Looking from the outside it would be easy for people to think that being able to go from being a mode of saving and building up assets to suddenly beginning to draw from those assets once retired would be an easy one.
However, over the years of working with people navigating this transition I have found this to be much more difficult. As Bill Perkins (author of the book Die with Zero) states ‘it’s hard to teach an old household new rules’.
Your first thought might be that my challenge is reigning people in and discoursing them from spending for fear of running out. That is sometimes the case, but less common than you might think.
For most people they have developed some form of system to saving money and building wealth by living below or within their means. This has served them well because they are then in the position to benefit from this at some point but changing that system can be hard.
The more technical term for this is Frugality Intertia which is the psychological resistance to shifting from the habit of saving to a phase of spending even after financial goals have been achieved.
The difficulty is being able to challenge ourselves and be willing to make a change in mindset, as well as thinking about what the money is actually for.
So how can you potentially do this?
The first thing, which we do with every client is financial forecasting and appropriate stress testing. This gives the best guide that we can think of when it comes to giving clarity and easing concerns. The finance geek in me loves running different scenarios, so we are happy to run multiple scenarios and tests (within reasonable bounds) to put your mind at ease. The common ones we are asked about concern financial market falls, unexpected costs and the impact of care costs. This can help give some peace of mind.
The second thing to do is to understand and visualise the consequences of not making the change. For some people that might mean not fulfilling lifelong dreams and aspirations. Common deathbed wishes and regrets are usually about not having done something when there was the opportunity to do so. For others the consequence might be leaving a large inheritance tax liability to their estate meaning that the Treasury benefits from your frugality rather than your loved ones.
The third thing for consideration would be to make an early ad-hoc purchase that aligns with your values and goals (provided it is affordable to do so). This sets out the stall for the future and marks a change in behaviour. There is a reason that people take that ‘once in a lifetime’ trip early into their retirement as this acts as a reset and new standard to live by.
The final thing I would offer up for consideration is to think about how to align your values and priorities to how you spend money. For me that comes in the form of family, health and experiences. It might be different for you, and knowing what that is might help.
I hope that this helps, but as ever if you want to talk it through further then feel free to reach out.
The final, final thing to add Morgan Housel is releasing a new book ‘The Art of Spending Money’ in October 2025 which I am very much looking forward to reading and you might too!
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