There are many people who struggle to build up a decent amount of retirement savings. And people in that boat often have to live more frugally in retirement than they want to.
But sometimes, an interesting thing happens to people who save very well and retire with millions of dollars. They struggle to spend their retirement savings and end up living far more frugally than they actually need to.
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Part of that may stem from a fear of running out of money. A 2025 Allianz survey found that 64% of Americans are more concerned about outliving their savings than actually dying.
But if you've having a hard time spending the money in your IRA or 401(k), it may be impacting your quality of life. Here's what to do if that's the case.
1. Create a budget and spending plan
Many retirees struggle to spend their money because they're not sure how to manage it. Two things that could help? Following a budget and establishing a customized withdrawal strategy.
Your budget should account for your various sources of retirement income, including Social Security and withdrawals from your savings. It should also account for your needs, like housing and healthcare, as well as your wants.
You can work with a financial advisor to come up with a safe withdrawal strategy for your nest egg. And from there, it's a matter of sticking to your plan.
So if your annual spending needs (between the things you have to spend money on and the things you want to spend money on) come to $100,000 and Social Security pays you $30,000, that means you need $70,000 a year to come out of your IRA or 401(k). If your financial advisor runs the numbers and says you can comfortably withdraw $70,000 a year without worry, then there really isn't a problem.
2. Keep regular tabs on your portfolio
To maintain your desired withdrawal rate, your retirement portfolio probably has to continue generating a certain level of income. So it's important to keep track of your investments to ensure that that's happening.
Keep adjusting your portfolio based on your income needs and spending goals. If there's a year when you want to take a big trip and do some home renovations, see if it's possible to work with your financial advisor to adjust your holdings to allow your portfolio to generate more income.
You may end up taking on a bit more risk with this approach. But you can also protect yourself against that risk by stockpiling some extra cash in case market conditions sour.
3. Remind yourself what the money is there for
Some people feel guilty spending their retirement savings because they recognize that in doing so, they may leave their loved ones with less of an inheritance. But try to remind yourself that if your initial goal in saving in an IRA or 401(k) was to pay for your retirement, then you shouldn't feel bad about using that money in retirement.
One thing you may want to do is talk to your heirs about what expectations they have. You may find that your grown children would rather you spend your money on yourself instead of leaving more to them. Besides, if you teach your grown kids strong financial habits, they might manage to build plenty of savings of their own, making them less reliant on money you may be trying to leave behind.
It's not so unusual to find yourself struggling to spend your retirement savings. But it's important to give yourself the freedom to enjoy the money you've worked hard to sock away. You can do that by having a solid budget and withdrawal plan, paying close attention to your investments, and reminding yourself what the money is there for in the first place.
