When retirement begins, you may strike a new challenge: how to confidently turn your savings into spending.

A Hidden Pattern in Retirement Spending

Most retirees may not spend their savings the way you might expect. Even those with substantial nest eggs may often hesitate to touch their portfolios.

Instead, according to new research by David Blanchett and Michael Finke, retirees tend to live off regulary scheduled income, like Social Security, pensions, or annuities, and leave their savings largely untouched. This research found that retirees spend roughly 80% of their lifetime income, but only about 50% of their savings.*

Why does this matter? Because the way you perceive your money—income vs. savings—may shape your retirement lifestyle.

Behavioral Bias: Income May Feel Safer to Spend

• Retirees possibly view investment accounts as wealth to preserve—not money to spend.
• Systematic income checks may feel more “spendable” than drawing from IRAs or brokerage accounts.
• This mental accounting may lead many retirees to under-live, not overspend.

Potential problems:

• Research shows retirees may withdraw only ~2% annually from savings, well below the classic 4% rule. *
• Even among affluent retirees, many may avoid spending from accounts unless forced by Required Minimum Distributions (RMDs). *

Why This Matters: The Real-Life Cost of Under-spending

Living below your means may sound smart, but in retirement, it may come at a cost:

• You might put off travel, generosity, or long-held dreams, even though you may be able to afford them.
• You may second-guess every purchase, worried about running out of money.
• You could pass away with large account balances you never used, potentially missing out on the life you saved for.

This may be the paradox many retirees could face: they’ve “won the game”… but don’t feel like they can “enjoy the prize.”

What May Help? Convert Wealth into Income

The study found that retirees with higher systematic income may spend more, even from their savings.* Why? Because they may feel more confident spending when their living and lifestyle needs may already be covered.*

This suggests a key strategy: design a plan that may use financial tools that strive to create a sense of predictable, purposeful income from your assets.

Consider Reframing Your Wealth as Income

Here are just a few ways you may strive to help your savings become income that you might feel comfortable spending:

• Coordinate Social Security claiming strategies with other income streams.
• Layer annuities or pensions to create consistent monthly income.
• Design your financial plan so you are not dependent on market performance to meet your living and lifestyle expenses.
• Revisit your accounts with an eye toward purpose, not just preservation.

Build a Retirement Spending Strategy That May Support Your Life

1. Start With What You May Want to Spend

Your life goals have the potential to drive your financial plan.

• What kind of retirement do you envision—travel, generosity, peace of mind?
• How do you want to support your lifestyle today and protect your future tomorrow?
• What legacy would you like to leave?

2. Strive to Structure Income That Supports Your Spending

Clarity today may create confidence tomorrow.

• Identify which dollars could potentially fund which years—early, middle, and late retirement.
• Coordinate lifetime income with other sources to reduce guesswork.
• Create a system where spending strives to feel safe, because it may be backed by structure.

3. Plan for the Surprises

Unexpected events may not have to derail your future.

• Design flexibility into your plan to help absorb life’s curveballs.
• Think through “what-ifs”—like health changes, inflation, or losing a spouse.
• Aim to anchor your income to help you stay on track, even when life may veer off course.

4. Align Every Piece of Your Plan

Your accounts, goals, and timing should all strive to work in harmony.

• Endeavor to treat your financial tools as part of one integrated strategy, not scattered accounts.
• Build a plan that aims to reflect your real priorities, not just your balances.
• Align income, estate, and expense strategies so your money may work to support your mission.

You’ve Saved for a Reason—Now Aim to Let Your Money Serve You

• Want to give to grandkids? Take that dream trip? Purchase a second home?
• It may not just be about spending; it may be about using your money in a way that brings life to your retirement.

With a properly structured plan and the right income strategies, you can strive to live retirement with confidence and purpose—not hesitation and fear.

Final Thought: You May Not Have to Spend Blindly or Barely Spend at All

Turning your retirement savings into a steady income stream may not just be a financial move; it may be a mindset shift. When your plan strives to show you what’s possible, you may finally feel permission to enjoy what you’ve built.

Want to understand how your savings could create income you feel good about spending? Let’s explore what that could look like for you.

*Source: Blanchett & Finke, “Retirees Spend Lifetime Income, Not Savings” (Retirement Income Institute, 2024)