As a financial adviser, one of the most common challenges I encounter isn’t helping clients save enough for retirement – it’s encouraging them to spend their money once they’ve reached it. After decades of disciplined saving, the psychological shift to spending can be surprisingly difficult for many retirees.
The Saving-to-Spending Transition
Most of us spend our working lives focused on accumulating wealth. We track our savings, contribute to KiwiSaver, and measure our financial progress by watching our nest egg grow. Then retirement arrives, and suddenly the rules change. Instead of adding to your wealth, you’re drawing it down — a reversal that many find uncomfortable.
I often remind clients of something I once read: “Clients of a good financial adviser should actually die with less assets because they’ve been encouraged to spend it.” While blunt, this perspective captures an important truth: the purpose of saving wasn’t to die with a large bank balance, but to fund a fulfilling retirement.
The challenge isn’t just mathematical; it’s deeply psychological. Many clients feel they’re on a tighter budget in retirement, even when our financial modelling shows they can comfortably spend a certain amount without running out of money.
This mindset shift is crucial. Retirement isn’t about penny-pinching; it’s about using your hard-earned savings to enjoy life. We need to reframe spending from a necessary evil to a positive action, one that allows you to travel, pursue hobbies, or spend time with family. It’s about giving yourself permission to enjoy the fruits of your labour.
Of course, this doesn’t mean throwing caution to the wind. The key is finding a balance between prudent financial management and living the retirement you’ve worked so hard to achieve. It’s about making informed decisions that align with both your financial situation and your personal goals.
Finding Purpose Beyond Work
Retirement presents another significant challenge beyond finances: how to fill your days with meaning. As I tell my clients, “There are seven days in a week, and people are used to only having to try and fill two of those because work takes up the other five.”
I’m a golfer myself, but I wouldn’t want to play golf seven days a week. The key is having some purpose to each day, whether it’s:
- Physical activity and exercise
- Social connections with friends and family
- Community involvement
- Learning new skills
- Pursuing hobbies and interests
Many community libraries offer social gatherings and craft activities during weekdays. Local sports clubs, volunteer organisations, and educational programmes can also provide structure and fulfilment. The goal isn’t just filling time; it’s having fulfilling time.
Balancing Planning with Flexibility
Effective retirement planning requires both foresight and flexibility. We need enough structure to provide security and direction, but enough adaptability to respond to life’s inevitable changes.
The reality is that retirement is a journey with many variables. Health changes, family needs, housing preferences, and personal interests will evolve. The best retirement plans acknowledge this uncertainty and build in room for adjustment.
What aspects of retirement planning are you finding most challenging? Is it the financial calculations, the psychological adjustment, or something else entirely? I’d be interested to hear your thoughts and questions.
