A recent Prudential Financial survey shows a clear pattern: among retirees with at least $500,000 in investable assets, most say they do not feel at ease splurging on fun. A separate TIAA survey of 1,000 people found that more than half put "running out of money before they die" at the top of their retirement concerns.
That anxiety shows up in how people spend. In the Prudential results, 61% reported guilt about paying for travel and adventures, and 86% felt the same when it came to big bucket-list buys like a beach house. Over one in four retirees also said they take pride in seeing their balances hold steady.
This is less about newfound frugality and more about a deep worry that savings could run dry. According to Prudential Financial's head of retirement research, David Blanchett, "What's happening is that people are balancing FOMO, the fear of missing out on enjoying their retirement, with FORO - fear of running out of money."
The mindset shift is real. After years of contributing, flipping to withdrawals can feel wrong. "I've had clients with more than enough assets who still feel anxious and a sense of guilt the first time they withdraw from their account, because for decades the money only flowed in," said Mark Sanaiha, a wealth adviser who founded Macallen Capital.
Offering another illustration, Liz Windisch of Maia Wealth, a financial planner, described a client who "took a monthly distribution from her IRA and paid the income taxes, and then put a portion every month in a savings account to 'save' for big purchases." And emotion often overrides arithmetic. Spending a nest egg "triggers something closer to loss aversion than logic," said Jeff Judge, who serves as managing partner at Chesapeake Financial Planners.
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Prices have climbed across most categories, and healthcare tends to consume a larger share of the budget as retirees age. There is also unease that Social Security payments could be trimmed by 22% in about six years. Add in the prospect of longer lives for healthier Americans and you get more years of bills to plan for, which makes day to day spending decisions feel fraught.
The unease is not limited to retirees. An Ally Bank report found that close to three quarters of U.S. adults feel guilty buying things that bring them joy when that money could go toward a financial goal. In a Goldman Sachs Asset Management survey, 42% of people earning under $100,000 said they live paycheck to paycheck, and so did 36% of those making more than $300,000. And a survey from the Pew Research Center, released Wednesday, found that nearly four in 10 Americans worry "every day or almost every day" about their ability to build savings for retirement, while the same share said they "often feel hopeful when they think about their finances."
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Prudential says confidence can improve with a written budget and financial plan, and by using an annuity to convert part of savings into a predictable lifetime paycheck. Many advisers also lean on a "bucket" approach to calm nerves: set aside roughly three or more years of planned spending, after accounting for Social Security and any pension, in cash-like vehicles; use a middle bucket mainly of bonds staggered by maturity; and place long-horizon money in stocks or alternative assets you do not expect to touch for about a decade.
The thread running through all of this is permission to enjoy what you saved for. The financial backdrop is noisy and the risks are real, but a clearer plan and steady income sources can make it easier to actually do the things you imagined in retirement - whether that is a big trip or simply saying yes to the weekend plans without second guessing every dollar.
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