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Many retirees struggle with the idea of spending down their retirement accounts, often opting to hoard their savings instead. This can be a common problem among retirees, but there are several reasons why they may choose not to spend down their retirement funds.
One of the main reasons retirees don’t spend down their retirement accounts is fear of running out of money. Many retirees worry about how long their savings will last, especially as they age and face rising healthcare costs. As a result, they may opt to hold onto their savings as a safety net, rather than spending it on things they enjoy.
Additionally, retirees may simply not know how to properly budget their retirement savings. After spending years saving and accumulating wealth, it can be difficult for retirees to switch gears and start spending their money. They may feel overwhelmed by the choices they have to make in terms of what to spend their savings on, leading them to opt for the safety of keeping their money in their accounts.
Another reason retirees may not spend down their retirement savings is a desire to leave a legacy for their loved ones. Many retirees want to leave behind an inheritance for their children or grandchildren, and as a result, they may choose not to spend their savings in order to pass it on to future generations.
Furthermore, retirees may be hesitant to spend their retirement savings due to a lack of confidence in their financial situation. They may be unsure of how much money they actually have, how much they can safely spend, and what their financial needs will be in the future. This uncertainty can lead retirees to err on the side of caution and keep their savings untouched.
While it’s important for retirees to be mindful of their financial situation and plan for the future, it’s also important for them to enjoy their retirement years and spend their savings on things that bring them happiness. Retirees should consider working with a financial advisor to develop a comprehensive retirement plan that takes into account their financial needs, goals, and desires.
Ultimately, retirees should find a balance between preserving their savings for the future and enjoying their retirement years. By addressing their fears, seeking guidance from financial professionals, and creating a spending plan that aligns with their goals, retirees can find peace of mind and make the most of their retirement savings.
I get scared when I think about retirement. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you weren't to blame for.it's especially difficult for people who are retired.
This just means that we are not making retirees pay enough of their share of the overall healthcare burden. Hip replacements for senior citizens engaging in extreme sports like "walking to the mailbox" are very expensive.
I hope to grow my retirement nest egg while in retirement as a hobby. My wife and I will be just fine living on our SS and my company pension. So when I do have to make mandatory withdrawals from my retirement accounts, I plan on buying tax liens on properties. I'm not retired yet, but I've done it before and ended up with a nice little; a quarter acre; piece of property in central Florida for total costs of 500 bucks, This was about a decade ago, and I've been paying taxes on it ever since. The yearly real estate taxes started out at around 35 bucks or so, but over the decade have almost doubled to $67. I get letters all the time from different people who all must've watched the same video bc they all tell me a similar story, then they offer to kindly take the property off my hands for what they all tell me is a fair price of anywhere between three and six thousand bucks as long as I sign a paper that states my intentions in the next couple of weeks.
I don't plan on doing this more than a couple hours a week'because I am retired; only in states where they let you do it online; I'll either get my money back withe a decent interest rate, or I'll get the propery. Not a bad deal if you ask me. Then I'll turen around and let those form letter writers have the properties for about ten times what I paid in taxes to own it, or the owner will pay me back for the taxes that I paid plus interest.
We save and save and worry and worry and we worry when things go bad and worry when things are going too good. When l die , l want to spend my last six hundred dollars on tipping my pall bearers , have a beer on me.
Josh,
It's about peace of mine. I would rather leave my kids a pile of money then run out of money even though I drought my kids will need the money. I also recognized that I got more joy buying my first car for $550 when I was 16 then I did buy a new high-end car when I was 56.
I retired in Feb 2022, just when the stock market tanked and inflation got hot. Instead of drawing out the 4% i planned for, we drew out only what we needed to live. And we learned that we have been quite content with that. Yes, our retirement accounts are way up since then, probably 20%.
Maybe they like doing physical activities and want to leave money to their kids. I certainly do. I'm 75 years old and still work. I like to make money. I'll probably live to 95 (my parents did). So I'll have years to do nothing. Long live inter generational wealth!
I lost so much in my 401k from Vanguard doing their investing with it I changed to safety and manage my own. I don’t trust them and have lost out on gains – I know they say stay the course but when you watch your money drop like that and it takes me so much time and such a struggle to invest vs pay off my house ( which will be paid off in two years) so I can retire quicker, I can’t bring myself to let anyone invest it. I know it’s dumb. I just can’t stand watching the little bit I have go away. I have four years left to work. I get a 5% match from employer, and I invest 8%. I wish I could make a good chunk in the next four years. I still have a car to pay off as well but no credit card debt. In retirement I plan to use social security and pensions but only take a small withdrawal each month from my 401k.
Thanks Josh, I wrote this paper when I worked at BlackRock.
What’s all the words about spending , Spending never gives me any juice , I guess if it make you feel good spend they should spend
Vast majority of retirees tighten their financial belts and spend LESS once they quit working….it isn't rocket science! The Suze orman's of the world are spewing falsehoods about needing 80% of your pre-retirement income to maintain your lifestyle in retirement….this is ludicrous! Unless your dumb enough to retire in CA or NY!! Haha
Because we're terrified of going broke. Absolutely terrified. We're all just trying to survive in America. There is no safety net. It's economic Darwinism and we will do whatever we can to survive.
I for one totally understand this & the findings. Finding #3; It's me ! we live quite comfortably on our SS + a very small withdrawal from my IRA's. We RV & go where we want; when we want. Not big on eating out; but we can & do when we want. We've always been financially conservative & its afforded us a non stress retirement.
I am 61, single, no kids and good health and plan to retire later this year at 62. I have $980,000 in retirement savings and ZERO debt with projected monthly income in retirement needing to be about $3800. I think I should be ok. Still undecided as to when to take SS though.