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3 Ways to Feel Comfortable with Retirement Spending

Author Greg Davis

Like many of us, you have been working and saving for decades for just this moment: retirement

Even though you may be ready to stop working full-time, now comes the hard part: Allowing yourself to spend your hard-earned savings since you will no longer bring in that paycheck, which has covered your monthly expenses. 

Saying goodbye to your workplace and a regular paycheck may trigger anxiety and sadness. As a nerdy accountant, my biggest challenge in retirement was not receiving a monthly paycheck during the fall of 2021 after receiving one for forty years or 480 months. Making the psychological shift from saver to spender is no small feat for most people.


In an interesting article, T. Rowe Price (TRP) divides retirees into savers and spenders. The article breaks them down and discusses the actionable steps you can take to boost your savings. Savers adjust their spending to maintain and grow their balances. Spenders are retirees who draw down their balances to maintain spending. 

In the article, TRP’s survey reveals that 70 percent of retirees identified as savers, while only 30 percent classified themselves as spenders. The survey shows that almost 60 percent of retirees want to maintain and grow their assets. The key to your financial retirement success depends on how well you understand your saving and spending habits.

The TRP survey also indicates longevity, healthcare costs, and inflation are some of the factors that will impact your retirement. As many POF readers know, thanks to science and medical breakthroughs, we are living longer than ever, but it costs us more to stay healthy. 

Inflation in 2022 was at forty-year highs as the COVID-19 pandemic was the primary factor driving excessive inflation in 2022 through demand and supply side distortions. Depending on your savings and spending preferences, you will need to combine different retirement solutions to pay for your financial needs and goals.


Research shows that many retirees with savings do not draw down very much, choosing instead to live off fixed sources of funds, such as Social Security, pensions, or income from part-time work. A study by Black Rock found that the vast majority of retirees still have at least 80% of their savings after two decades of retirement.

That is no doubt partly because they enjoyed one of the longest bull markets in history from 2009 to 2020, which helped replenish some of what they drew down over the years. And they are among the last generation of workers to benefit from corporate pensions. 

However, the psychological reluctance to tap one’s savings is a factor for most people regardless of their financial wherewithal. It may become more acute for soon-to-be retirees as they face inflation, volatile markets, and a lack of pensions.

Many advisors advise clients to go easy on themselves and view their first several years in retirement as a learning experience when it comes to spending. They are trying to figure out who they are now that their primary career is over and figuring out what they can and can’t do financially. 

For example, we recently bought a car for my wife as she replaced a car she had driven for 15 years. Despite a portfolio balance that hasn’t changed much in the past 2.5 years since we retired, I felt better running this car purchase by our advisor despite his reminder that it wasn’t necessary. 


So, while seeking financial advice and planning for retirement is helpful, they do not always address the psychological challenges retirees face.

To better manage these challenges, let’s explore three effective ways to build comfort with spending in retirement. 


1. Accept and embrace uncertainty 

Psychologists suggest the power uncertainty has over us is of our own making. We can limit its negative impact by accepting and embracing it rather than worrying about it. Understand that no plan can eliminate uncertainty; it’s an inherent part of life. 

Acknowledge that while you can’t control every aspect of your future, you are not rendered powerless. The key is to focus on what is within your control. This includes adhering to a sensible withdrawal rate and maintaining a healthy lifestyle, which can significantly mitigate feelings of helplessness. 


I appreciate spending more time with my wife in retirement and discovering new offerings in a new city (Philadelphia). We love walking to many city sites, such as the excellent restaurant scene, sporting events on Broad Street, and concerts at the beautiful Kimmel Center, which is only one block from our condominium. We have also been able to enjoy the outdoors by bicycling and playing our new retirement sport of pickleball, which is a racket or paddle sport that combines elements of tennis, badminton, and table tennis. We hope to stay young by walking more often and joining various groups such as city food tours and dinner clubs.

2. Adjust to a shift in identity

It’s true that your frugality might be a lifelong companion, as old habits notoriously die hard. However, retirement marks a profound shift in identity, steering you away from a professional persona that may have been your anchor for years. In fact, many retirees define retirement as an exciting new chapter in their lives. This transition calls for a redefinition of self, which can significantly influence how you view and use money.

Navigating this change effectively means exploring and embracing new facets of your identity. Ask yourself: What passions have I set aside? What new pursuits excite me? 

Aligning your spending with these newfound interests and aspirations gives your financial decisions a deeper sense of purpose.



In delving into the nonfinancial aspects of retirement, we learned that getting old does not have to be a sad time. It can be an exhilarating time when we get to do the things we always dreamed of doing. My wife and I have a cheerful outlook toward aging as retirement has provided us the chance to do things we have dreamed about, such as writing a book, taking a ten-day trip through Canada, or enjoying a new hobby like rowing on a peaceful river on a dragon boat. 

For others, it may simply mean spending more time with family, volunteering, exercising, taking on civic duties, or sitting at a coffee shop and enjoying a delightful book. I highly suggest expanding our boundaries as we age and learning new activities, which will only enhance our retirement years and our overall happiness.


3. Cultivate a more positive relationship with money

Behavioral psychology reveals our tendency to prioritize negative over positive information, a phenomenon known as “negativity bias.” This bias significantly influences our financial decisions, often leading us to focus more on avoiding negatives than pursuing positives.

When told by an advisor there’s a 99% chance of a successful retirement, many of us fixate on the 1% risk of running out of money. A way to counter this is through positive reframing. It involves redefining money as a tool for joy and fulfillment, not just a shield against potential downsides. This shift in perspective encourages us to see money as a means to enrich life experiences.

That doesn’t only mean consumption, but rather recognizing the happiness that can come from using money purposefully, such as through charitable giving or supporting loved ones. Research suggests we gain much more happiness from spending on others than on ourselves! 


It is extremely hard to manage your money well in retirement unless you are realistic about what is on the table. Many advisors recommend that the first thing to do is to develop a budget and sketch out a plan on how to cover your expenses best.

So before retiring, keep track of your spending and regular expenses, like housing, food, health care, etc. Then, assess how those expenses might change in retirement (e.g., if you plan to move to a less expensive home or area and if you will qualify for Medicare or if your insurance costs will be subsidized by your old employer). While easy to forget, you will need to account for any anticipated one-time outlays, such as paying for a child’s wedding, buying a car, or taking a major vacation.

Then, assess your fixed income (e.g., Social Security or pension payments if you are still lucky enough to have a company-provided pension). The difference between your expected outlays, and your fixed income is the amount you will need to draw from your savings.

Once you have that number, build a cash bucket that can cover what you will need for a year or two, so you will not be forced to sell anything (e.g., stocks) if the market heads south or you retire into a bear market (as I did during the painful year of 2022). 

As my retirement approached in 2021 after a rewarding career, my wife and I collaborated with our financial advisor to determine our streams of income in retirement. As 2022 has taught us, inflation can majorly impact our retirement needs. Higher prices combined with greater medical expenses in our older years make it critical to ensure our income and investments can support our longer lives. Thanks to using software called You Need a Budget (YNAB), we had a good handle on our retirement expenses, which are reviewed on an annual basis.


If you need reassurance that your income and cash flow plans are sufficient, meet with a financial advisor. My wife and I meet or speak with our advisory team often, which has been very comforting in our early phase of retirement. Together, you can look at the impact of taxes, evaluate your portfolio diversification, and prepare for the legacy you would like to leave your family and others. Per the National Association of Personal Financial Advisors (NAPFA) website, you can search for a financial advisor in your area.


Final Thoughts

With the confluence of declining pension incomes and longer lifespans, the strong retirement asset retention seen in this last generation of retirees will not likely be repeated for much longer. 

Future retirees will need a greater percentage of overall income generated from retirement assets, meaning nest eggs will need to work harder for longer. This is not inherently bad, but it will require a more proactive and focused effort overall. 

My best advice is to realize that we have saved our entire lives to reap the benefits of retirement. It may be painful for many of us, but it’s ok to spend our assets on things that increase our happiness, such as experiences or help less fortunate others!


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