How do you go from being a diligent saver for retirement to a responsible spender in retirement?

It’s a simple question with a not-so-simple answer.

Think about it: In your 30s, 40s, 50s, and 60s you scrimp, save, and build your career/salary. Eventually you start worrying about the market, the value of your house, helping out with a college education, and end with a last final savings push until you reach financial independence. These decades provide ample opportunity to form dependable, repeatable saving habits.

When you achieve financial independence you enter a new paradigm: You no longer need to save; you only need to spend. Those decades of saving habits formed, however, leave you feeling guilty for no longer saving. Welcome to the conundrum of diligently planning for a responsible retirement.

The consequence? You may unnecessarily reduce your ability to spend in retirement (or overfund an inheritance) since your “habit” keeps guilting you into additional savings.

Remember, most retirement projections generally assume that you will not be a saver in retirement. If you knew you were going to be a saver in retirement, then you likely could have afforded to spend more during your working years. Think of the difference that could have made on you and your family’s life.

Changing your saving mindset can be difficult. A successful businessman I advised told me he was burnt out for over five years before he finally called it quits. For decades he diligently saved for this day, but when he retired, his saving habit continued. While he was successful in achieving financial independence, if he had known his saving habit would continue, he potentially could have avoided those last five grueling years of work and moved on to his desired lifestyle sooner.

Upon reflecting on this client and others like him, the following behaviors can make kicking the saving habit difficult in retirement:

1. Force of Habit

Old habits die hard. Changing from a diligent saver to a responsible spender requires a change of mindset. If the way you think about your financial responsibilities and obligations feels the same after retirement as it did before, you are probably doing something wrong.

Remember, your retirement plan communicates not just mathematical concepts, but a way of living that is consistent with the opportunities and constraints the plan offers. This is why investors who have a plan and stick with it – through the income and withdrawal ramifications – fare much better than those who don’t.

2. Fear of Loss (that cannot be replaced)

Losses are bad, but deviating from your plan is worse. Inevitably, markets will pull back and you will incur losses. But this is not the time to abandon ship. Panic at the first and subsequent downturns essentially throws out all the planning you’ve done to date and may set you up for problems down the road, ranging from unanticipated tax consequences to diminishing withdrawals.

If you’ve retired responsibly, you’ve identified your financial goals and built a portfolio designed to weather the ups and downs at your level of risk tolerance. You need to be realistic about how you spend your savings in relation to the risk of your portfolio. Your understandable desire to preserve principal when there’s no safety net means making realistic assessments about the withdrawals you can generate. If this is indeed the case, market gyrations won’t keep you awake at night; you should be able to focus on and enjoy the realization of your long-term goals.

3. Confusion of Priorities (Retirement vs. Estate Planning)

While what you expect to leave behind (estate planning) is inextricably linked to the assets you accumulate during your life (retirement planning), you need to take care of yourself before your heirs. Over the years I’ve seen plenty of clients confuse these two, resulting in a less-than-desirable retirement. As much as your heirs would appreciate an inheritance, they probably also prefer not having to support you in your old age.

When you prioritize your estate planning goals, it typically requires feeding your savings habit (which, of course, feels good), but often to the detriment of your retirement planning goals. As always, good planning results in identifying and implementing strategies that achieve an appropriate balance of these (sometimes) competing objectives.

The Bottom Line

Don’t get me wrong; good saving habits are essential. They almost always result in positive outcomes. But don’t forget that over-saving (a tough habit to kick) comes with the cost of sacrificed lifestyle, often during the years when you would have enjoyed it the most.

This article originally appeared on January 28, 2015 on You may view the article here.

Brian Vnak

Brian Vnak

Senior Vice President, Advisor Services

CFP®, CPA, Series 7 Securities Registration,1Series 66 Advisory Registration,† Insurance License Brian diligently advises clients on income, gift, trust and estate tax issues while leveraging the expertise of the Roundtable to deliver comprehensive, customized strategies. For more than 10 years he has helped numerous clients develop and implement sophisticated financial, tax and estate strategies that are in alignment with their goals and values. Brian is a...Read More