The Retirement Newsletter: Moving from saving to spending
Issue Number: 177 (30) — changing your money mindset
Welcome
In issue 177 (30) this week, I look at a money problem many retired people experience: moving from a saving to a spending mindset.
Moving from saving to spending
I am not a financial advisor. I am writing about what I have read over the years about money and retirement. This is not financial advice.
One idea I kept coming across in reading about retirement was that retirees need to move from a saving to a spending mindset. I hadn’t thought about this change, and I must admit I am struggling with making the move.
Saving for your retirement
I was rightly told that I needed to save for my retirement, and there were many reasons to do so:
Income Replacement: We stop getting paid once we retire. Hence, we need some income replacement, usually from our pensions and savings.
Uncertain Future of Social Security/State Pension: Growing up, I saw my relatives struggle to live on the UK State Pension. There was always talk of the State Pension no longer being available or worth so little that I would need a private pension when I retired. I would struggle to maintain my lifestyle without savings and a private pension if I only had a State Pension. I am so glad I developed the savings habit — my only regret is that I didn’t develop it earlier.
Avoiding Dependence: Without retirement savings, you may need to rely on family, friends, or charity for financial support — not a good position. By saving for retirement, you can maintain independence and avoid becoming a financial burden.
Unexpected Expenses: Life is unpredictable, and emergencies such as health issues, home repairs, or other financial shocks can happen in retirement. A solid savings cushion ensures you can handle these unexpected costs without compromising your long-term financial security.
While working, I pumped as much money as possible into my pension and savings. It was tough going, and it became a habit. I am so glad that I made the effort.
Spending in your retirement
After many years of being in savings mode, I am finding it difficult (if not impossible) to switch to a spending mode.
I am lucky to have a monthly income from my employer’s pension scheme. I put as much money as I could into the scheme, and while my pension is not as good as it would have been if the scheme hadn’t been eroded over the years, it is enough to live on. It covers my day-to-day expenses and a couple of holidays a year. So, for me, retirement feels like I have taken a pay cut.
The problem is that I cannot bring myself to take money from my savings pension pots.
The other month, I wondered how I was getting through my pension income so quickly. I discovered I was still running three automatic monthly debits into different pension savings schemes. I can’t break the habit. I have spent years building up my savings, and I have enjoyed seeing the numbers in the account go up. To see them start going down will be heartbreaking.
Why is the move from saving to spending needed?
There is a need to move from saving to spending in retirement, and the biggest argument for doing so is that — YOU CAN’T TAKE IT WITH YOU.
OK, you can leave your money to your kids or a worthy cause, but you have worked all your life to build up the cash in your accounts, so why not enjoy it?
I am not suggesting that I go mad and splurge on big-ticket items such as boats and cars (all of which have hidden recurring expenses). But I need to start spending (carefully) on experiences — holidays and adventures — things with no recurring payments. That is, spend on things that make me happy and build memories, not items that will clutter my home and have hidden costs.
Transitioning from saving to spending will also be necessary to replace lost income and meet essential living expenses. However, spending savings is also about enjoying retirement to the fullest.
We have earned it, we have saved it, and now it’s time to spend it!
What about you?
How have you handled your transition from saving to spending in your retirement? Do you think such a transition is necessary? Please share your stories in the comments below.
Please note I am not a financial advisor. I am writing about what I have read over the years about money and retirement. This is not financial advice.
This week in the Retirement Hustle
In The Retirement Side Hustle this week, I looked at how I edit faceless videos. The video newsletter is a follow on from:
In the new video newsletter, I again show how to record a faceless video and then demonstrate two ways of editing it: the traditional video cut and splice and text-based methods.
The Retirement Side Hustle Newsletter is subscription-based. However, each video comes with a free minute or so that allows you to confirm the content, and if you take out a free subscription, you get full access to one edition.
Travel — Nostalgia Corner
This week, more stories from visits to waterfalls near Luang Prabang, Laos.
Laos — Tad Sae Waterfalls (ຕາດແສ້), Luang Prabang (ຫລວງພະບາງ/ຫຼວງພະບາງ), Laos — part 1 of 4 — Time for some more waterfalls.
Laos — Tad Sae Waterfalls (ຕາດແສ້), Luang Prabang (ຫລວງພະບາງ/ຫຼວງພະບາງ), Laos — Elephants at the Falls — part 2 of 4 — There is an elephant in the pool!
Laos — Tad Sae Waterfalls (ຕາດແສ້), Luang Prabang (ຫລວງພະບາງ/ຫຼວງພະບາງ), Laos — Jumping the Falls — part 3 of 4 — Jumping the falls — would you jump?
Laos — Tad Sae Waterfalls (ຕາດແສ້), Luang Prabang (ຫລວງພະບາງ/ຫຼວງພະບາງ), Laos — the hike to the top — part 4 of 4 — A strenuous hike and on which I got lost, but it was worth the effort.
Next week, stories from some more time in Luang Prabang, Laos, and a ferry across the Mekong River to explore the village Ban Xieng Man, Luang Prabang (ຫລວງພະບາງ/ຫຼວງພະບາງ/), Laos.
Next week
I have been on holiday the last two weeks, and in next week’s issue, 178 (31), I ask why I still get post-vacation blues when I’m retired.
Thanks
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Until next time,
Nick
PS: If you would like to contribute a story, give advice, or provide anything else to the newsletter, please get in touch.
Please note: I am not a financial advisor. When I write about money and financial matters, I base my opinions on what I have read about money and retirement over the years. IT IS NOT FINANCIAL ADVICE.