Why we wrestle with the shift from saving to spending

There are a couple of reasons why retirees might find it hard to switch from saving to spending:

• Fear of running out: People understandably worry they might outlive their retirement savings, especially with uncertainties like healthcare costs or market downturns. This fear can be paralyzing and often leads to folks holding onto their money too tightly.

• Habit and mindset: For many, saving becomes ingrained. They might feel a sense of security in a growing nest egg, even if it means sacrificing some enjoyment in the present. Saving can become a virtue in and of itself, rather than a means to an end.

• Loss of regular paycheck: Retirement can mean a shift from a steady income stream to managing your own personal pension. But this is as much a psychological adjustment as a financial one and often makes retirees feel less free to spend.

These anxieties are common, but there are strategies to contextualize and address them to develop a healthy spending plan in retirement.

However, they also point to a universal human struggle that‘s observable from a young age: the difficulty balancing between present and future enjoyment.

A keen observation of this tension and its natural consequence came from an unpublished short story, “An Interview with God” by James J. Lachard (the pen name of English writer, James “Jim” Brown). This quote made the rounds on social media in 2011 but was (and still is) misattributed to The Dalai Lama.

When God is asked what surprised him most about mankind, he said:

“Many things.”

“That they get bored of being children, are in a rush to grow up and then long to be children again.

That they lose their health to make money and then lose their money to restore health.

That by thinking anxiously about the future, they forget the present, and live neither for the present nor for the future.

That they live as if they will never die, and die as if they had never lived.”

Life is often a struggle, and we are certainly in a privileged position to have even a measure of choice in navigating these tradeoffs. Yet, even when we have a financial choice, our will to implement change is still compromised.

My work often entails laying out the financial paths that folks can choose from given their resources. I help translate the complexities of the tax code, stock market, and risk management into understandable terms. Yet, on a deeper level, we all wrestle with the same question of how to spend (or save) our limited time, money, energy and attention.