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When you follow the “saving is good; spending is bad” mantra, there’s a chance frugality syndrome will creep up on you in retirement.READ THE ARTICLE
As former podcast guest Jamie Hopkins has found, some individuals step into retirement needing a strict budget and discretionary spending limit, while others have a more flexible financial picture. In these cases, the real challenge is feeling comfortable spending your life savings. However, when you’ve accumulated wealth specifically earmarked for retirement, Hopkins recommends three techniques to spend without jeopardizing your financial security:
📌 Test It Out: Gradually transition into retirement by working part-time and making partial retirement withdrawals. This allows you to experience spending without depleting savings immediately.
📌 Needs, Wants, and Wishes: By categorizing your expenses into spending, discretionary wants and extravagant wishes, as well as aligning them with safe income sources, you can find greater peace of mind in spending.
📌 Go Beyond Success or Failure Metrics: Avoid solely focusing on success or failure metrics. Leverage guaranteed income sources like Social Security and annuities and know that retirement is not a binary outcome. Spending adjustments can be made as needed.
If you’re like many successful investors or the “millionaire next door”, you’re hardwired to save instead of spend. Reframing your mindset won’t be automatic, but learning to embrace spending your money on what matters most to you is priceless.