Advisers have a powerful opportunity to help clients “flip the switch” from saving to spending in retirement, says Aegon.
In its latest Money:Mindshift podcast, the retirement specialist discussed the challenges people face in spending the money they have spent decades saving, particularly as retirement becomes more flexible and personalised.
According to Aegon research, more than a quarter (26%) associate spending retirement savings with anxiety, while 18% feel fear and 15% experience guilt. This compares to 15% who associate spending with excitement and 10% who feel relief.
Financial planner and host of Humans vs Retirement Dan Haylett, says: “Clients often have more than enough to live well, but they still hesitate to spend. They’ve spent 30 or 40 years building the habit of saving. Flipping that switch – especially when it means drawing down capital that won’t be replaced – is emotionally challenging.
“We’re nudged to save but we’re not prepared for the transition into spending. That’s why so many people reach later life with regrets about what they didn’t do.”
Haylett suggests the use of a ‘memory fund’; a way to reframe retirement spending as an investment in joy, connection and legacy. He also encourages clients to consider sabbaticals and purposeful breaks earlier in life, not just after retirement.
Dr. Tom Mathar, head of Money:Mindshift at Aegon, says advisers have a “powerful opportunity” to help clients.
“By helping clients define what a good life looks like, and giving them the confidence to live it, financial advice becomes truly transformative. It’s a strange problem to have: to an economist, there’s no such thing as ‘saving’, only deferred spending. Yet many people, even those who’ve saved more than enough, struggle to spend.
“But when we understand the emotional complexity of modern life, it makes perfect sense. Never have we had to navigate such intricate trade-offs between our present selves and our future selves. Spending money shouldn’t feel like a problem, but for many, it is. And that’s why learning how to spend well is a skill worth nurturing,” he said.
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