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Adjusting in Retirement  How to Switch From a Savings to a Spending Mindset Adjusting in Retirement  How to Switch From a Savings to a Spending Mindset
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Preparing for Retirement: How to Switch From a Savings to a Spending Mindset

Insights & Ideas Team •  February 15, 2017 | Enjoying Retirement

For years, you’ve worked to save a portion of your income to prepare for retirement. But now that you’re approaching this phase of life, you may feel anxious about spending down what took you a lifetime to build.

“Sometimes it’s the best savers who have the hardest time enjoying retirement,” says Robert Delamontagne, PhD, author of The Retiring Mind. “You’ve crunched the numbers and found that you can afford the lifestyle you’ve planned. Yet, spending your savings is more psychologically difficult than you anticipated.”

You’re not alone. Moving from a saving to a spending mindset can be stressful. That’s because great savers are conditioned to delay instant gratification. For decades, you’ve trained yourself to save first, spend later. It’s tough to expect yourself to change habits the day after leaving the office.

For some, worry and even fear play a role. The unknown—including uncertainty about how long you’ll live, future economic swings and health care changes—coupled with the lifelong quest to have enough to feel financially secure can leave you feeling that you’re never truly prepared, even if you are.

And then there’s guilt. Those who were reluctant spenders during working years (always saving for a rainy day) face a fundamental change in attitude to become a more willing and relaxed spender. Others feel guilty that they will spend everything, leaving nothing behind for their children. This is a major shift, and it takes time.

How to Shift Your Thinking

If you’re challenged with changing your mindset from working/saving to retiring/spending, there are several things you can do to ease the transition, enjoy more and stress less.

1. Figure out what passion you want to pursue. You’ve worked. You’ve saved. Now that you’re post-career, you have the time (and the money) to spend doing other things. Learn a new language or instrument, travel, volunteer or explore your creative or adventurous side. Does the experience bring you joy? If you’re busy doing something you love, you’ll have less time to spend worrying.

2. Find role models. Many people have more than money tied up in working. It’s an identity that’s suddenly gone. “While I knew I had enough financially, I missed the responsibilities I had and the roles I held,” admits Delamontagne, who read more than 50 books to prepare for retirement. Others find support groups and talk to peers who’ve successfully made the transition.

3. Have a plan for living in retirement. We plan for retirement but not to live in it. The ability to comfortably spend in retirement comes down to confidence, and confidence comes from knowing—logically—what you have and what you need. This is where a financial professional can help. He or she can work with you to develop a plan to create the income you need to pay for all the things you plan to do in retirement. Having a plan will help you to feel more confident about spending your money because you won’t be as worried about running out.

4. Distinguish between spending and wasting money. If you’re a good saver, you probably aren’t an impulse buyer. Look at your retirement savings as one of the tools you have to explore your interests and accomplish the things that are important to you. Budgeting can help control nagging worries and make educated choices about what you spend your money on.

Bottom Line 

You’ve saved money, and you deserve the ability to confidently spend it. It’s understandably difficult to shift from a savings to a spending mindset. But when you have a financial plan that shows you how you’ll generate income in retirement, you may find you’ll worry less about whether to spend your money and more about deciding to order the steak or the lobster.

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