The Psychology of Retirement Income: From Saving to Spending
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If you find it challenging to enjoy your wealth, you may be stuck in a phenomenon known as the "retirement consumption puzzle." While most retirees have enough funds to live comfortably, about 25 percent significantly reduce their spending in retirement.
READ THE ARTICLEWhat to know: This issue is more common amongst retirees who rely on personal savings versus guaranteed income sources like annuities or pensions. Further, psychological factors, such as loss aversion and uncertainty about future expenses, may contribute to this behavior.
Potential solutions: To encourage increased enjoyment of your dollars, you should evaluate your financial goals, track spending, and recognize your emotional responses to spending. Using guaranteed income sources or reframing retirement income as a regular paycheck might also help alleviate the problem.