You spent decades saving for retirement. You contributed to your 401(k), invested, paid the bills, raised a family, hopefully paid down some debt, and tried to make smart decisions along the way. The whole idea was that someday you would have enough money to stop working and actually enjoy it.
Then retirement gets closer and something interesting happens. After spending 30 or 40 years saving money, suddenly you’re supposed to start spending it. And for a lot of people, that’s much harder than they expected.
I see this all the time. People don’t usually come right out and say, “I’m afraid I’m going to run out of money.” Instead, it comes out in other ways. They put off the big trip they’ve always wanted to take. They keep driving the car they really don’t like anymore. They hesitate to help their kids or grandkids even though they’d love to. They agonize over purchases they can probably afford. Or they find themselves constantly saying, “Maybe I should wait. I might need that money later.”
Of course, there’s nothing wrong with being careful with money. In fact, being careful is probably one of the reasons you have retirement savings in the first place. But there’s a difference between being financially responsible and being afraid to spend because you don’t know what you can afford.
And I think that’s a really important distinction.
For most of our working lives, we’re taught to accumulate. Save more. Invest more. Don’t touch the retirement accounts. Prepare for the future. Then retirement arrives and we’re expected to flip a switch and start drawing money out of those accounts. Your paycheck may be gone, the stock market is still going to go up and down, healthcare costs become more important, and none of us knows whether we’re planning for another 10 years or another 30.
That’s why I think a good retirement plan needs to answer more than, “Do I have enough money to retire?” It should also help answer, “How much can I comfortably spend and still be okay?”
If you’re approaching retirement or already retired, here are three questions I think are worth asking yourself.
What would make you feel financially secure 10 or 20 years from now?
Before you start thinking about account balances, think about what financial security actually means to you. Maybe it’s knowing you can stay in your home for the rest of your life. Maybe it’s having enough money set aside for healthcare. Maybe you want to know you’ll never have to depend financially on your children. Or perhaps security means being able to travel, help your family and still know there will be plenty of money there when you’re 85 or 90.
We tend to talk about retirement security as if it’s a number, but I don’t think it is. It’s a feeling, too. Two women can have exactly the same amount of money saved and feel completely differently about it. Until you understand what makes you feel secure, it’s difficult to build a retirement plan that actually gives you confidence.
What are you not doing today because you’re afraid you might need the money later?
This might be the most revealing question of the three. Is there something you really want to do but keep putting off because you’re worried about spending the money? Maybe it’s that trip you’ve talked about for years, a new kitchen, a different car, taking the whole family somewhere special or even just spending a little more on yourself without feeling guilty about it.
Then ask yourself another question: Am I saying no because I truly can’t afford it, or because I don’t know whether I can afford it?
Those are two very different things.
Sometimes the issue isn’t that you don’t have enough money. It’s that no one has helped you understand what your money can realistically support. And without that clarity, the safest answer always feels like “don’t spend it.”
What would you need to know to give yourself permission to enjoy your money?
Maybe you need to see what happens if the market drops 20%. Maybe you need to know how much income your investments can reasonably provide each year. Maybe you’re worried about healthcare or long-term care. Maybe you need to understand what happens if you live to 95. Or maybe you simply need to see, in black and white, that you can spend some of this money and still be okay.
That’s one of the things I think retirement planning sometimes gets wrong. We spend so much time talking about accumulation, rates of return and how much someone needs to retire that we forget why they accumulated the money in the first place.
Your money has a job.
I’ve always said that your money is the vehicle. Retirement is the destination. The point of accumulating money isn’t simply to die with the largest possible account balance. It’s to create security, choices, freedom and the ability to live the life you worked all those years to have.
That doesn’t mean spending recklessly. You still need to plan for inflation, healthcare, taxes, market downturns and the possibility of living a very long life. But there’s a big space between spending too much and being afraid to spend anything at all.
A thoughtful retirement plan should help you find that space. It should give you enough confidence in your future that you can actually enjoy some of your money today.
Because the goal isn’t simply to make your money last for the rest of your life.
It’s to make sure you’re living during the rest of your life, too.
