By Michelle D. Bennett, AIF®, CFP®, Executive Vice President, Newport Capital Group
For most of our working lives, the financial message is relatively straightforward: save more, spend carefully, prudently invest for growth and avoid taking unnecessary risks. These are great habits that often lead to great wealth outcomes.
Retirement introduces an interesting challenge, however.
After decades spent learning how to accumulate wealth, some people find it surprisingly difficult to start using it. If this sounds familiar, you’re not alone. New research is attaching numbers and behavioral science findings to this phenomenon.
A 2025 analysis from the Retirement Income Institute found that married households at age 65 withdrew about 2.1% annually from savings, on average. Among wealthier retirees, the gap between what they could reasonably spend and what they actually spend can be even wider.i
This outcome is so common that behavioral economists have been studying it for years, and have even given it a name: the “Retirement Consumption Puzzle.”ii Meir Statman, the Glenn Klimek Professor of Finance at Santa Clara University and a prominent behavioral-finance scholar, has examined how emotions and mental shortcuts influence saving, spending and financial well-being.
The explanation is not necessarily found on a balance sheet. Saving can become associated with discipline, security and even identity. Spending, on the other hand, can feel like moving backward. And after a lifetime of watching an investment portfolio grow, seeing the balance begin to decline can be uncomfortable even when that is precisely what the financial plan anticipated.
In the Employee Benefit Research Institute’s (EBRI) 2024 Spending in Retirement Survey, 38% of retirees described themselves as having a “savings mindset,” compared with just 11% who identified with a “spending mindset.” More recent EBRI research found that more than three in four retirees said they could afford to spend freely, yet nearly half reported underspending because they worried about running out of money.iii
Of course, caution in retirement is hardly irrational. Longevity is uncertain, healthcare and long-term care can be expensive, markets are volatile, inflation can shock the system and unexpected expenses inevitably arise. EBRI found that 36% of retirees had experienced unexpected spending needs during retirement.iv So, it’s fair, even wise, to be careful.
The goal is not to convince retirees to spend more. The key determination that’s important to make is whether financial restraint reflects the realities of a person’s financial plan, or if they are carrying over—perhaps unnecessarily—habits and concerns from their accumulation years.
A good place to start is by asking what your wealth is ultimately designed to accomplish.
For some, the answer may include extensive travel or purchasing a second home. For others, it could mean bringing children and grandchildren together more often, pursuing a hobby that was difficult to prioritize during a career or helping younger generations while they are building their own lives. Philanthropy can also be an important part of the equation.
These goals do not necessarily have to compete with leaving a legacy. In fact, it can be useful to broaden how we define legacy in the first place. A meaningful legacy is not only the wealth that remains at the end of your life. It can also include the experiences you create with your family, the opportunities you provide to children and grandchildren and the charitable impact you can make during your li fetime. In other words, it might mean spending (and living) a little.
There is an important distinction between intentional spending and overspending. A well-designed financial plan should account for core living expenses, taxes, healthcare, potential long-term care needs, market volatility, liquidity and the assets you hope to leave to family or charity. Once those priorities have been incorporated, the plan can also help identify what resources may reasonably be available for enjoying life in the present.
If you consistently spend far less than your plan supports, postpone meaningful experiences year after year or feel uncomfortable making a portfolio withdrawal even when your long-term projections remain strong, it may be worth revisiting the assumptions behind those decisions. Are you responding to an actual financial constraint, or to the feeling that spending down assets is inherently risky?
Stress testing can be particularly useful. Rather than relying on a single projection of how retirement might unfold, a financial plan can model different market environments, inflation assumptions, healthcare expenses, longevity scenarios and spending levels. It can also examine how additional travel, gifts to family, charitable contributions or other discretionary expenses could affect the plan over time.
The purpose is not to calculate the maximum amount you can spend each year and then encourage you to reach it. Quite the opposite. It is to understand the boundaries within which you can make decisions comfortably while maintaining the financial resilience that helped you build wealth in the first place.
That clarity can become increasingly valuable as retirement progresses. The spending level that feels appropriate at 65 may look very different at 75 or 85, which is why retirement income and spending decisions should be revisited regularly rather than established once and left untouched.
Building wealth requires discipline, patience and often decades of delayed gratification. But it also means permitting yourself to use your resources intentionally when your financial plan says you can.
Ultimately, a successful retirement should not be measured solely by how much remains in your portfolio. The better question may be whether the wealth you worked so hard to build is supporting the people, experiences, causes and priorities that matter most to you.
[i] Source: “Retirees Spend Lifetime Income, Not Savings,” Retirement Income Institute, April 2025.
[ii] Source: “Even Rich Retirees Fear Outliving Their Money,” The Wall Street Journal, December 29 2024.
[iii] “2024 Spending in Retirement Survey,” Employee Benefit Research Institute, November 7, 2024.
[iv] “2024 Spending in Retirement Survey,” Employee Benefit Research Institute, November 7, 2024.
Michelle Bennett, CFP ®, serves as the executive vice president of Newport Capital Group. The opinions in this column are not to be used as financial or planning advice. For additional important disclosures, please visit newportcapitalgroup.com/disclosures.
This presentation includes forward-looking statements. Actual events may differ materially from those reflected in the forward-looking statements.Always consult an attorney or tax professional regarding your specific legal or tax situation.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. In addition, information presented in this presentation is believed to be factual and up to date, but Newport Capital Group, LLC does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.
This presentation includes forward-looking statements and opinions, including descriptions of anticipated market changes and expectations of future activity. Forward-looking statements and opinions are inherently uncertain, and actual events or results may differ materially from those reflected in the forward-looking statements. In addition, all expressions of opinion are subject to change without notice in reaction to shifting market conditions. Therefore, undue reliance should not be placed on such forward-looking statements and opinions.
The article originally appeared in the August 27 – September 2, 2026 print edition of The Two River Times.
