The number one concern for most people approaching retirement age is that they will run out of money. It is such a great fear amongst individuals and families that many people actually deprive themselves of the number one objectives they had for retirement. Having fun!
When you are working 40, 50, or 60 hours a week and raising a family, you often dream about what you will do when work is optional. You daydream about taking the vacations to destinations you have never seen like Australia. You ponder the idea of spending three months sitting beachside and purchasing that cool convertible you always wanted your whole life. So, what’s stopping you? It isn’t the kids. It isn’t the work. It isn’t the weather. Why is it so hard for retirees to enjoy the money they saved for that very purpose of enjoying when work becomes optional?
Without proper planning (and even sometimes with proper planning), the fact is that most retirees simply become paralyzed by the fear of running out of money. Think about it. When you have been saving money and watching it grow for 30 or 40 years, the notion of spending money is a new skill that you’ll need to learn. And it isn’t easy at all training the spending muscle.
It’s really hard emotionally to see the account values of your brokerage accounts, IRA’s, or 401(k) go down which is why most retirees ask the question of how much interest they can earn off their accounts. The moment a retiree sees their account values go down, they will begin to shrink their spending which is the main reason having a financial plan is paramount to making a successful and happy transition financially into retirement.
Consider these few final tips and thoughts. After six months of spending money in retirement, did your checking/savings account go up or down? This is a good barometer of what’s actually happening with your money. Have you considering what you are planning to leave to your kids down the road? If the answer is whatever is left over, then you should really start spending today. It will be harder than you think to spend all of your money especially if you have a pension. Last, don’t deprive yourself. If you haven’t been able to enjoy a few of the finer things in life, now is your time to start spending some money in retirement.