Written by Mark Dennis, Forbes Contributor
In my work as a financial planner and coach, I’ve worked with many financially secure clients, including multimillionaires, who still feel uncomfortable spending even modest portions of their wealth after retiring, despite projections showing they can afford it.
These are not people deciding whether to buy a yacht or make another extravagant purchase. They are typical retirees with common retirement goals: travel, a home improvement or another experience that could meaningfully improve their lives. Still, withdrawing money from accounts they spent a lifetime building felt less like enjoying retirement and more like taking a financial step backward.
Their discomfort may sound surprising, but it is far from unusual. A 2026 survey from Corebridge Financial of 2,210 Americans ages 45 to 79 with at least $100,000 in investable assets found that only 28% were comfortable with the idea of their retirement savings declining to cover living expenses. Among retirees, 38% said they spent less than they wanted to preserve their nest egg.
This does not mean every cautious retiree should simply spend more. Inflation, health care, market declines and a desire to leave a legacy are legitimate reasons to hold back. But another group faces a different problem: They want to spend more, their financial resources support it, and yet spending still feels wrong.
Retirement Reverses the Rules of Financial Success
During our working years, the rules of responsible financial behavior are relatively consistent: saving is good; withdrawing is bad. A rising account balance indicates progress. A falling balance signals danger. Delaying gratification demonstrates discipline and responsibility. Follow those rules for 30 or 40 years and they can become more than financial practices. They become part of how a person defines security, competence and success. Then retirement arrives and reverses many of those rules.
After retirement, contributions may slow or stop. Earned income disappears. Withdrawals become normal. Account balances may decline over time even when the retirement strategy is functioning exactly as intended. A person can understand those new rules intellectually without accepting them emotionally. Watching a retirement account decline may still feel like losing ground, even when the money is being used responsibly for the purpose it was accumulated.
Behavioral finance experts offer one explanation for this: mental accounting. Though dollars are economically identical, people place money into different psychological categories. For example, income in a checking account feels spendable; money in a retirement account feels protected. Research examining retirement spending through the lens of mental accounting suggests these categories influence how retirees use different forms of wealth.
Why Income Feels Easier to Spend
Social Security and pension payments generally arrive as recognizable income. Retirees do not have to decide every month whether to liquidate part of a Social Security benefit. The payment arrives, enters the household budget and is available to pay expenses.
Investment wealth, however, feels different. Withdrawing from a portfolio often requires a series of uncomfortable decisions:
- Is this a bad time to sell?
- What if I need expensive health care later?
- What if I live much longer than expected?
- Will I regret spending this money?
Retirement researcher David Blanchett examined how retirees use different categories of resources, including Social Security, pensions, wages, investment income and retirement savings. His research published in Financial Planning Review found that retirees consumed about 80% of their lifetime income but only about half of other available savings and income resources.
His analysis also found that retirees spent more from qualified retirement accounts after required minimum distributions began. One possible explanation is that money became easier to spend once it was removed from an investment account and reframed as income. The economic value of a dollar does not change when it moves from an individual retirement account to a checking account. Its psychological meaning, however, can.
Projections Show Capacity — Not Permission
A retirement projection can estimate whether a spending level appears sustainable under a particular set of assumptions. It can model investment returns, inflation, longevity, taxes and other variables. It may show that a retiree can afford additional discretionary spending while maintaining an acceptable financial margin.
But the projection may not answer the practical and emotional questions many retirees face:
- How much should I transfer each month?
- Which account should provide the money?
- What happens after a poor investment year?
- How will I know whether the strategy remains on track?
The probability of success stated in a financial planning report is an abstract result. Retirees still see actual dollars leaving their actual accounts. This may be why having a well-defined spending strategy appears to matter. In the Corebridge Financial survey, 55% of retirees with a specific spending strategy reported being highly confident in their ability to manage investments and spending throughout retirement. Only 29% of retirees without a spending strategy reported the same level of confidence.
Correlation isn’t causation here, but the pattern supports a practical conclusion: A plan is easier to follow when it includes explicit operating rules.
Behavioral Tools That Make Spending Feel Safer
Behavioral finance is often presented as a catalog of financial mistakes. Investors chase performance, react emotionally to losses and rely on mental shortcuts. But these same principles can also be used constructively. For instance, a behaviorally informed retirement-income system can make responsible spending easier without encouraging reckless consumption. We can use the following steps to create a workable retirement income strategy:
- Define what the money is intended to accomplish. Instead of treating the entire portfolio as one protected nest egg, retirees can identify which resources are intended for lifetime spending, emergencies, health care, family support and legacy goals. This does not change the value of the money, but it gives each portion of wealth a defined responsibility.
- Create a retirement “paycheck.” A planned monthly transfer from an investment account to a checking account can reduce the need to authorize and agonize over every individual investment distribution. The transfer should be based on a reasonable retirement analysis and reviewed regularly. Automation changes the decision environment, not the underlying investment risk.
- Establish a discretionary spending allowance. A retirement plan can identify an amount available for travel, hobbies, family experiences, home improvements, or other personally meaningful goals. That amount is permission, not an obligation. No one improves retirement by buying things simply because a financial projection says that more spending is possible.
- Separate reserves visibly. Retirees may become more comfortable using designated spending assets when emergency, health care, and other contingency reserves have been identified separately. Once uncertainty has an assigned place in the plan, the entire portfolio does not have to function as an emergency fund.
- Establish adjustment guardrails. A spending strategy can identify in advance what would trigger a review or reduction. It can also specify the circumstances under which spending may continue or increase. Predetermined rules allow prudent caution to remain part of the strategy without permitting every market fluctuation to become a financial emergency.
- Predictable lifetime income may also play a role. Social Security and pensions already provide an income floor for many retirees. Some households may consider exchanging a portion of their assets for additional lifetime income through an appropriate annuity arrangement.
That choice involves meaningful tradeoffs. Annuitization exchanges capital and liquidity for contractual income and may affect inflation protection, legacy objectives, and financial flexibility. It is one possible income-framing tool, not a universal solution. Scheduled portfolio transfers can create a retirement paycheck without annuitization, although they do not transfer longevity or investment risk to an insurer. The larger lesson is not that every retiree needs a particular product. It is that the way retirement wealth is organized and delivered can influence whether that wealth feels “safe” to spend.
Spending Less Isn’t Always a Problem
Retirement spending often declines with age. Research by Michael D. Hurd and Susann Rohwedder, based on Health and Retirement Study data collected from 2005 through 2019, found that inflation-adjusted spending after age 65 declined at average annual rates of approximately 1.7% for single households and 2.4% for couples. The declines occurred across initial wealth levels. That pattern does not necessarily indicate a problem. Health, mobility, interests, household composition, and desired activities change over time. Some retirees are genuinely content spending less. It is therefore important to distinguish among three forms of spending restraint:
- Necessary restraint: The household’s resources do not support additional spending
- Intentional restraint: The retiree genuinely prefers greater reserves, flexibility, charitable giving, or a family legacy.
- Unwanted restraint: The retiree wants to spend; the plan supports it, but fear or habit prevents the choice.
The objective is not to persuade retirees to consume more. It is to help them use money consistently with both their financial capacity and their actual priorities. For financially prepared retirees who remain reluctant to spend, one question may be especially revealing:
“Am I preserving this money for a defined purpose, or am I preserving it because spending still feels wrong?”
A sound retirement strategy should protect against foreseeable uncertainty. It should also provide a practical way to fund the retirement the household spent decades preparing to enjoy. A retirement plan is not successful merely because the money lasts. It is working when the money responsibly supports the life the retiree intended it to fund.
