Stop Saving, Start Spending In Retirement?


More than 15 years ago, some colleagues and I were talking about how effective we were in building our savings.  We were all making a good living, but some were more successful in building their net worth than others. One colleague – a single guy with a snappy car – mentioned that he started out being a good saver, but had recently been spending too much and needed to put himself on an “austerity plan”.  

In contrast, I said that my wife and I needed to do the opposite – go on a “frivolity plan”.  A financial advisor told us we were likely in the top 1% of all savers – and that we would have plenty of time to save what we needed before retirement.  His surprising line of thinking was that we shouldn’t sacrifice the present for the future and could begin spending more on the here-and-now.

Needless to say, we didn’t listen (we also didn’t make him our advisor).  While we certainly have enjoyed our share of luxuries along the way, we maintained an extremely high savings rate – probably between 70-80% of our income over the last 15 years, once you factor in the value of deferring the exercise of stock options.  That’s obviously a very high rate and it paid off with our ability to retire to an enhanced lifestyle before we turned 50.

That said, our austerity plan seems now to have followed us into early retirement.  I just read this article from Jane Bryant Quinn who reports on this exact phenomenon.  She notes that while “everyone praises the habit of thrift,” when it comes time for long time savers to start spending, “They can’t do it. They’re so used to thinking of savings as sacred that they don’t touch the money, even if it crimps their retirement style of life.”  Jane Bryant Quinn is my absolute favorite personal finance writer and she perfectly captures the notion that “some die-hard savers stay thrifty for too long.”  We just have a hard time breaking into those piggy banks we spent so much time filling.

I just did a quick estimate of our spending for the year and find us coming in a little less than what we spent last year.  We were supposed to be enjoying ourselves and spending more, especially since our investments have done well and we’ve picked a little fun money through some consulting & board work.  While our spending only includes one-fourth depreciation on an almost new sports car – a definite splurge – our annual spending in retirement isn’t higher than any of the last five years.  It’s a little less actually.  I showed my wife the math I had on this (we use to track spending) and she was as surprised as I was.  

Here’s a chart based on US Federal Bureau of Labor Statistics data from that shows the direction that spending typically goes over the course of one’s retirement:


So looking at this, isn’t it time for a frivolity plan?  I thought so, until I started researching possible winter vacation destinations.  I couldn’t believe how expensive every place looked.  I thought: Who are these people that splurge on a week at the Atlantis in the Bahamas?  Who are the people that book a suite on a Caribbean cruise line to southern islands?  Who are the people that book an all-inclusive resort in San Diego in January?  I had definite sticker shock. I humbly told my wife I didn’t think could afford any of these vacations.  After all, going to sunny climates in the middle of winter means paying full fare.

It was bullsh*t.  Again, I was naturally falling into the same thrifty habits that got us to early retirement.  After revisiting the travel framework that I set up prior to retiring, I was surprised to see that we were fully budgeted for any of these trips.  I guess I’ve been so focused on saving & austerity, I forget that we are now supposed to be spending more. 

In retirement we are supposed to be enjoying the literal fruits of our labor – so I guess we better get our act together and start indulging a bit.  It’s finally time to take the advice that financial planner gave us more than 15 years ago!

Image Credit: Pixabay

23 thoughts on “Stop Saving, Start Spending In Retirement?

  1. Very interesting post! I have issues with spending with everything BUT vacation (hence my blog name lol). But those people are also possibly using miles and points which have for example allowed me to take first class flights to Asia and live like a queen for 2k with miles and points. We are doing to an all inclusive in Mexico that you can pay with points and our flights were using miles – it is literally cheaper than staying here and eating out all week!

    I however like the idea that you dont need to spend more because you are totally content with your life. The year I took off for our MAs we were spending little money but I never felt like Ih ad to spend as much as I do when I am kind of trying to fill some other void (because I am working all day, I deserve to buy me some crap!).

    This also makes me feel better about overspending in retirement….

    Liked by 1 person

    1. I’m with you on the opportunities for travel hacking. My wife just cashed in a load of points for a trip to see her friend in Kentucky. I’m just coming up on the end of my free year on Delta Amex, so I need to quickly find a new card.

      Liked by 1 person

      1. I can second the whole travel hacking thing. Right now, we’re working towards strategically getting our whole vacation next year for free with two new Chase cards. If we’re successful, that will save us almost $4,000. That’s practically a whole Roth IRA funded for the year!

        Liked by 2 people

      2. Wow – that’s huge. I was planning on switching from delta Gold Amex to Chase Sapphire. Looks like a good one.

        Liked by 1 person

    1. October is Wisconsin Door County for us and November is Napa Valley. I complain about the cost of all these trips, but never feel like it was many poorly spent when I get back!

      Liked by 1 person

  2. Flipping the switch from saver to spender has got to be tough. Of course, it’s not necessary, either, unless you’re not happy with the way you’re currently living your lives.

    Do what makes you happy. If it’s a week at Atlantis with $10 glasses of orange juice with breakfast, go for it. My guess is that splurging will only make you uncomfortable. Whether I can afford it or not, I have a strong aversion to being wasteful with money.


    Liked by 1 person

  3. I think about this a lot! Both the transition from saving to spending, and just the very act of selling off shares that we’ve worked so hard to build up. Will we be able to part with them? Will we be able to stomach seeing our numbers go in the wrong direction? I’ll be honest — I feel a bit queasy thinking about it! It’s good to hear your experience, and that it’s reasonable to think that that transition will be a challenge. But I do hope that you guys will let yourselves take some fun trips soon… though maybe not during peak season. 😉

    Liked by 1 person

    1. So far the only shares we’ve sold are stock options that have a strict exercise window. We have to sell them. Despite what we’ve sold, the value of our remaining shares has risen a lot and that means the balance keeps going up. Let’s hope that trend continues!

      Liked by 1 person

  4. “Who are these people that splurge on a week at the Atlantis in the Bahamas? Who are the people that book a suite on a Caribbean cruise line to southern islands? Who are the people that book an all-inclusive resort in San Diego in January? ”

    Lol, I was one of those people who did all three of the trips you italicized, and also 10 days in Glacier Bay, a month-long vacation in Spain/Italy after a Mediterranean cruise, and 2 weeks in Tokyo/Kyoto during cherry blossom season. All of these in about a year and a half. We took the trips 1-2 years after the company I worked for IPO’ed, so they were a little reward and easily affordable. On the cruises, we sat at the captains table and our fellow diners were business owners, hedge fund managers, and upper management. Most of them were 20-30+ years older than us with a lot of worldly experience. There are a lot of rich people out there, especially at popular vacation destinations, and even more so at internationally known destinations.

    If I held those stock shares I sold for the vacations until today, they’d be worth well over $2 million so that’s the other side of the coin.

    Liked by 2 people

    1. The funny thing is we’ve taken a lot of great trips over the years, but still I get gun-shy when I see the prices. The great thing is that I never regret the money I spend on a super vacation!


  5. Love it! You hit the nail on the head. Our frugal habits become a part of who we are and indulging in luxurious expenditures means dipping into that money we worked so hard to put away. But if not now, when? It sounds like you should book that trip and treat yourselves to that warm, winter vacation – especially since you’re actually UNDER budget. And when you’re sitting on that beach in January, you better post pictures to inspire the rest of us still on FIRE!


  6. Man, I always imagine I’ll have all this pent up energy to spend like crazy in retirement and I’ll have to work hard to keep a lid on that! It’s interesting to hear how it may go the other way.

    Imagine I’m you from a decade ago… “Go ahead. Loosen the belt a little. You’ve worked hard for the $10 orange juice 😉”

    Liked by 1 person

    1. We’re leaving for a long weekend trip this weekend, so our experimental frivolity plan will be in full vigor. We’ll see how it goes.


  7. I hear you loud and clear! I totally think I’m going to have this problem even after we are FIRE. Reading through the Early Retirement forums, I don’t think we’re alone. And I also don’t think this is necessarily a bad habit to maintain. The more money we hang on to now, the more passive income it will generate for us in the future. What a beautiful reward!


  8. Totally agree it is hard to switch off the frugality. Even if our frugality is someone else’s luxury. I still look at the cost of meals on a menu, even though we could be at 4 star restaurant! Hubby bought a used pick-up truck (a dream of his for years was to have a good toy-hauler) instead of a new one…a good Chevy runs for years! And yes, pricing out that big trip next year….finding it super challenging to go with the “luxury tour” even if I’ve always dreamed of trying one. Years of watching pennies and justifying the spending does not turn itself off overnight. I continually challenge myself with the question…will it bring me joy? Sometimes that has started to be….well yeah….spend the money!

    Liked by 1 person

    1. In worry too if I switch ‘on’ the luxury switch, I will have a hard time getting off the hedonic treadmill!


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