Are You Spending Too Little in Retirement?

Navigating the risks to retirement, maintaining security and transforming your spending strategy from a “save-only” mindset in order to enjoy your retirement.

Today, we’re tackling a question that might surprise many: Are you spending too little in retirement?

Understanding Retirement Spending

Recently, I came across an intriguing article in Barron’s titled “These Retirees Have a Good Problem. They Aren’t Spending Enough.” This piece piqued my interest, and I dove deeper into the study it was based on, conducted by New York Life. For those who might not have access to Barron’s, I’ve linked the study and a similar article available for free from Insurance NewsNet.

The crux of the matter is this: Many retirees have diligently saved throughout their working lives, yet when it comes time to enjoy the fruits of their labor, they hesitate. Economists studying retirement behavior have two major questions:

  1. Why don’t retirees purchase more annuities for guaranteed lifetime income?
  2. Why do so many retirees underspend, even though they have sufficient savings?

The Fear of Outliving Your Money

One significant factor behind this conservative spending is uncertainty about future expenses, particularly healthcare. The study highlighted that only 16% of retirees withdraw regularly from their portfolios, while a staggering 30% don’t touch their savings at all. This cautious approach often stems from a fear of depleting resources prematurely, particularly in the face of potential health issues.

Changing the Spending Mindset

Bill Perkins’ book, “Die With Zero,” offers a compelling perspective on retirement spending. Perkins argues that money represents your life’s effort and energy. If you don’t spend it, you effectively waste those parts of your life. While I don’t fully endorse the notion that unspent money equates to wasted life, it’s essential to remember why you saved in the first place: to enjoy your retirement.

I’ve seen this firsthand with clients. One couple, for instance, would call me around the 25th of each month, asking for small withdrawals to cover their expenses, despite having ample savings. They felt guilty and stressed about depleting their funds. After some discussion, I convinced them to set up a systematic monthly withdrawal, which significantly reduced their anxiety and guilt.

The Comfort of Regular Income

Receiving a consistent monthly payout can be incredibly reassuring. Think about it: during your working years, you received a regular paycheck, which provided financial stability. Replicating this in retirement can alleviate the stress of wondering if you can afford your monthly expenses. It allows you to enjoy your retirement without the constant worry of watching your account balance dwindle.

A quote from the Barron’s article resonates with many retirees: “Getting used to this new pattern of spending… I kind of need permission.” After decades of saving, shifting to a spending mindset feels strange. Saving money felt like a win, so spending it might feel like a loss. However, with proper planning, you can give yourself permission to enjoy the money you’ve saved.

The Role of Insurance

Another significant concern for retirees is the potential cost of long-term care. This worry often leads to under-spending. However, insurance can mitigate these risks. The Employee Benefit Research Institute found that retirees with long-term care insurance spend more annually compared to those without. This insurance provides peace of mind, allowing retirees to spend more freely, knowing they’re covered for potential future expenses.

Planning for a Confident Retirement

Effective retirement planning involves more than just accumulating savings. It’s about creating a strategy that allows you to enjoy your retirement years without fear. This often includes:

  1. Setting up Regular Withdrawals: Mimicking the paycheck cycle from your working years can reduce stress and make spending feel more natural.
  2. Considering Annuities: These can provide a guaranteed income stream, alleviating the fear of outliving your savings.
  3. Incorporating Insurance: Long-term care insurance can help manage the risk of significant healthcare expenses, allowing you to spend more confidently.


The study from New York Life and insights from Bill Perkins both encourage a similar sentiment: you’ve worked hard and saved diligently–now, it’s time to enjoy your retirement with confidence. Don’t let the fear of the unknown prevent you from living your best life.

Related: 2025 Social Security Cola Projected at 3.3%