{"id":349244,"date":"2026-05-03T00:30:17","date_gmt":"2026-05-03T06:30:17","guid":{"rendered":"https:\/\/www.whitecoatinvestor.com\/?p=349244#d=202605"},"modified":"2026-05-01T15:03:06","modified_gmt":"2026-05-01T21:03:06","slug":"the-psychology-of-spending-in-retirement","status":"publish","type":"post","link":"https:\/\/www.whitecoatinvestor.com\/the-psychology-of-spending-in-retirement\/","title":{"rendered":"The Psychology of Spending in Retirement"},"content":{"rendered":"

The difficulty of spending in retirement is, at least in part, psychological. People who have spent the past 30-40 years working so hard to accumulate their nest egg (living like a resident for the first few years out of training, utilizing a high savings rate, spending intentionally, etc.) can\u2019t just flip a switch when it comes to the decumulation phase<\/a>.<\/p>\n

The paycheck that replenishes your checking account every two weeks suddenly disappears, and the phrase, \u201cDon\u2019t worry; we can always make more money,\u201d begins to ring hollow. Your spending rate becomes even more important, and you have to mathematically figure out how much you can withdraw from your portfolio so you don\u2019t run out of money before you leave this earth for good.<\/p>\n

A lifelong accumulator doesn't flip a switch and magically become a decumulator. It\u2019s psychologically recalibrating your entire money life.<\/p>\n

The Toughest Problem for a Retiree<\/h2>\n

How could that paradigm shift not be difficult? Christine Benz, the director of personal finance and retirement planning for Morningstar, who delivered a keynote address at WCICON26, called it a retiree's toughest problem.<\/p>\n

\u201cMy guess is that for a lot of you, you\u2019ve been good savers, you\u2019ve taken in a lot of wisdom on how to invest wisely,\u201d Benz told the WCICON audience (which you can now watch on the Continuing Financial Education 2026 course<\/a> (Use code CFE100 to save an additional $100 until May 12.)). \u201cThe issue is that when it comes to turning on spending in retirement, people truly struggle with this. Especially affluent older adults who have maybe more than enough, they struggle with spending in line with what they could actually spend.\u201d<\/p><\/blockquote>\n

People love to watch their net worth increase year after year. When that net worth starts to decrease and the millions start to slip away, it could be a cause for panic even if, as Benz said, they have more than enough<\/a>.<\/p>\n

As various surveys have noted, 3\/4 of retirees reported that their assets remained the same or actually grew in retirement, and 55% of financial professionals said that many of their clients spend \u201cmuch less\u201d than they can afford in retirement.<\/p>\n

Said Benz, \u201cThey say, \u2018I can\u2019t get my clients to spend.\u2019 I have to cut checks to them and say, \u2018You\u2019re spending it.\u2019\u201d<\/p><\/blockquote>\n

One of the problems is the unknowable nature of retirement. You don\u2019t necessarily know when retirement will start. You don\u2019t know how long it will last. You don\u2019t know how healthy you\u2019ll be, how long you can travel and take part in the so-called go-go years, or if you\u2019ll need to spend large chunks on long-term care. You don\u2019t know what the market returns will be. You don\u2019t know how high inflation will get. You probably don\u2019t know what you don\u2019t know.<\/p>\n

Psychologically, what made you a good saver could make you a bad spender, and not having a clear crystal ball<\/a> can make retirement a difficult mental exercise.<\/p>\n

\u201cThere are,\u201d Benz said, \u201ca lot of wild cards figuring into this safe spending rate discussion.\u201d<\/p><\/blockquote>\n

What About the 4% Rule?<\/h2>\n

Many people cite the 4% rule<\/a>\u2014where you can be about 90% sure that your retirement money will last 30 years if you withdraw 4% of your portfolio per year (increasing with inflation)\u2014as their guiding light in retirement spending. But not even the creator of the 4% rule, Bill Bengen, believes that\u2019s a true measure of how much you can<\/em> spend in retirement.<\/p>\n

The 4% rule is more of a minimum, Bengen says now, and he actually spends something like 4.9% per year<\/a>. As Benz said during her keynote, the 4% is a great starting point for determining how much to spend in retirement. But that number is anchored in history, and it doesn\u2019t account for the future to come (it\u2019s yet another unknowable).<\/p>\n

Here are some limitations of the 4% rule:<\/p>\n