4 Ways to Enjoy Your Savings in Retirement Without Going Broke

Randy Smith saved diligently for retirement throughout his 36-year career, especially during his final five years as a general manager at a materials handling company.

“I was putting so much of my paycheck into a Health Savings Account and a 401(k) that it was close to 50 percent,” said Mr. Smith, 64.

His wife, LeeAnn Smith, 62, worked for 34 years as an elementary schoolteacher. She retired in 2020. Her sole source of retirement savings is a pension equal to half her salary.

Despite their accumulated resources, the couple, who live in Idaho Falls, Idaho, worried about running out of money and having to rely on their children, Mrs. Smith said.

Couples like the Smiths, who have spent decades saving for retirement, can experience what may be considered a good problem: switching from building their savings to spending it. New retirees are often afraid. They imagine worst-case scenarios like a stock market crash or sky-high inflation. And they may tie their self-worth to their ability to save more than others, said Mark Stancato, founder of VIP Wealth Advisors in Decatur, Ga.

“It’s not a math problem; it’s a mind-set problem,” Mr. Stancato said.

When you retire, you’re often in your peak earning years, said Regina Neenan, director of cash flow and insurance planning at FPFoCo, a wealth management firm in Fort Collins, Colo. Suddenly, you face a jarring reality: No income is coming in, except perhaps Social Security, and money is mostly going out. The immediate concern Mx. Neenan hears from retirees is, “What if I run out of money?”

Before Mr. Smith retired in 2024, the couple met with a financial manager to determine when to take Social Security and to assess their overall situation, comparing their estimated annual budget with their savings and investments. They accounted for their projected life span, which is 30 more years for Mr. Smith and 25 for Mrs. Smith, based on their parents’ longevity.

The financial manager ran several scenarios factoring in inflation, changes in the stock market and unexpected expenses, like health care and home repairs. Financial models showed the couple how much they could spend each month, and Mr. Smith decided he would not take Social Security until he turned 70.

“It gave us confidence that we can enjoy what we’re doing,” Mrs. Smith said.

Spending your retirement savings can be deeply emotional, said Ashley Quamme, a financial therapist and founder of Beyond the Plan in Augusta, Ga.

When clients feel anxious about money despite having sufficient funds — a kind of financial dysmorphia — Ms. Quamme explores where those feelings originated and works with clients to align their emotions with their reality.

“Sometimes even just being able to say out loud, ‘You know what, spending this wealth that I have spent decades building is really hard and it’s really emotional’ is very powerful,” Ms. Quamme said.

Getting comfortable with spending that money doesn’t happen overnight, though. Here are four ways to shift from accumulating your nest egg to enjoying the money you’ve saved, making sure you have enough money to last your lifetime and, if you choose, leave something for your children.

Align Spending With Your Life Phase

The first 10 years of retirement are typically when people spend the most money because they can travel and enjoy the activities they put off while they were working full time, Mr. Stancato said.

After people turn 65, their annual rates of household spending decline by 1.7 percent for singles and by 2.4 percent for couples, according to a RAND study. As we age and our health starts to decline, we typically spend more time at home and less money traveling, eating out and on hobbies, Mr. Stancato said.

After meeting with the adviser, the Smiths felt more confident. They decided they could take annual monthlong trips to Costa Rica and Europe and several U.S. trips to visit their 13 grandchildren. Mr. Smith admits that traveling to Costa Rica for a month will probably be challenging 10 years from now. “Not that we can’t still travel, but how far we can walk and how much stuff we can take will limit some of our options for travel,” he said. “These are our go-go years,” Mr. Smith said, “and then you go slow and then it’s no go.”

Give Yourself a ‘Retirement’ Paycheck

One of the hardest transitions for retirees is losing their regular paycheck while still having to pay for housing, health care and expenses like food and utilities, said Jared Gagne, wealth manager at Claro Advisors in Boston.

“It’s very difficult to go from making money and seeing a consistent paycheck to not getting one and still having the same bills to pay, and wondering where that money will come from,” Mr. Gagne said.

Inflation is adding to the problem, he said. “People are spending more money because of inflation, so it feels like you’re constantly chasing a moving target,” he said. But, if your money is invested, your assets have grown on paper significantly more than the price of eggs has increased over the past five years, he said.

About 61 percent of Americans age 65 and older have money invested in the stock market, whether in an individual stock, a stock mutual fund, a self-directed 401(k) or an individual retirement account, according to a 2025 Gallup poll.

The math of compounding, diversification, risk management and disciplined withdrawals will become even more important as younger generations prepare to retire, Mr. Stancato said. Many older retirees built their savings habits knowing that they would receive a pension, making their savings feel like a safety net rather than a resource to draw from. And that leads them to feel that spending is emotionally risky.

Younger generations cannot rely on a traditional pension, though. “Millennials, on the other hand, will build wealth knowing they are fully responsible for generating their own lifetime income,” Mr. Stancato said.

To help clients feel more secure, Mr. Gagne recommends automating a predictable monthly transfer from their investment accounts into their checking account on the 1st or 15th of each month, similar to receiving a paycheck. This is especially helpful to people who don’t have a pension because it creates a reliable income stream, he said.

While everyone’s financial situation is different, Mr. Gagne offered some broad advice: Follow what is known as the 4 percent rule. In general, you can use about 4 percent of your assets each year of retirement without worrying about running out of money or dipping too far into investment principal. For instance, if your brokerage account, I.R.A. and other assets add up to $1 million, you can withdraw about $40,000 a year. Divide that number by 26, and you can pay yourself about $1,538 every two weeks.

This structure also keeps people from overspending. If markets are strong, the client could potentially take out more money. If markets are uneven, the client can adjust the amount transferred into checking.

Try Small Splurges

We often assume we must reduce our spending when we retire, but if you’ve saved consistently and paid off your mortgage, or if your rent is manageable, you can enjoy retirement without pinching pennies, Mx. Neenan said.

To determine how much newly retired clients can spend each month, Mx. Neenan tracks how much they spent the year before they retired, then calculates their account assets adjusted for inflation and market returns.

Even if clients can spend an extra $1,000 a month, Mx. Neenan suggests starting small by spending an extra $200 a month on doing something they enjoy. Perhaps it’s taking a weekend trip, having lunch with friends every week or spending money on a hobby you want to try.

At their next meeting, Mx. Neenan will ask the client how it felt to spend that extra $200 and what effect it had on the client’s quality of life. Then they review the budget, and Mx. Neenan shows the client that spending an extra $200 didn’t hurt the financial plan.

Tie Spending to Goals

Identify concrete ways to use your money such as family vacations, gifts to loved ones or charities, or projects to adapt your home to your needs, Mr. Stancato said. When the conversation is framed around personal fulfillment or the ability to create memories with family, clients tend to be more comfortable spending, he said.

“I remind them your wealth isn’t meant to be preserved forever; it’s intended to fund a life well-lived,” Mr. Stancato said.

Since retiring from NASA with a pension two years ago, Ed Waggoner has been using his retirement money to do just that.

A friend suggested Mr. Waggoner, 78, read “Die With Zero” by Bill Perkins, which focuses on creating all that you can from your money and enjoying it while you can appreciate it. The book, Mr. Waggoner said, changed his attitude about retirement.

“I decided to start focusing on the present and take advantage of the opportunities to make a difference while I am still living,” said Mr. Waggoner, of Alexandria, Va. This included working with his alma mater, the Samuel Ginn College of Engineering at Auburn University in Alabama, to establish a scholarship, and giving his two adult sons a generous sum of money last Christmas.

“It allowed me to see their joy while I’m still alive,” Mr. Waggoner said, “and that’s meaningful to me and to them.”