occur uniformly over 20 or 30 years, reducing lifetime expenses to annual costs is one way to address uncertainties about having enough money for medical expenses in retirement.
Moving forward
While many retirees and their financial planners are skilled in building a savings plan, far fewer are able to create a lifestyle plan in retirement. When I visit with local financial planners in my area and ask about lifestyle plans in retirement, they are often uncomfortable giving advice or offer only vague generalizations about what and how retirees can approach this important matter.
Ultimately, this is something that every individual or couple must do for themselves. Family and financial advisers may have a few insights, but until people do the “heavy lifting” by answering a few critical questions, little progress will be made toward a workable, usable plan.
Here are some questions to consider:
- What expenses actually bring me a sense of satisfaction and contentment?
- What am I most afraid of if I make a big financial outlay? How can I address that fear?
- Will children or grandchildren benefit or be harmed by a financial gift now rather than an inheritance later?
- What causes or groups align with my values, and how might they use a financial gift from me?
- What top five places, experiences or activities are on my personal “bucket list”?
- How do I want to be remembered? How can I use some of my resources to fund this legacy?
Viewing retirement savings as a tool for living shifts the focus from chasing an arbitrary net-worth score to funding a secure, meaningful lifestyle. Making this transition requires shifting from a lifelong habit of accumulation to value-based spending, where expenditures are evaluated not by their cost but by the satisfaction they generate.
Research shows that retirees derive the greatest sense of fulfillment when allocating resources toward lifelong learning, kinship moments and intentional generosity — such as funding family experiences or supporting meaningful causes. Ultimately, aligning financial outlays with personal priorities transforms accumulated savings into a practical road map for living with purpose, confidence and peace of mind.
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