Many retirees are surprised to find that the biggest challenge in retirement isn’t overspending, but rather figuring out how to enjoy their hard-earned savings without the fear of running out of money.

Resources:

• • FREE RETIREMENT READINESS REPORT
  • How Much Can I Spend in Retirement with a $2.3M Portfolio
  • Why Most Retirees Will Never Draw Down Their Retirement Portfolio

Avoid These Common Retirement Spending Mistakes

Retirement is a time many people look forward to after decades of saving and investing. However, many retirees find themselves making common mistakes when it comes to retirement spending. Surprisingly, these mistakes don’t typically involve overspending. Instead, the challenge often lies in spending too little and continuing to save even when it’s no longer necessary.

Understanding the Purpose of Retirement Savings

The main reason people save and invest during their working years is to have enough money to enjoy retirement. This means having the financial freedom to cover daily expenses, pursue hobbies, travel, and live a comfortable lifestyle without the need to worry about earning a paycheck. But once they reach retirement, many find it difficult to shift their focus from saving to spending. This is where retirement spending mistakes begin to show up.

Research Shows Most Retirees Underestimate Their Retirement Spending

Recent studies have shown that many retirees tend to hold on to their wealth and continue to grow their investments well beyond what they need. While it might seem like a good idea to continue growing wealth in retirement, it can lead to a gap between what retirees could spend versus what they are actually spending. This gap in retirement spending means that many retirees deny themselves the experiences they saved for out of fear of running out of money.

How to Overcome Retirement Spending Challenges

1. Shift Your Mindset: The first step in overcoming this spending gap is recognizing that retirement is the time to enjoy your savings. After decades of working and saving, you’ve earned the right to spend on the things that matter most to you. This includes travel, experiences with loved ones, and hobbies that bring joy and fulfillment—all essential parts of retirement spending.
2. Understand Your Financial Situation: It’s essential to have a clear understanding of your financial standing. While it’s important to ensure that your money lasts throughout retirement, it’s equally important to recognize when you’ve saved enough. This will help you confidently engage in planned retirement spending without the fear of running out of funds.
3. Create a Balanced Retirement Spending Plan: Work with a financial advisor to develop a retirement spending plan that balances enjoyment with security. A well-thought-out plan considers factors like life expectancy, inflation, and unexpected expenses, ensuring that you can spend comfortably while maintaining a safety net for the future.

The Benefits of Smart Retirement Spending

When you adopt a balanced approach to retirement spending, you open the door to a more fulfilling retirement. Whether it’s taking a dream vacation, spending more time with family, or exploring new hobbies, using your retirement savings as intended can lead to a happier and more satisfying retirement.

At the same time, planning and monitoring your retirement spending ensures that you won’t outlive your money, allowing you to enjoy the peace of mind that comes with financial security.

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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. Disclosures: https://onedegreeadvisors.com/solutions/#disclosures