Retirement is a long-held dream: the chance to relax a little more, spend time with friends and family, and maybe travel.

It’s something you’ve likely spent years preparing for, through pension planning and saving. But research has shown that, for many adults, it can be harder than anticipated to make the switch from saving to spending.

Old habits die hard. Instead of enjoying the wealth you’ve accumulated specifically for this stage of life, you could find yourself anxiously avoiding spending, worrying about depleting savings that will no longer be replenished by income.

In the same way that saving is a discipline, spending is also a skill that needs to be honed. Find out how to ease your way into retirement joyfully and navigate the behavioural shifts needed to transition from pension saver to pension spender.

Lack of new income can make spending a difficult habit to form in retirement

Following years of financial discipline, it can be easy to fall into ingrained spending and saving patterns. Each month, you earn, pay bills, put money into your pension pot, and this continues in a cyclical fashion until you retire.

At that point, you could expect to feel a rush of freedom and a sense of financial independence. But the pattern you’ve become so familiar with is broken, and whatever you’re spending isn’t being replaced by new income.

Research has shown that this sudden shift can be quite stressful, with Money Marketing stating that UK adults report a range of negative emotions associated with spending retirement savings. Retirees felt:

  • Anxiety (26%)
  • Fear (18%)
  • Guilt (15%).

The research also found that a lower number reported positive emotions, such as excitement, security, and relief.

Even those who have the most robust financial plans can experience these negative emotions, despite the figures themselves showing they have nothing to worry about.

Shifting your mindset can be difficult, even if you have sufficient savings

The psychological shift – from prudence and caution to suddenly having a licence to spend – can feel overwhelming.

The Financial Times cites a study which found that around half of its respondents had income exceeding expenditure at age 62. By the end of retirement, this figure had increased to around 80%.

But such is the power of preconditioning. It’s rarely as simple as making a quick mental shift from saving to spending. The “nest egg” or “rainy day money” can feel like a comfort blanket, and you might need to make some conscious changes to really get into the swing of responsible retirement spending.

When we work with you to develop your financial plan, we’ll always talk to you about your retirement goals. Now is the time to put that part of your plan into action.

If you’re feeling hesitant, here are five practical steps that may help.

1. Establish your income

Knowing exactly how much you’ve got coming in can help with your budgeting and offer some peace of mind.

This will depend on your circumstances and how you access your pension. For example, purchasing an annuity will usually offer you a fixed income for life, and this could help you feel more in control.

Talk to us about the different options for your retirement income based on your personal circumstances.

2. Reframe your thinking

Look upon your wealth as a way to unlock opportunities and experiences. This is the time to pursue the goals and aspirations you’ve been working towards all your life.

Rather than viewing money as something to constantly accumulate, shift to viewing it as a means of purchasing priceless experiences and happiness, which will fill your later years with memories.

3. Consider gifting during your lifetime

Of course, you may want to leave something behind for your loved ones after you die. If this is stopping you spending, you could consider making gifts while you’re still alive so you can see them enjoy their inheritance.

4. Spend at your own pace

If the thought of spending is making you uncomfortable, you could start small and work your way up. This could be going out to dinner every week, joining a gym or signing up for a class – little things that can really enrich your life.

As you start to notice the added fulfilment, you’re more likely to feel inclined to continue spending.

5. Keep working on your financial planning

Retirement isn’t one homogeneous period of time. You might retire in your late 50s and live to be 100. These are very different ages.

Your financial plan may need to account for higher spending in early retirement on holidays and more energetic activities, while also preparing for potential care costs in later life.

Get in touch

Your retirement is a wonderful opportunity for getting more from life; a time filled with rich potential. We want you to enjoy every minute and can help you make the switch from saving to spending, without feeling reckless or overwhelmed.

If you’d like to talk to us about retirement spending, or any other aspect of financial planning, we’re always happy to help. Email hello@intelligentpensions.com or call 0800 077 8807.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.