Rubino & Liang Wealth Partners

Why Are Retirees So Afraid To Spend In Retirement?

Why Are Retirees So Afraid To Spend In Retirement?

The fear of running out of money is so real that many retirees don’t spend and perhaps aren’t enjoying their retirement like they could.

When asked “How often do you withdraw funds from your retirement accounts”:

  • 52% Only as needed.
  • 30% Never
  • 16% Systematically and regularly

 

Crazy, right?

What’s more interesting is that JP Morgan-Chase did a similar study for 120,000 households with $500,000 to $5 million in assets, and found that especially for higher-income families (so, people with over $1 million in assets), spending falls sharply for discretionary categories,  such as entertainment, food and beverage, and travel.

This comes back to that question of “Are you CONFIDENT you have enough money to live the lifestyle you want in retirement.”

And for a lot of people, there are those external factors that they CAN’T control – like knowing what healthcare costs are going to be once they retire – that cause them to be OVERLY cautious with their retirement savings.

 

Its A Real Psychological Challenge You Might Face When Nearing Retirement.

The “what if” scenarios creep up and just PARALYZE your ability to spend a bit more on discretionary expenses – be it a vacation home, a trip with the kids and grandkids, or even just a few extra nights out for food and drink with friends.

That’s why having a financial professional who can look at your entire portfolio and create a cohesive plan is SO important as you get ready for retirement.

It’s important to go over your essential expenses; things like mortgage, utilities, car payments, etc…

…and then also bring to focus a few external challenges that you CAN’T control, be it inflation, tax law changes or retirement rules, or stock market volatility. Then factor in consistently rising and possibly unexpected healthcare expenses and It’s no surprise that there might be a little voice in the back of your head preventing you from withdrawing from your retirement accounts – that voice repeating the constant “what if” scenarios:

“What if the stock market drops 20%?”

“What if my spouse has a sudden healthcare emergency?”

“What if they change my social security benefits or taxes or whatever?”

 

Taking Control Of What You Can’t Control

Let’s add a positive “what if” scenario to that voice:

“What if… you could minimize the impact that those external factors have on your retirement lifestyle?”

If you knew there was a strategy in place that addresses each of those “what if” scenarios, would it help you sleep at night?

The Employee Benefit Research Institute (EBRI) found in its 2023 Retirement Confidence Survey that workers reporting they or their spouse have a retirement plan in place are more than TWICE as likely to be at least somewhat confident in their financial security in retirement vs. those without a plan (74 percent with a plan vs. 29 percent without a plan).

If we can make sure we have a plan set up that will ensure you will have the funds to cover those essential expenses, no matter WHAT the stock market does or congress decides to do with taxes – it helps alleviate those “what if” questions.

Once that big psychological barrier is broken, it gets easier to see that you can make systematic or regular withdrawals from your accounts and not feel any hesitations about it.

And, let’s say for SOME reason there’s a MASSIVE change to your needs in retirement, we sit down and reassess the situation.

Not A “One And Done” Relationship

That’s another hesitation people have before they speak with a financial advisor that focuses on retirement planning – they think building a retirement plan is a “one-and-done” kind of thing (maybe that’s what they get with some of the big-box store type of advisors?), but that shouldn’t. be the case.

What we set out to do with the 365 Retirement Plan was to make sure we create something that can change with the world AS IT CHANGES.

Our focus is on helping people to and through retirement – which is a totally different set of rules than the financial advice you may have received during your working years.

Tax laws change, the stock market is always going to be discussed in the media, and the quality of your health is most likely going to play some sort of a factor in your retirement as you age –

– but by working with someone who focuses on helping you build something that helps prevent those things from having a major factor in your portfolio’s ability to live the way you want, now THAT is something that help with those internal “what if” questions…

If you’d like help addressing your “what if” questions, click here to set up a time to speak with us and express those concerns.

HAVE A LIST OF QUESTIONS AROUND YOUR FINANCES?

Thinking about your retirement situation?

Let’s chat. Find a time on our calendar to reserve a 15 min. phone call with either Sam, John, or Ryan - we'll use this time to get to know you and your needs and talk about the retirement planning obstacles you may be facing.

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