3 Warning Signs Your Retirement Spending Plan May Be Too Restrictive — and What to Do

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If you’re retired, sitting on a nice pile of cash and happily living a frugal life, this article is not for you. If you’re a retiree with resources that you’re too scared to spend on anything but the basics, read on.

“There are happy frugal people, and there are miserable frugal people who are only living frugally out of fear,” said Pam Krueger, founder of Wealthramp and co-host of MoneyTrack on PBS. “They believe that they will never have enough, that they will always live in scarcity.”

Some of these retirees are so fearful of running out of money, that Krueger compares asking them to quit focusing on saving to “asking a dentist to quit flossing.” Financial experts do agree, though: Spending-averse retirees can loosen the purse strings if a few steps are taken.

“We see this quite a bit,” added Jake Heisler, a certified financial planner with Quaker Wealth Management. “Some of the best savers are some of the worst spenders. They’ve been focused on one thing for so long, it isn’t easy to shift.”

There are, of course, many of us who either are skimping or will need to skimp in retirement, if retirement is even possible.

For those who do have money to work with, here are three signs your retirement spending may be too restrictive and tips on how to break free.

You’re Missing Out On Your Retirement Dreams

Many of us have a sizeable amount of money in our retirement coffers, but we still find ourselves not having much fun. Dream trips are postponed or never happen. Special experiences with grandkids are put off. Hobbies we intended to pursue have never taken flight.

There are many possible reasons for this, including upbringing, past financial difficulties and the economic uncertainties of the day. Krueger said many of these retirees are “not living up, they’re living down, and they’re depressed … it’s very psychological.”

Possible solutions include enlisting the help of a financial pro to talk you through these issues. Krueger believes a strong financial adviser will see a client’s situation through the eyes of the client, help to distinguish between healthy concerns and over-indexed fears and conquer any financial worries that the client doesn’t need.

Heisler agreed and noted that these shifts may take a while. He shared the story of one client, a widow, who announced one day that she was going to take that dream trip after all. Her decision followed two years of financial conversations.

“Most shifts don’t happen overnight,” Heisler said. “These things take time.”

You’re Prioritizing Legacy Over Lifestyle

There’s nothing wrong with wanting to provide for your kids, grandkids or other descendants. It’s possible to go too far though, experts say.

Heisler noted that “legacy” usually makes a good later step instead of a first step. Getting the order wrong can leave retirees’ financial security and desired lifestyle seriously underfunded.

“Some focus on the next generations, making sure the kids and grandkids will have enough,” Heisler said. “They jump over the next steps and go right to the legacy.”

Getting those adult children involved in the conversation can be a good first step to solving the issue. A financial pro may help guide the conversation. In many cases, the younger set will ensure that they’re doing just fine and that one of their biggest hopes is that their parents will spend some of that money and enjoy themselves.

“The kids are often in the best position to initiate the conversation if they see mom and dad living ‘glass half empty,'” said Krueger.

You Have a Financial Plan, and the Basics Are In Place

Even hardened savers living in fear of running out of money may relent, when presented repeatedly with evidence of financial security.

If you’re guarding every cent like Scrooge on Christmas Eve, despite having:

• Enough money to cover your basic expenses (including housing, food, healthcare and transportation)
• Little to no debt
• An ample emergency fund
• A strong ratio of retirement income compared to pre-retirement income (maybe 70-80%)

It may be time to loosen up a bit.

Reminders that you’re in good shape are also important. Ground yourself in your financial plan, and create regular check-ins. If you’re still hesitant to spend, a trusted friend with financial knowledge or a full-on financial pro may be able to provide the nudge you need.

“You’ve got permission to live,” Krueger said, adding that a good financial partner can “prove it to you.”

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