9 Ways to Overcome the Terror of Spending Your Retirement Savings

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Editor's Note: This story originally appeared on NewRetirement.

Terror about retirement spending is not uncommon. In fact, most people are worried about spending their nest egg and running out of money. After all, you have been conditioned for decades to earn, not spend.

You were probably a teenager when you opened your first paycheck and officially started the cycle of earning and spending your own money.

Since then, the following process has never stopped: Work. Earn money. Spend some. Save some (hopefully). Repeat.

And now, just because you are ready to retire, you are forced to adjust to an entirely different system. Suddenly, it’s supposed to seem totally normal to spend, then spend some more, and then spend even more — drawing down the retirement nest egg that took you a whole lifetime to build?

That can be terrifying! And, if you are feeling scared, you’re definitely not alone.

If you’re uneasy and not sure you can handle watching that nest egg balance fall month after month, take a deep breath. Following are several tips to overcome your fear of retirement spending.

1. Get really comfortable with your numbers

Retiree trying to lower her inflation risk
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It’s pretty much impossible to look at your nest egg and automatically know that it’ll last you through your retirement. There are just too many variables at play.

It’s easy for someone else to tell you that you have enough for retirement. However, it is much more powerful to see for yourself.

It is possible to calculate how a comprehensive set of your own values — your assets, spending, rates of return, inflation, income and so much more — will result in a secure future. With detailed knowledge and sophisticated calculations, you will be able to gain a sense of financial well-being and confidence to overcome retirement fears.

That’s why NewRetirement offers a comprehensive retirement planning system with detailed budgeting and withdrawal options.

Start by inputting some basic information and get an estimate for how long your money will last. Then, add more detail and start running various scenarios to discover your own safe spending levels.

The withdrawals feature will help you determine how to best manage withdrawals from savings and easily see your projected annual income and expenses for the rest of your life.

Keep adding details, reconciling your information, and stay on track for a secure future.

2. Understand the real risks to your future security (and plan for them)

Man using laptop and calculator to plan finances
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Research from Transamerica found that concerns about running out of money, the viability of Social Security and not being able to afford health care are the three biggest retirement fears.

Other factors that might put your financial security in jeopardy include inflation, unstable economic markets, unforeseen emergencies, forced retirement, falling home values, an environmental disaster, a catastrophic health event or perhaps even an unpredictable pandemic.

There is a lot about the future that we can’t predict, but that doesn’t mean that you can’t plan!

3. Get reassured by a financial adviser

Female Investment Adviser and Client
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Have you ever sold a house before? Did you try to sell it on your own, or did you seek out an experienced professional who sells dozens of homes each year? Most people probably went with the experienced Realtor.

Why? It’s simple. You were attempting to make a transaction with the largest asset you had at the time, and it wasn’t worth the risk of getting it wrong.

As you’re nearing retirement, you want similar reassurances. Talking with a financial adviser can definitely ease your concerns about whether or not your nest egg will last as long as you do — however long that turns out to be.

Additionally, a financial adviser can help you optimize your wealth by assisting with:

  • Retirement fund management
  • Mortgage advice
  • Insurance recommendations
  • Tax help
  • Investment risk
  • Estate planning

Explore questions to ask a financial adviser.

4. Adopt the ‘right’ kind of spending

Happy older couple
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Money is everything — at least, that’s what you might have thought when you were young. That’s why you scrimped and saved! You figured that money would give you security, create options and maybe even give you some happiness.

Well, while that’s not too far off, it’s not entirely true. Money, all on its own, doesn’t really do that much for us. It’s what we do with that money that might lead us toward happiness.

Let’s say you had $100,000 in excess cash that you could do whatever you wanted with, no strings attached. And, if you lost it all, it wouldn’t affect your life whatsoever.

So, you decide to buy a Ferrari 360, some say the most beautiful car on the planet. The thrill is immediate: the vibration of the engine, the way it just grabs the road around those tight corners, the smell of European leather. All sensational.

But you know what? It probably gets old after a while. No matter how exotic that car is, the story is still the same. It’s awesome when you drive it — experience it — but owning it can become an expensive burden.

If you can shift your spending from ownership to experiences, spending your nest egg becomes fun and meaningful instead of a retirement fear.

It’s not about fast cars, it’s not even about big houses — it’s about experiences and making memories.

It’s about having the time to do the things you’ve always wanted to do, not buying all the stuff you always thought you’ve wanted.

Countless studies have shown that people are far more satisfied — in the present and in the long run — when they purchase experiences than when they buy objects.

When you spend your money on memories, you’ll stop thinking about your dwindling retirement and you’ll actually start living your life the way it was meant to be lived.

Thomas Gilovich, a psychology professor at Cornell University, has studied the question of money and happiness for over two decades. He explains, “We buy things to make us happy, and we succeed. But only for a while.”

He continues, “Our experiences are a bigger part of ourselves than our material goods. You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless, they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”

Think about “120 Big Ideas for What to Do in Retirement.”

5. Guarantee your income with a lifetime annuity

Benjamin Franklin smiles on a $100 bill because he is providing passive income
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All right, that was poetic and all, but let’s come back down to reality. It’s still freaky to spend money that you’re not actively earning.

A lifetime annuity is an insurance product that allows you to pay a lump sum and in turn, receive a guaranteed monthly paycheck — for life.

In other words, if you have $250,000 and you’d like to receive a set payment each month instead of stressing about what investments to make that won’t go up in smoke and will return your desired income, then you could buy an immediate annuity and receive say, $1,000 a month. (The actual amount differs for everyone. Use a lifetime annuity calculator to determine your income.)

The consistent income might be just enough to ease your tensions about your retirement. It was difficult to know how long your nest egg would last when viewed as a whole, but now that you have a set $1,000 coming in with your Social Security money, maybe you can see this working.

The downside of lifetime annuities is that they are not designed to offer you stellar returns on your money. They are supposed to alleviate retirement fears and provide peace of mind.

Explore the pros and cons of annuities.

6. Don’t let the money shrink

Investing mistakes
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This is easier said than done, but it is absolutely possible. Many retirees manage to increase their wealth after retirement instead of spending it down. Review advice from a retiree who had more savings at age 80 than when he first retired.

If you already have it in your mind that you’d like to leave a hefty inheritance to your children and grandchildren, then this option might just suit you perfectly.

On average, the stock market has earned approximately 7% per year since the early 1900s. But there have been many ups and downs over the last 100 years and now that you’re nearing retirement, you need more certainty about returns than before. I imagine you’ll be on the search for some safer investments that yield between 3% and 5%.

According to many investment professionals, withdrawing from your nest egg at a rate of 4% is one way to help ensure that you will still have money at your death.

It’s not a hard-and-fast rule. Some argue that 4% is too much, and some say it’s too little. They may both be right because everyone has different circumstances, and no one can predict what the stock market will do. Learn about problems with the 4% rule.

Regardless, if you’re fearful that you’re going to run out of money in retirement, then you could simply withdraw a percentage that is less than your average rate of return on the money.

That way, you’ll have comfort in the fact that you’re being ultra-conservative with your precious nest egg.

Find “18 Ideas for Lifetime Wealth and Peace of Mind.”

7. Trading money for an even more valuable asset

Time is Money
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What’s more important than money? Family, friends, experiences. But what’s even more important than that?

As the story often goes, a man lays on his deathbed with only a few more minutes to live. He knows it, his family knows it, but there’s nothing that anyone can do about it. What is the one wish of that man?


He thinks of opportunities missed, memories forgone, and precious time that was simply wasted. If only he could have it all back.

When it comes to retirement, don’t get scared away. Embrace it. You’ve worked all your life to get to where you are today, and now you have the chance to buy the world’s more valuable asset — time.

It’s the one purchase you’ll absolutely never regret.

Explore eight ways to shift your retirement perspective for a happier future.

8. Have a purpose

A retired couple celebrates their freedom by taking time to enjoy the sunshine and fresh air outdoors
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For most of your life, earning money has been a key purpose. In retirement, you need to make sure you have a new reason to get out of bed every day.

And, by adopting or acknowledging a new type of purpose for retirement, it will be easier to spend your money.

You want a reason to do something, not a reason not to do something. Explore “6 Ways to Find Meaning and Purpose in Retirement.”

9. Go slow and ease your way into retirement spending

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Time may be what you need to feel comfortable spending in retirement. Research from Age Wave and Merrill Lynch found that it takes retirees about 18 months, on average, to get over feeling uncomfortable about spending money.

Explore some ways to transition into retirement instead of going cold turkey.

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