Should You Spend More in Retirement? The Case for Enjoying Your Money
One of the biggest surprises in retirement isn't that people spend too much.
It's that many spend too little.
After decades of saving and living within a budget, it can be difficult to switch from accumulating wealth to spending it. Even retirees with healthy portfolios often hesitate to travel, remodel their home, or enjoy experiences they've worked their entire lives to afford.
Being financially responsible is important. But if fear keeps you from enjoying retirement, it may be time to revisit your plan.
Why Many Retirees Underspend
Saving becomes a habit over a 30- or 40-year career. Retirement requires a different mindset.
Common reasons retirees spend less than they could include:
Fear of running out of money
Concern about future healthcare costs
Uncertainty about market downturns
A desire to leave as much as possible to their children
These are valid concerns, but they shouldn't automatically prevent you from enjoying your retirement years.
How Do You Know If You Can Spend More?
The answer isn't based on your account balance alone.
Instead, it comes down to whether your financial plan shows your income and assets can support your goals over the long term.
Some encouraging signs include:
Your retirement income consistently exceeds your spending.
Your portfolio continues to grow despite withdrawals.
You've planned for healthcare and long-term care costs.
Your withdrawals remain well within sustainable levels.
If that's the case, spending a little more may not jeopardize your financial security.
The Cost of Waiting
Many retirees postpone experiences until "someday."
They delay travel, put off family vacations, or avoid spending on hobbies because they're worried they'll need the money later.
The reality is that your ability to enjoy those experiences may decline with age.
Example
Jim and Linda planned to travel extensively in retirement but kept delaying trips because the market felt uncertain.
By their late 70s, health issues made many of those trips unrealistic.
Their savings had grown well beyond what they expected, but the opportunities they had planned for were no longer available.
Key Insight
Money can often be replaced through investment returns. Time cannot.
Spending More Doesn't Mean Spending Carelessly
This isn't an argument for reckless spending.
It's about spending intentionally on the things that matter most.
That could mean:
Traveling while you're healthy.
Helping grandchildren with education.
Renovating your home to age in place.
Pursuing hobbies or lifelong interests.
Creating meaningful family experiences.
The goal isn't to spend more simply because you can. It's to use your money in ways that improve your quality of life.
Don't Let Taxes Make the Decision for You
Ironically, spending too little can sometimes create larger tax issues later.
If you rarely withdraw from traditional retirement accounts, those balances may continue growing until Required Minimum Distributions (RMDs) force larger taxable withdrawals.
In some cases, strategic withdrawals earlier in retirement can improve long-term tax efficiency while also providing money to enjoy retirement.
Balancing Lifestyle and Legacy
Many retirees want to leave an inheritance, and that's a worthwhile goal.
But it's also important to ask:
Are you sacrificing the retirement you envisioned to leave behind more than your family expects or needs?
In many families, children would rather see their parents enjoy retirement than leave the largest possible inheritance.
A thoughtful financial plan can help balance both objectives.
Common Signs You're Underspending
You may be living more conservatively than necessary if:
You're consistently spending less than your financial plan anticipated.
Your portfolio continues growing year after year.
You regularly postpone meaningful purchases out of fear.
You avoid experiences you've always wanted despite being financially able to afford them.
These patterns don't automatically mean you should spend more, but they're worth discussing with your financial advisor.
Planning Creates Confidence
The best spending decisions aren't driven by emotion. They're supported by a well-designed retirement plan.
When you understand how much you can safely spend, you're less likely to make decisions based solely on fear.
At Greenbush Financial Group, we believe retirement planning isn't just about preserving wealth. It's about helping clients use their resources to create the retirement they've spent decades working toward.
Final Thoughts
Saving for retirement requires discipline. Enjoying retirement requires confidence.
If your financial plan shows you have more than enough, it may be time to give yourself permission to spend on the people, experiences, and goals that matter most.
After all, the purpose of building wealth isn't simply to accumulate it. It's to use it to support a fulfilling retirement.
Rob Mangold
About Rob……...
Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.
Frequently Asked Questions
- Is it common for retirees to underspend?Yes. Research consistently shows many retirees spend less than they can afford because they're concerned about outliving their savings.
- How can I tell if I'm spending too little?A retirement income plan can project whether your current spending is sustainable. If your assets continue growing despite withdrawals, you may have room to spend more.
- Should I prioritize spending or leaving an inheritance?It depends on your goals. Most retirees can strike a balance between enjoying retirement and leaving a meaningful legacy with proper planning.
- Can spending too little create tax problems?Potentially. Delaying withdrawals from traditional retirement accounts can lead to larger RMDs and higher taxes later in retirement.
- What's the biggest mistake retirees make with spending?Many assume they need to preserve every dollar, even when their financial plan shows they can comfortably afford to enjoy more of their retirement.
