Do You Have This Financial Problem – Not Spending Enough?

October 12, 2025 — You probably know some well-off people who live well below their means .- we sure do. At the extreme end these folks won’t buy anything if it’s not on sale. They opt for the cheapest entree at a restaurant. And forget about business class tickets, even if it means sitting upright in the middle seat on a 16 hour flight to Australia. Although they have the retirement savings and other assets to buy anything they want without fear, have their home paid for, no debts, and children with successful careers, they just can’t stop acting like they have to live on a miser’s budget.

Running out of money is the biggest worry people usually have in retirement. Someone might have worked hard, but didn’t earn or save enough, or ran into family or financial trouble. The anxiety that someday they will have to survive just on their Social Security is real for them. But there are a surprising number of folks who are blessed to be in the opposite situation – despite their substantial assets they live well under their means. There are many reasons why they deny themselves the pleasure that their hard earned savings could bring. This article will explore some ideas on how to get over those fears and inertia.

Ideas to Help Get Over the Hump

Most baby boomers grew up with parents who lived through the depression of the 1930’s. That legacy often installed frugality as a key virtue. Don’t spend what you don’t have, shut off those lights, only buy what’s on sale, etc. For many, even those who have the money, it can be very hard to part with that deep rooted training.

For those fortunate enough to have sufficient resources to not have to worry about running out of money, here are some ideas to get over their fear of spending enough hump. After all, what is the point of scrimping just to admire the size of a bank account.

The .01% Rule

This one is a little hard to grasp, but it is reassuring. Assume someone has retirement assets of $1 million, not uncommon for many successful people. If you subscribe to the 4% withdrawal rule they can safely take out $40,000 every year, adjusted for inflation, and never run our of money over a 30 year retirement.

The .01% rule, proposed by Ritholtz, CEO of Ritholtz Wealth Management, means someone can spend .01% every day without any worries. In the case of a person with $1 million in retirement funds, that means they have $100 to spend each day. Some people might have to budget all of that for rent, food, taxes, etc. Others, who have additional income from Social Security, pension, or other sources might be in a position where part or all of that $100 is available for discretionary spending. If anything is left they can safely spend it on whatever they want. If they don’t use any of that extra for 30 days, they can paid for a little vacation or some other luxury.

Spending Your Gains

The stock market has been very kind to investors over the past several years. Many based the withdrawal plan from their savings on something like on a 6% return. From 2020-2024, the S&P 500 has averaged about 14% per year. For someone who had $500,000 in an S & P index fund, instead of taking the planned $30,000 from that source, for each of those years they actually could have felt free to spend that extra 8%, ($40,000) without going outside their withdrawal strategy. The corollary to this is that if they only get a 2% return vs. a 6%, they might consider reducing their annual withdrawal by $20,000.

Portfolio Escalation

Similar to the previous situation, a retirement portfolio might now be worth much more than the original balance used to calculate the original withdrawal plan. As an example, the plan might have been based on $1 million, but after a few years is now worth $1.25 million. In that case they could feel free to skim off the top and still keep the original plan intact. Or, increase the annual spending plan based on the new portfolio value.

How to Get Over the Spending Hump

Let’s face it, it’s hard to break old habits. You’ve saved and made sacrifices to get where you are – but can you change your mindset and be freer about your spending? In this case what you spend is a question of ordering your priorities.

Here are some possible priorities (yours might be a combination)

• Enjoy life and spend every last dollar. One estate attorney’s stock line to his clients is that the perfect withdrawal plan is to plan on spending it down so the check to the undertaker bounces. The theory is that they earned it, they might as well enjoy it.
• Leaving it to heirs. How much do you want to bequeath to family and friends? Don’t forget that if you own a home, it’s value will be part of your estate. Some folks scrimp to leave the kids every cent, while others like billionaire Howard Buffett think that enough is enough (or might be too much!)
• Give it away. Charitable giving can make a difference in the world and your community, and be very satisfying too. There are many ways to donate money, like listing beneficiaries in the will and charitable remainder trusts. Most plans have tax advantages. For those with hefty Required Minimum Required Distributions (RMDs) every year, donating those to charities will help keep taxable income down.
• Help the kids out now. Let’s say someone lives to their early 80’s and has a nice estate for the kids to inherit. The next generation might be in their early 50’s at that time, in their peak earning years and nearing retirement. Why not help them when they are younger, when they have the maximum need for extra cash. You (and your spouse too) can give $19,000 to anyone, every year, without triggering the gift tax. You can give up to that amount to their spouse, and their children. Funding 529(c) plans for grandchildren is also a good way to take the worry out of ever escalating college tuition costs, freeing the parents to save for their own retirement.

Bottom Line

In our view it is smart to carefully consider your retirement spending plan, rather than just drifting into it. Many people, unfortunately, have to carefully manage every dime just to stay afloat, which means worry and a very tight budget. But others see their assets increavery year, but never changing their spending habits. If you are fortunate enough to be in that group, maybe it’s time to rethink your spending patterns, enjoying it now, rather than admiring its value, passing into the next world with a big balance you never got to enjoy.

Comments?
Have you been rethinking your spending plan, or do you have trouble parting with a dollar, even if you have it? Please share your thoughts in the Comments section below.