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Becoming a Spender after a Lifetime of Saving

Guarding Your Savings

Reaching retirement is a long-awaited moment that you quite literally work your entire life for. This is considered the crowning achievement of your career. Your prudent financial decisions along the way have helped you accomplish what was once only a dream. For decades, you forged a savers mentality and made countless sacrifices along the way in preparation for this defining moment.

For some it is a glorious sendoff, for others it is an intimate goodbye with colleagues. Regardless of how your career journey ends, when retirement comes, it is a paradigm shift. The experienced and disciplined “saver” now must embrace what is ahead. Your savings becomes your paycheck and daily work is replaced with a slower pace of life; time filled by that which brings you joy.  

We are programmed from a young age to save, but what happens when it is time to spend? Chances are you are well prepared and will not go over budget, but spending your life’s savings can create an emotional dilemma. The most important thing to remember is that your prudent financial decisions and sacrifices along the way is the reason you can retire. You have been preparing and planning for decades. Although this money is saved for retirement and carefully calculated based on your future needs, your retirement mindset does not always change as swiftly as your final day passes at the office. If you find yourself feeling stressed as you enter retirement and unable to shift your mindset, here are three helpful tips.

Talk with your financial advisor.

Your financial advisor is often the person who has been most involved with guiding your financial decisions throughout your career. When struggling to justify your spending in retirement, revisit the plan you have created and discuss in detail with your advisor. Receiving encouragement to spend and move beyond the saver’s mindset can be refreshing. A little reassurance can go a long way to ease a worried mind.

After a few months, your mindset starts to adapt to your new reality, and you will have a better idea of your lifestyle and your budget. Now is the time to let your earnings do the earning while you enjoy the fruits of your labor.

Reflect on your previous habits.

If you are constantly questioning your ability to travel, to spend, and to check off your bucket list items, you are most likely still practicing your previous habits of frugality. This isn’t to say you should not track your spending, but when you are conscious of your money, you most likely are not making rash and unjustified financial decisions. It is not likely that you will radically shift your spending habits as you enter retirement.

Over time, you will gradually be able to adjust your outlook to not view your newfound financial freedom as dwindling down your savings, but instead enjoying your retirement. At the end of the year, make sure to compare your spending vs. your plan. You may find that you have 20% more to spend in the next year, or that you need to cut back a bit. The constant watching of finances wanes as you adjust to your new normal. The good news is over time you will find your flow; the balance of spending and frugality to make your retirement plan a success!

Let optimism be your guide.

Throughout your life, you have witnessed the volatility of the market. As you transition into retirement, you may adopt a more negative outlook on your portfolio returns during market declines. Have faith in the future. Belief, based solidly on historical record is that optimism is the only realism. Optimism is the only conclusion supported by facts. Keep in mind your long-term goals and investments, not just the snapshot of the moment. Do not watch the market, your portfolio is not the market.

While retirement is a joyous time, having difficulty adjusting to the spending aspect is common. Don’t let the fear of your financial security get in the way of the plan you put in place. When in doubt, reassess your situation and remind yourself that it is ok to spend! It is time to enjoy the payoff of early mornings and long nights at the office. Now is the time to lower your guard and embrace your new reality.

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