American workers are told to spend their entire career saving for retirement, building a nest egg that they dare not touch.
When that career ends, retirees are expected to break the nest egg and begin spending it down.
For many Americans, the transition from saving to spending does not come easy.
In a recent survey by Allianz Life, 39% of retirees said they are reluctant to spend their retirement savings. And 71% of working-age Americans said they expect to be reluctant about spending retirement funds when the time comes.
Financial advisers say one of the biggest parts of their job is persuading clients, even the rich ones, to spend their savings in retirement.
“It’s hard to get somebody to even go out and spend five dollars for a cup of coffee at
7-Eleven when they’re so used to saving everything,” said Melissa Cox, a certified financial planner in Dallas.
Cox said “about half” of her clients struggle with spending retirement savings.
“One of my favorite clients, I am literally begging him to spend money,” she said. “He won’t go on vacation, which he desperately needs.”
For retirees, the transition from saving to spending can be scary
Financial advisers often conceive of a retirement plan in two distinct acts. The first is the “accumulation” phase, when Americans are earning income, allocating investments and building retirement savings through 401(k)s and other accounts. The second is the “distribution” phase, when the retiree spends down the savings.
For many retirees, the change is frightening.
“We’re all accustomed to spending our paychecks, but we’re not accustomed to spending our retirement savings,” said Jonathan Swanburg, a certified financial planner in Houston. “If you watch your portfolio go down, it can be a very stressful thing.”
Retirees have to embrace a new reality in which their income is largely beyond their control. In working years, you can cover an unexpected financial shock or big-ticket purchase by negotiating a raise or a higher-paying job. Retirement income, by contrast, tends to be fixed.
“The only thing you can really control at that point is your spending,” said Peter Lazaroff, a certified financial planner in St. Louis who has a forthcoming book on investing.
'I over-analyze every major purchase'
Gerry Elam, 68, of Opelika, Alabama, retired early from his job at General Electric amid pandemic-era downsizing in 2020. Elam had always lived below his means, and his financial planner said he had more than enough money to retire. The only problem, he said, was learning to spend it.
“I think the biggest change for me is going from saver to spender,” he said. “I over-analyze every major purchase, and by major, I mean over a couple hundred dollars.”
The best retirement savers can be the worst retirement spenders, Lazaroff said.
“People who build up a sizeable portfolio over their lifetimes are good savers,” he said. “And good savers, almost by definition, are bad spenders. They’re not good at seeing money go out the door.”
Part of the problem, Lazaroff said, lies in the “mindset adjustment” that your retirement savings are no longer off-limits.
Retirees fear outliving their money, and with good reason
Retirees also have well-grounded fears of running out of money, a setback many Americans say they fear more than death itself.
“It’s absolutely the number one fear of people headed toward retirement,” said Kelly LaVigne, vice president of consumer insights at Allianz.
The Allianz Center for the Future of Retirement released its 2026 Annual Retirement Study in July.
“I get it that you don’t want to run out of money,” LaVigne said. “But you also don’t want to put off things that are really worth it to you.”
Lazaroff sees retired clients struggling with competing risks. One is the risk of running out of money if you spend too much. The other is living – or dying – with regret if you spend too little.
“If all you do is worry about running out of money, you’re not going to spend enough, and you’re going to end up dying with regret,” he said.
For fear of overspending, a retiree might balk at fulfilling a bucket-list item, like taking a long-delayed vacation, or flying first class.
“If you were in the working world, you probably held off on taking that trip because it was too expensive,” Swanburg said. In retirement, “you’ve lost that paycheck, and now you’re trying to take this trip that is really, really expensive.”
This article originally appeared on USA TODAY: Retirees spent their lives saving. Now they're afraid to spend
