Scared to Spend: Overcoming the Terrifying Retirement Cycle

“I know what the numbers say,” multiple customers have told me after seeing positive statistical analysis suggesting they are less likely to run out of money. “But I don’t know how to live comfortably after retirement.”

And who can blame them? Half of the financial world is focused on how woefully underprepared most Americans are for retirement, and the other half is focused on how woefully underprepared most Americans are for retirement, and the other half is focused on how many retirees have as much money as they do. You’re stuck with a “safe” withdrawal rate of 3%, 4%, or 5% that’s designed to help you leave this world. Saved for retirement. No wonder they’re scared.

But I think there are other factors at play here that don’t have numbers or percentages. It is the strength of the anxiety that grips many newly retired people who have crossed the threshold from accumulation to decline, and that is the power of disempowerment.

power to take away rights

That makes perfect sense. A person who has been working for 30, 40, or even his 50 years, a truly productive working adult, will likely be further removed from the highest point of his career accomplishments, peak earnings, and maximum years of savings. .

Even though they are in the highest marginal tax rate ever, their diverse income sources, tax-advantaged savings mechanisms, and philanthropy have given them flexibility at tax time.

Yes, they made many financial and investment mistakes during their working lives, but they had the time, income, and savings to make up for their indiscretions.

Now there are no high fives, no pats on the back, no W-2 income, much less tax flexibility (supposedly) subject to the whims of the market, and plenty of free time to worry about it. Little or no control.

Let’s be honest: Despite the visions of retirement bliss thrown up by big financial company commercials featuring endless cycles of golf courses, grandchildren, sailboats, and marine mammals, retirement is surprisingly demoralizing. It could be something.

“Just because you reach a different ‘stage’ in life doesn’t mean you can simply abandon lifelong habits of discipline and prudence,” Brian Portnoy, Ph.D., founder of advisory consultancy Shaping Wealth, told me. told. “Habits are part of our identity, and each of us zealously protects our identity.”

So how can those who are currently retired, or soon to be, take these steps with confidence? How can they take back this proverbial power?

Take back your power

The path to a confident retirement will be different for each individual and family, but here are some ways everyone can stay strong in retirement.

1) Gradual transition to retirement.

From a mental, physical, and financial perspective, there is a good chance that you will gradually move towards retirement. There are many economic benefits. Rather than flipping the switch from accumulation to withdrawal, you might stop contributing to your retirement account and try to grow the account during this first stage before turning on the income faucet. Perhaps you could delay taking your Social Security retirement benefits a little longer and increase what is probably the only source of fixed income that most people have with an automatic, inflation-adjusted increase.

Physically, you’ll be active for longer, and mentally, your identity change will be more of a journey than a cliff-jump.

2) Never stop “working”.

In this first phase of retirement, rather than a utilitarian work approach that maximizes reward for your time, you may want to pursue a role with less pay that feels more closely related to your true identity. They might even accept it. Some of my clients use this phase of retirement to teach at the university level, write a book, tend a farm, start or partner with a non-profit organization that serves almost their most important purpose. There are people who do that.

Even if you choose something, or even if you have to give up on it, work,in any kind of way work It may still be the key to a healthy retirement. This is why I encourage all my clients, especially those who are retired, to be proactive about setting annual goals. It doesn’t really matter if your goal is to visit each of your grandchildren in college, plan a vacation with your extended family, or lead a study at your church or synagogue. what These goals are above why you chase them.

3) Build an investment portfolio with your retirement in mind.

Retirement portfolios serve the needs of a variety of individuals, but most people approach this stage of life with a unique approach to investing. This is one of the reasons why some people have a hard time sticking to portfolios with ratios like the standard 60/40 or 50/50. This is not clearly related to your actual retirement goals. And this idiosyncratic portfolio approach often requires retirees to adhere to a single number, a (hopefully) statistically tested percentage of their portfolio to preserve their wealth in retirement.

The generally accepted number is 4%. So even if he were to withdraw only 4% of his retirement portfolio each year, he would still have as much or more than his retirement savings left on this earth. My colleague and SignatureFD co-founder Doug Liptak calls this the “96% problem,” suggesting that a myopic focus on sustainable withdrawal rates ignores the purpose of the funds in the first place. Masu.

“The hard reality of the 96% problem is that it’s not just about untapped wealth,” Liptak said. “It’s about lives not lived. It’s about the moments we didn’t grab, the hands we didn’t hold, the places we didn’t go, and the changes we didn’t make. It’s about looking back and saying, ‘I really lived.’ It’s about thinking, ‘Is this true?’

This is one of the reasons why I recommend investing in the language of life, especially in retirement. Through a goals-based investing approach, we can better meet the needs investors feel at this stage of their lives by filling his four “buckets”:

  • protect: Ensure protection against the unexpected with a customized “night sleep” fund.
  • live: Build your “retirement fund” with more stable assets so you don’t have to worry about short-term fluctuations in the stock market.
  • growing up: Continue to grow your money with more volatile assets to fund your future and outpace inflation.
  • give: Give strategically to the people and causes that matter most to you.


After over 25 years of working with individuals and families on their retirement journeys, it is my personal opinion that the first few years of retirement are one of the most stressful life transitions a person will experience. This means that there is a possibility that it is. But it doesn’t have to be that way. Retirement can and should be a rich, purpose-filled phase in life that retirees don’t have to fear.

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