The Cure For Financial Hoarding and Over-Saving
One alarming trend I’ve noticed among retirees, whether they retired early or at a traditional age, is their inability to stop saving money. It seems that the habit of saving is so ingrained that even when there’s no longer a need to save for the future, it’s hard to break. This continued frugality can prevent retirees from enjoying a leisurely life to the fullest.
I began noticing this tendency to over-save about six months into my own retirement, which started after I left corporate life in the spring of 2012. Despite careful financial planning and a hefty severance package after 11 years of service, I found myself unable to indulge even in a simple celebration dinner without feeling guilty. This reluctance stemmed partly from the sudden absence of a regular paycheck, a situation I had not faced in over a decade.
Financially, investing my severance money was a wise move, as the markets have since grown by over 30%. However, from a lifestyle perspective, I realized that I wasn’t truly enjoying the financial security I had worked so hard to achieve. This realization made me reconsider the purpose of continuous saving when it doesn’t contribute to tangible life improvements.
In this article, I explore strategies for retirees like myself to unlearn their excessive saving habits. While it’s essential to maintain financial health, excessively limiting spending in retirement can detract from enjoying the fruits of one’s labor.
A perfect example is a relative of mine, a veteran with over 30 years of service and a substantial pension. Despite his financial security, he remains overly cautious with his spending. During a family dinner, I pointed out that there was no need for him to continue saving as he was already comfortably retired. I suggested he indulge a little, perhaps upgrading to a nicer cabin on their next cruise, but he dismissed the idea, content with modest accommodations since he views the cabin as just a place to sleep.
It’s clear that I’m projecting my desires onto him; if frugality brings him happiness, that’s his choice. However, I can’t help but feel that both he and I are not optimizing our spending to enjoy life to the fullest. This sentiment is echoed by many retirees who continue to prioritize saving over spending.
One way I’ve suggested tackling this mindset is by reflecting on life’s unpredictability. Considering the ages at which some notable figures have passed away can serve as a stark reminder that life is to be lived. Adjusting expected lifespans and financial plans accordingly might encourage more balanced spending.
Traditional budgeting methods also play a role. By understanding exactly how much money is needed for a comfortable life, retirees might feel more secure in enjoying their savings. For example, I know I can live on about $100,000 a year from passive income, yet the fear of future financial responsibilities keeps me from spending it.
Finally, writing down a list of desired purchases can be enlightening. Often, the total cost of these items is a minor fraction of a retiree’s net worth, which could make the spending seem more justifiable.
In conclusion, while it’s wise to prepare for the future, retirees should not let the fear of financial insecurity prevent them from enjoying their present. A balanced approach to spending and saving can lead to a more fulfilling retirement.
