The Psychology of Spending in Retirement: Why You Might Hoard Instead of Enjoy

For decades, you’ve worked, saved, and planned for retirement. You were disciplined. The financial cushion you built is designed to last because you skipped luxuries, invested wisely, and built it from scratch. After retiring, though, you don't use the money because you’re afraid to spend it.

It’s not unusual for that to happen. For many retirees, saving is easier than spending. After all, it can be very difficult to switch into “decumulation mode” after years of accumulation. As a result, retirees, even those with large nest eggs, can experience anxiety, guilt, and uncertainty every time they swipe a card or make a travel booking.

So, why is it so hard to enjoy the money you’ve saved for decades? Well, let’s take a closer look.

The Root of Retirement Spending Anxiety

Often, this reluctance to spend isn’t caused by a lack of funds; instead, it’s caused by ingrained psychological patterns and deep-seated fears.

Deeply Ingrained Habits

When you’ve worked hard for more than 30 years to live below your means, save diligently, and prioritize future financial goals, spending can feel like a profound betrayal.

The thing is, frugality isn’t just a strategy. Eventually, it becomes a core part of your identity. When the financial imperative to save rigorously is gone, the powerful habit still remains, questioning every expenditure.

Your Income is not Guaranteed

According to researchers, both single and coupled households experienced an annual decline in real spending after age 65 at about 1.7 percent and 2.4 percent, respectively. This isn’t always because they have to, but because they feel compelled to do so. Regardless, it’s a significant number, representing people who have been saving diligently for decades but struggle to enjoy the fruits of their labor.

The problem is especially acute among retirees who rely on personal savings. It has been shown that those with guaranteed income sources, such as Social Security, pensions, or annuities, are more likely to spend with confidence. With more retirees depending on their savings, the number of “decrease spenders” is expected to increase.

Fear of Running Out

Many retirees fear outliving their money. Despite meticulous financial projections, the future remains unpredictable. Inflation, market uncertainty, and the ever-present threat of escalating healthcare costs can make even the most robust portfolios feel vulnerable. In fact, an Allianz Life study found that 64% of people worry more about running out of money than dying.

Often, we spend too cautiously, or don’t spend at all, in an effort to safeguard ourselves from uncertainty.

Loss of Income Identity

For your efforts and hard work, money “coming in” was a direct, tangible reward. As a result of your active earnings, spending felt justified. During retirement, the dynamic changes dramatically; money does not come in as regularly as it did while you were working.

In some cases, this fundamental change makes spending unjustified, irresponsible, or even unsustainable since it is not possible to replenish finite resources.

Cultural Conditioning and Scarcity Mindset

If you grew up in economically turbulent times or were raised on values like “save for rainy days,” “a penny saved is a penny earned,” or “don’t waste money.” Although there is no logical financial reason to hoard or hold back money, these beliefs can instinctively trigger feelings of guilt or anxiety.

In other words, it’s a scarcity mindset that persists long after the actual scarcity no longer exists.

Loss Aversion

Almost everyone experiences loss aversion, the concept that we feel loss more acutely than gain. Age, however, often intensifies the condition. In older investors, there is less time to recover financially from major financial setbacks, so they are more cautious with their money.

This includes the sequence of returns risk, or the danger of experiencing negative market returns early on. When you withdraw from your investments while they are losing value, you must sell more to meet your spending needs. The result is that your nest egg depletes faster, leaving fewer assets to participate in market rallies.

When Caution Becomes Counterproductive

It’s okay to be cautious. Excessive fear, however, can rob retirement of its purpose: freedom, enjoyment, and peace of mind. If your wealth exists solely on paper, not used for experiences, support, or joy, what was the point?

Here are a few signs that your caution is turning into anxiety;

• Even though you can easily afford vacations, upgrades, and home repairs, you don’t.
• “Splurges” under $100 stress you out.
• Although you have ample funds, you decline activities with family and friends due to cost.
• After buying something enjoyable for yourself, you feel guilty.

Does this sound like you? If so, maybe it’s time to change your mindset, not your portfolio.

6 Practical Mindset Shifts to Help You Enjoy Your Money

It takes intention and a shift in mindset to let go of survivor’s remorse in retirement. When you switch from saving to spending after decades of careful planning, it can feel uncomfortable. But money isn’t just for safety. It’s for living. To help you spend confidently and joyfully, here are six practical shifts:

1. Reframe Spending as a Return on Investment

It’s more than just a safety net. Your savings are the reward for your discipline and hard work. Experiences, home improvements, and memories made with loved ones are all returns on investment.

You didn’t just save for protection; you saved for freedom, the freedom to decide how you spend your time and energy. Ask yourself: What is the definition of a valuable return at this stage in your life? Do you want peace of mind, comfort, connection, or joy? Spend in alignment with those values.

2. Build a Flexible Spending Framework

Ambiguity breeds fear. When you’re not sure whether your money will last, it’s difficult to enjoy spending it.

To estimate a sustainable withdrawal rate based on your goals and life expectancy, consult a trusted advisor or use reliable financial tools. Next, divide it into monthly or category-based budgets, including:

• Estimate your life expectancy and financial goals to determine an annual withdrawal amount from your portfolio.
• Make your annual budget more manageable with monthly or category-based spending budgets (e.g., travel, hobbies).
• Set aside a discretionary fund for fun, a budget dedicated explicitly to guilt-free indulgences.

When your financial structure is transparent, well-defined, and flexible, you can spend within established guidelines without constantly worrying about “messing things up.”

3. Practice Value-Based Spending

Instead of asking “How much does this cost?” ask “How much joy or meaning will this bring?”

For example, a $5,000 trip with grandkids might be more valuable than a shiny new appliance. Giving to a cause you care about can feel far more fulfilling than watching your account grow. With value-based spending, you can use your money to live your values rather than just accumulate more of them.

Try writing down 3 — 5 core values you want to live by in retirement, such as family, wellness, adventure, learning, and contribution. Whenever you make a big purchase, ask yourself, “Does this align with any of these values? ”

4. Create “Permission Slips” for Joy

Giving yourself explicit permission to splurge can prevent guilt from creeping in. Reminders like these help retirees overcome the scarcity mindset:

• “I’ve earned this vacation — it’s part of my plan.”
• “Spending on my well-being is a smart investment.”
• “Joy is a valid use of my money.”

When repeated intentionally, positive self-talk can rewire old beliefs and help you feel safe when you spend.

5. Test-Drive Enjoyment With Small Experiments

You don’t have to go all in on lavish expenses. Instead, ease into enjoyment with small “spending experiments.”

• Spend one night in a hotel that is a little nicer.
• Order the premium wine or artisan coffee.
• Fly in style with an upgraded seat.
• Treat a friend or family member without overthinking it.

Notice how it feels. If it brings you joy or ease, let it build your confidence — as long as it does not jeopardize your financial plan. By gradually increasing your comfort level with spending, you will gradually be able to spend more.

6. Talk About it — Even the Awkward Stuff

It’s common for anxiety to thrive in silence and isolation. You can break the cycle by opening up and discussing your fears with a friend, therapist, or, crucially, your financial advisor. Having a shared vision of what this important chapter of life could be, and how money fits into that vision, is imperative if you have a spouse or partner.

As a result of candid conversations, you can surface hidden fears, challenge long-held beliefs, and find common ground about what it means to “enjoy retirement” together. It is also possible to obtain external validation and practical strategies through professional guidance.

What Does “Enjoying” Your Money Really Mean?

“Enjoying” your money doesn’t necessarily mean buying flashy things, taking lavish vacations, or spending extravagantly. Instead, it could mean;

• Providing support. Giving your adult children a down payment, funding your grandchild’s education, or donating to an important cause.
• Buying time and convenience. Having someone do chores, home maintenance, and errands so you have more free time.
• Investing in personal growth. Enroll in classes, purchase tools, or fund hobbies that spark your curiosity.
• Enhanced experiences. Traveling without budget anxiety, with fewer compromises, and with more comfort.
• Philanthropy. Supporting local causes, scholarships, and community projects that align with your values.

Rather than spending big, spend consciously — in ways that enhance your well-being, align with your values, and fulfill your vision for this liberating chapter.

Final Thoughts: You’ve Already Done the Hard Part

You came up with the plan. Savings were made. It’s your right to use it.

There is a learning curve involved in letting go of scarcity. Allowing yourself to live a full, meaningful life now doesn’t mean throwing caution to the wind.

It’s not important to die with the most money. Living with purpose is the goal.

Image Credit: landsmann; Pexels

Learn more about planning for retirement.

This article was written by John Rampton from Due and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.