5 Telltale Signs You’re Being Too Cheap in Retirement

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Spending in retirement can be daunting. There are lots of uncertainties and unforeseen risks that may prevent you from splurging, never mind inflation reaching a 40-year high. But if you’re being too cheap with your retirement dollars, it defeats the purpose of amassing a nest egg in the first place, even if hunkering down helps you sleep at night. ​

“It’s very common [for retirees] to respond conservatively” when it comes to spending in retirement, says Rob Williams, managing director of financial planning, retirement income and wealth management at the Schwab Center for Financial Research. “You’ve lost a paycheck; your ability to go back to work has decreased or may not be there; there’s a lot of uncertainties and risk to try to anticipate.” ​

Medical expenses are a big one. With retirement easily lasting decades, there’s a greater chance you’ll get hit with a pricey medical bill or require long-term care. Housing is another high-dollar consideration. Rents are soaring, and a lack of affordable housing is a real problem for older adults. The prospect of not being able to cover those outlays is scary, which prompts retirees to forgo that vacation, hobby or night out on the town — the very things they’d saved up to do in their postwork years. What they don’t realize is that over time, it adds up and their money ends up outlasting them. That’s fine if there are heirs or a charity these savers want to leave their money to. Otherwise, it may be time to start spending some of those bucks if any of the signs below rings true. ​

1. You’re healthy

The average 65-year-old retired couple in 2021 is projected to spend $300,000 on health care expenses during retirement, according to Fidelity Investments. That’s not accounting for any unexpected illnesses or long-term care requirements, which can add thousands of dollars to the bill. It’s a big reason retirees are frugal with their money, but if you’re healthy, you don’t have to be a spendthrift.​

​“A good sign is how you are doing medically,” says Andrew Meadows, senior vice president at Ubiquity Retirement + Savings. “Are you exercising, eating well, doing everything you can to prevent that medical diagnosis?” If you can answer yes, Meadows says you don’t have to be so chintzy when it comes to spending on things dedicated to wellness and keeping you active. The healthier you are, the less you’ll need to spend on medical care and the more money you’ll have for the pursuit of happiness.

2. ​You don’t have a plan

We spend years mapping out our retirement saving plan, methodically putting money away and making sure it’s invested properly. But once retirement hits, we don’t have a detailed plan on how to spend it. Without a plan, it’s hard to tell how much you should actually be drawing down, Williams says. It can lead to overspending by some and underspending by others.