One of the Toughest Transitions in Retirement: Becoming a Spender Instead of a Saver - Cravitz Financial & Insurance Solutions

One of the Toughest Transitions in Retirement: Becoming a Spender Instead of a Saver

Only one third of retirees are comfortable spending their retirement money! Most would rather live off Social Security, pensions, or income from part-time work, rather than spend down their nest egg.

It is a delicate balance in retirement: you don't want to compromise your quality of life, but neither do you want to run out of money!

In this video Ryan explains his action plan to help turn a saver into a spender.

  1. Create a Spending Plan
  2. Assess Fixed Income Sources
  3. Bridge the "Retirement Gap" 

A holistic financial plan will include sustainable income sources that will allow you to feel comfortable spending (or even growing!) the money you've worked so hard to accumulate.

This kind of planning is what we specialize in at Cravitz Financial. If you have any questions about designing a retirement you can enjoy give us a call.

Full Transcript:

Erin: Ryan, good to see you today. We are talking through one of the toughest transitions in retirement, becoming a spender instead of a saver. I was surprised to learn that only one-third of people feel comfortable spending their retirement money. Most would rather live off social security pensions or income from part-time work. You and I have spent hours talking through a retiree's biggest fear, outliving their money, but what about the other side of that coin, don't hoard your money and compromise your quality of life? How do you help people transition from being savers to spenders?

Ryan: This is an interesting one because a lot of times the people that do the best job of saving over the years have the hardest time once they actually retire because they've done such a great job, they've been diligent, they've been frugal, they've saved up a nice nest egg, and now it's so hard to go about spending down from this. Psychologically, it's just a huge transition, and, for many people, it's really a challenge to do. I'm thinking of one client of mine right now. Actually, her and her husband, I joke with them from time to time and I say, "Are you spending your money? Make sure you spend your money." Because they just have that mentality of, always been just great savers.

Erin: And it makes sense. I mean, this same study by BlackRock found that a vast majority of retirees still had 80% of their pre-retirement savings two decades into retirement. One-third even grew their assets. Do those numbers surprise you?

Ryan: Isn't that amazing? It doesn't really surprise me, quite frankly, because it goes back to what we were just saying, that so many people that do such a good job of saving over the years have such a hard time with spending down from what they've built up. They may just want to spend the interest not the principle, or whatever the case might be, but there's that fear of possibly running out of money, which is why it's so important to have a plan, identify what your expenses are, and, if you are comfortable within your plan, then you can feel comfortable that you can spend money along the way and enjoy yourself all throughout those retirement years.

Erin: Right. Well said. So you mentioned you have this action plan so that people can feel more comfortable spending their hard-earned money, and that first step is to simply have a spending plan. But, surprisingly enough, one-quarter of people polled said they just don't have a spending plan.

Ryan: You have to have a plan, I can't say it enough, and it starts with identifying what your expenses are. It's one of the most painful things for most people to do, is to put together a budget. And, quite frankly, in your working years, if you're saving and investing and you still have money on top of that each month and you're doing well, there really isn't much of a reason to have to put together a budget. But once you retire or you're planning to retire, identify what those expenses are and know how you're going to meet those expenses. That's the first thing you have to do.

Erin: And now the second step is to assess your fixed income sources. What does that mean exactly?

Ryan: Fixed income sources include things like social security, a pension. Although, for many people, pensions have been on the decline for years, so a lot of people don't have pensions. Another source of guaranteed income could be from an annuity that provides a guaranteed income for life backed by the insurance company. These are income sources that you can count on each month to be there to help meet those necessary expenses.

Erin: And so when you have completed step one and two, then you can get to step three, which is finding out that discrepancy, which is known as the retirement gap. How do you help people bridge that gap?

Ryan: Well, one way is with an annuity, as we just mentioned. As an example, if your monthly expenses are $8,000 a month and you have social security and maybe a pension and that provides, let's say, $5,000 a month, you could carve off a portion of your portfolio to make sure that you have that $3,000 a month of income guaranteed to you, again, backed by the insurance company, coming in each month there for the rest of your life. That would be one way to do it. There's other bucketing strategies where you're identifying more short-term, medium term, and long-term money, but having an action plan for different money that you have and breaking it up to meet certain goals.

Erin: And that plan leads to peace of mind, which is what's so important. Ryan, if somebody wants to talk to you about creating their financial plan so that they can enjoy the retirement that they deserve, what's the best way to reach you?

Ryan: They can call. It's 714-462-9155. Or they can go to the website at

Erin: All right. Ryan, thank you.

Ryan: Thank you.


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