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I’ve always been a saver. From my first job singing in the church choir, I stashed earnings in a snap-top Band-Aid box. I added to my savings by sweeping the patio of a family friend.
Sometimes, I’d shake my savings onto my bedspread and count it. It gave me a great feeling to find that I had $10.50 or $15.65. The stacks of silver quarters gave me a sense of security as a child.
That’s why it’s been a bit of a letdown to start withdrawals from my 401(k). No, they’re not required. Required distributions don’t kick in for me for four more years. No, the reason to automate monthly withdrawals is simple. Five years into retirement, I can see the bottom of my liquid savings.
I’m lucky, however. With the U.S. stock market at new heights, my assets have grown slightly in retirement, not shrunk. If I don’t spend money, some of it might evaporate in a correction.
But subtracting from my 401(k) feels like I’m entering the downslope of life. Franco Modigliani won the Nobel Prize for his life cycle hypothesis of human consumption. When we are vigorous and young, we save money for old age. When we are retired—and presumably tired—we withdraw the money to live without labor.
This transition to withdrawals is not easy for lifelong savers like me. You may have experienced it, too. Spending money can feel irresponsible. I’ve worked hard to postpone consumption, unless the money was for someone else.
This summer, for example, I tried to coax one more year out of an old Electrolux, which only started intermittently. I’ve got old sheets, old books, an old house, and an old boat that requires daily bailing.
Being a thrifty Yankee is a time-honored role here in Maine. If I’m honest with myself, however, I realize that maintaining all these geriatric possessions is getting in my way. I don’t work as hard at everyday chores as I have, and some jobs are beyond my skills. Thoughts of deferred maintenance keeps me up at night.
I’m going to change. I started with a small step today. I threw away the old Electrolux. I could have taken it to the repairman again, but honestly, it’s a relief to be rid of the old contraption. I want to spend more time on the water, not in the shop.
Being a saver was fed to with mother’s milk. My parents were Holocaust survivors. They always said put a penny to a penny and it will become more. They worked very, very hard in a luncheonette. Frugal does not even begin to describe how we lived. To make a very long story short, I am a saver, big time and how. I am 77, a widow and have way more (thank G-D) than I likely will every spend. I was born in Germany, came to USA as a little one, settled in Brooklyn and never went anywhere since. They say grow where you are planted–well, I still live in the same house since I was 12!. Spend, you say, how do I even begin??
LOL! I feel your pain. My wife and I have been savers all our lives and managed to retire debt free. However, once the paychecks stopped, we had to start spending our own money which was a difficult transition. Even though I had used a Monte Carlo simulation tool to test whether our savings was likely to last (it was), it was still a difficult transition. 15 years post retirement we have more than we started with and have been able to spend what we wanted along the way. A lifetime savings habit is not easy to shed and you’ll probably start conservatively as you begin retirement, but hopefully will gain confidence as time goes by.
Well, you just met someone a lot like you, I did all those things in my youth and always waned to work at an early age to put money in my pocket. At age 10, I earned 50¢ for working all day Saturday to deliver meat from my Uncle’s Butcher shop. The real earnings came from the customers, maybe up to $5 tips or more on a Saturday, the only workday. I would take on any job to earn money, because I liked to have money in my pocket, and Mom said always have enough for a bus ride home, 10¢. Anyway, I have made it, because of my savings over 50 years, allows me to no longer have a budget. After 70, I learned it was OK, to spend more than I took in. And now after 57 years of marriage we also found the way to work our finances, with no squabbles. For sure spending more is difficult, but I assure you now is the time to make your life SIMPLER as you grow older, and to use your saving to do it is AOK. Best to your Freedom Future.
Absolutely Greg, I’ve been the same frugal guy all along, until I left the job and now, it’s great to not compare by looking at prices.
I did my ‘growth’ for over 50 years and now can simply enjoy what I’ve done. A fellow with a radio show mentions ‘You can be outrageously generous and have the most fun you’ll ever have with money’
Congrats on getting rid of the Electrolux (did you buy a new vacuum?)
Decluttering and downsizing are something of down tasks. It helps to acknowledge that you can hardly give away this stuff. Still, it’s nice to have a fresh and less cluttered home.
In our town every household is allowed two pickups a year of “household waste”. That removes a sizable 9x4x4 foot pile of unwanted material twice a year. It’s picked up by our sanitation department. With luck, any neighbor can rebuild their pile at least once if whoever happens to drive by thinks it’s “good” junk.
Attending a few estate sales and open houses can confirm our human nature to keep things too long and what is expected by the next inhabitants of our space.
I’m inspired by your post. I’ll go into the shed and get rid of sprinkler parts for a system that barely works and I’m no longer interested in maintaining. Good enough to donate? Doubtful!
Having money that you have to withdraw is a good problem to have. I’ve always been pretty thrifty, but I have found that as I realize I can’t outlive my nest egg, I am a bit more willing to spend money in my later years. But that situation should also come with a warning. Or really, two warnings. First, don’t lower the core financial guardrails you’ve lived with all your life. Deciding to give more money to your alma mater is a lot different than letting yourself agree to put in a swimming pool you really won’t be using much. Second, there are lots of other people out there who also recognize that you have a pot of money that is not being used. Your financial status is probably pretty widely known. Thus, you will get lots of nice invitations from people to help you spend it (including on them). Worse, there are people who will try to take it from you. Always be on your guard with people you don’t know who want to talk about your money with you.
Lifespan, Healthspan, and, now <drumroll> Joyspan.
You probably have already set yourself a spending budget based on some safe withdrawal rate model. That gives you a target to spend to.
Yes, spending it is hard (I’ve written extensively about this very thing elsewhere) – much harder than accumulating it.
Trust your budget, and work on spending on things that bring you joy. Whether it’s travel or buying yourself a new boat or giving money to the kids, figure out what brings you joy and use your hard-earned savings for that.
Harrumphing about [raking leaves, repairing an appliance, changing the oil, etc etc – pick one] is a good place start. Outsource those tasks joyfully, knowing that you can afford it and doing so eliminates your harrumphing.
Congrats on achieving financial independence. En-Joy it!
Enjoy! You earned it!
I still have the little metal “piggy bank” I received when mom took me to open my first savings account at the one bank in our little town in Oregon. It’s in the shape of a pioneer covered wagon, in commemoration of Oregon’s centennial and pioneer heritage celebrated a couple of years earlier. Next time I go to Oregon I will donate it to the town museum.
Like the author, I’ve always been a saver. But I have an additional challenge beyond reluctance to spend. There is nothing I want. I’ve been fortunate to travel much of the world in my 72 years, but I’m slowing down and feel most of that is behind me. I’m satisfied with my house, my furnishings, my car. I’m generous with my daughter and grandsons, but not overly so. I donate to causes and charities important to me. But I’m frugal.
I’ve realized that really, I don’t own anything. I’ve paid to possess all of these things for a while. But one day someone else will possess them, or they will be discarded. So I enjoy them but recognize they are trivial to my remaining days. I’ve downsized a couple of times and it felt refreshing to do it. I like what I’ve kept, but there’s no desire to add to it.
So my next step is to decide how to give away most of what I have saved, while retaining enough to ensure I don’t place my remaining days in jeopardy.
Thanks for the article, and thanks all for listening.
Who’d you bring the “old Electrolux” to, the last vacuum repairman in the world?
We too just began IRA withdrawals three years prior to RMDs starting as we similarly “can see the bottom of our liquid savings.” Fortunately, we have only minor letdown feelings as the withdrawals have mostly helped fund the kids’ down payments and Roth conversion taxes.
“This transition to withdrawals is not easy for lifelong savers…..”
I agree and somehow some aspects still do not feel “right” to me. However, I’ve been adjusting gradually. I’m coming to the other side of the mental argument, shifting from “Why do whatever?” to “Why not do whatever?”.
It is no longer about spending the money. For example, this year we came very close to replacing our RV “cabin” in Michigan. It’s a 31 ft. and more than adequate, but it would be nice to have a little more room, perhaps a 36 ft. RV. However, in the end we decided against it simply because we aren’t sure how much longer we’ll be coming here. Ignoring health issues, we have made a verbal commitment to be here in 2026 but have begun a search for an alternative 1,000 miles closer to “home” for 2027 and beyond.
Greg, thanks for a great piece. Like many, I found the transition from accumulation to decumulation to be a challenge. For me , the key to saving was to automate it – have savings taken out of your paycheck first. Automating withdrawals from retirement accounts is the way to go. The first one is the hardest, then you get used to it. I set up a recurring withdrawal from Vanguard when we bought a new home 2 years ago. It is easy to use and I can easily forego a month’s withdrawal if I don’t think we need it. Luckily our investments have replenished what we’ve withdrawn. I’m not happy about current interest rates, but we are OK. I also like to tell myself I’m just trading equity investments for real estate in a desirable location. As others have written, I keep asking myself why did we save so much if we are unwilling to use some of it? I’m also a fan for Modigliani. The flaw in his hypothesis is that it assumes we humans are rational.
Over time I was able to change. I’m entering my 25th year in “retirement” and was fortunate to partner with my SIL who built a successful business with my financial support. It threw off enough annual distributions that I was to able to be careless with my spending.
When he sold it, I got a chunk of money, paid taxes, and then worried I could run out of it. Once I finally reached the age when it was enough, I was able relax and start spending again.
But the spending is different now. Sure it has slowed up, and I actually put us on an allowance.
However, with the move to a CCRC into a smallish apartment, we are treating ourselves to all new furnishings. Whatever, the budget was, we busted through it. I feel good about it.
Fortunately, with so many heirs, the impact on each will be minor.
I choose not to believe that silly clock that has us living way too long. While the CCRC promises to keep us, we can simply both move into an assisted living unit covered by LTCI to preserve cash for the kids.
I am trying to ignore what’s happening 12 miles from us and beyond hoping the impact on our family can be overcome. I feel powerless knowing there is so little I can do to help us return to less stressful times.
My grandchildren will inherent a world my generation failed to protect. The two generations before us were more focused on the greater good.
I’m wrestling with this transition, as well. And it’s a common topic in family discussions. There’s no real tension, but my wife is clear that she’s ready to “throw out” the old and spend the money we’ve been piling up.
She has followed through on the throwing out. We began by cleaning out the attic this spring, and once my daughter got home from college, they partnered to put together several loads for friends and charity.
There has been no similar feverish activity on the spending side. But I’m bracing for it, and rehearsing my tempered reaction to a reasonable request. I’m counting on my slow transition into retirement to help me establish a new rhythm with minimal shocks.
I love this post. For me, it was easy to save because I had savings plans at work that took money out every paycheck. Spending the money is harder because of the unknowable future. How long you live determines how long your money will last but most of us don’t know how long we have left. Predicting the future is always tricky but at least for my IRA, if I take minimum distributions I should not run out of money before I run out of time.
I certainly appreciate that we are all creatures of habit, and don’t easily change a lifelong approach to saving. But that pile of money you saved was for exactly this reason – so you can have a comfortable retirement. I hope you enjoy the benefits of all your years of hard work. All the best to you.
Boy are you singing to the choir Greg. We did spend some bucks on a new home and furnishings a couple years back….. I’m sure glad that’s over.
Speaking of singing in the choir, what kind of church pays people to sing in the choir? I sang in church choirs starting with the junior choir at age 8, but I’ve never heard of getting paid for it! That’s a new one on me.
Although i am in a different situation I fully agree. I don’t like to see our assets decline either through daily market fluctuations or an RMD. I get an unjustified feeling of loss, of things going in the wrong direction.
Should a lifetime of saving disappear? Well, if it was for retirement, yeah it should, but i can see that doesn’t make it any easier.
Even though i see charts showing that with certain withdrawals retirement funds can actually still increase- that has been true with our RMDs and rollover IRA – it still can be a struggle.
I’m with you. It’s difficult to acknowledge when you’re on the downslope, whether it be financial, medical, strength, emotional or something else.
I started taking IRA money early, too – mostly to (hopefully) smooth out the tax implications of future RMDs, which begin for me next year. I don’t spend it, so now it’s part of my non tax-deferred investment account.
Thriftiness isn’t geographic – it’s attitude!
I completely understand. It’s so hard to shift from a lifetime of saving to a period of spending, especially when that discipline has been a part of who you are since childhood. The act of withdrawing money feels like you’re going backwards, not forward.
But you’ve earned this. All that hard work and discipline was for this time. Don’t think of it as “the downslope”; it’s the natural and well-deserved conclusion to a cycle you started so long ago.
The relief you felt when you threw away the old vacuum is a sign. It’s a reminder that sometimes, letting go of things—whether it’s an old vacuum or an old mindset—can free you up to enjoy your life by using your hard-won savings. Enjoy this new chapter!
Greg, I love the Franco Modigliani quote. That is so true, but as you described can be a difficult transition to make mentally.
I think more about the downward slope healthwise than finance wise. Too many of our family and friends are experiencing these health challenges which are impacting whatever plans they had for retirement and the enjoyment that we deserve to experience. Thinking about it in that context makes me much more comfortable and not feeling irresponsible about it. Good luck with your transition to withdrawal…and please treat yourself to a new vacuum cleaner.