Here is a retirement statistic that might surprise you: about one third of retirees still have 100% or more of their original assets after 20 years of retirement. That means many people are spending far less than they could, and in some cases, far less than they should.
This is not a good news story. It is a planning problem worth understanding.
Why Retirees Are Underspending
Research from the Employee Benefit Research Institute found that retirees tend to spend from predictable, guaranteed income sources like Social Security, pensions, and annuities, but avoid dipping into their own savings. Even when they have significant assets, many retirees hold back.
Why? A few reasons come up consistently:
Fear of running out. After decades of being told to save, save, save, many people find it psychologically difficult to flip the switch and start spending. The fear of outliving their money is real, even when the math says they have more than enough.
Lack of a clear plan. Without a structured withdrawal strategy, many retirees default to spending as little as possible because they do not know how much is safe to spend. Uncertainty leads to inaction.
Health and mobility limitations. As people age, their ability and desire to spend on experiences often decreases. The early years of retirement, when people are healthy and active, are often the best time to spend, but many people hold back during that window.
Why This Matters for Your Planning
If you are in your 30s, 40s, or 50s and building toward retirement, this research has important implications for how you plan.
First, it suggests that the fear of running out of money, while valid, may be overblown for people who have saved consistently. The bigger risk for many people is not spending too much in retirement, it is spending too little and missing out on the experiences and quality of life they worked so hard to afford.
Second, it highlights the importance of having a clear retirement income plan, not just a savings goal. Knowing exactly how much you can safely spend each year, and having a system for doing it, removes the psychological barrier that keeps so many retirees from enjoying what they have built.
Third, it reinforces the value of guaranteed income sources. Retirees who have Social Security, a pension, or annuity income spend more freely from those sources because they know the money will keep coming. Building guaranteed income into your retirement plan can give you the psychological permission to actually enjoy your retirement.
The Permission You Did Not Know You Needed
Here is the thing: you are allowed to enjoy your retirement. You are allowed to travel, to treat your family, to do the things you always said you would do when you had time. That is the whole point.
A well structured retirement plan is not just about making your money last. It is about giving you the confidence to use it. Start building that plan now, while you still have time to make it exactly what you want. You earned this. Plan to enjoy it.