The Stress of Spending in Retirement — And What Actually Helps

In the previous article, we talked about knowing what you're retiring to, and how having something that gives your days shape beyond the paycheck is an essential part of the emotional foundation of retirement. But there's another source of stress that many retirees struggle with: figuring out how much you can actually spend.

During your working years, the financial equation is relatively straightforward. Money comes in, money goes out, and if the balance is off, there are options for earning more or cutting back. There's a rhythm to it, and most people have a reasonable sense of what they're working with at any given time.

Retirement changes that dynamic entirely. The paycheck stops, and now the savings that took decades to build are being drawn down to fund daily life, with no clear picture of how long that life will be, what the markets will do, what inflation will look like, or what health expenses may come up along the way. That's a significant amount of uncertainty for someone trying to decide whether they can afford a kitchen remodel or a trip overseas.

The result, for many retirees, is a low-grade anxiety about money that sits in the background of nearly every spending decision. Not panic, but a constant, nagging uncertainty. Am I spending too much? Should I pull back? What if the market drops? What if I live to 95?

The Fear Is Real, Even When the Money Is There

What makes this anxiety particularly notable is that it doesn't only show up for people who are short on savings. It shows up across the board, including retirees who are financially comfortable by any reasonable measure.

The 2025 EBRI Retirement Confidence Survey found that nearly four out of five retirees said they could afford to spend freely within reason. But almost half of those same retirees admitted they still spend less than they could because they're worried about running out of money. People who know they have enough are still holding back out of fear.

The Allianz 2025 Annual Retirement Study found that 64 percent of Americans said they worry more about running out of money than they do about dying. And a 2024 study by researchers David Blanchett and Michael Finke, published in the CFP Board's Financial Planning Review, found that the typical 65-year-old couple with at least $100,000 in financial assets was only withdrawing about 2.1 percent of their portfolio each year, well below the 4 percent guideline that most financial planning is built around. The pattern is clear: retirees aren't overspending. They're underspending, sometimes significantly, because they don't have a clear sense of what's actually sustainable.

The Guessing Game

A large part of the problem is that most people don't have a spending framework that tells them where they actually stand. They have a portfolio balance and maybe a general sense of what they need each month, but no real mechanism for knowing whether their current pace is sustainable, or what to do when conditions change.

And conditions always change. Markets go up and down, inflation runs hotter or cooler than expected, and large one-time expenses show up, whether that's a new roof, a health event, or helping a child with a down payment. Without a system that accounts for all of that, every spending decision becomes a judgment call. And when those judgment calls involve your life savings, the natural instinct is to be overly conservative, saying no to things that may be perfectly affordable and carrying a level of financial stress that doesn't match the actual situation.

What a Real Spending Plan Looks Like

A spending plan, in this context, is not a budget in the traditional sense. It's not about tracking every dollar or limiting yourself to a fixed monthly amount. It's a plan that has been built on actual historical data and tested against real-world economic scenarios.

The planning tools available today allow a spending plan to be stress-tested against some of the worst economic periods of the last hundred years, including the Great Depression, the stagflation of the 1970s, and the 2008 financial crisis. These aren't hypothetical scenarios, but actual historical sequences of returns, inflation, and market volatility.

What comes out of that process isn't just a single number. It's a range that shows what current spending looks like relative to what's sustainable, and what might need to change if conditions deteriorate. More importantly, it shows what kinds of adjustments would have been needed during those difficult historical periods to help keep the plan on track. In many of those scenarios, the adjustments were smaller than people tend to assume, though it's important to note that past conditions don't guarantee future results.

A good plan also accounts for the fact that retirement spending isn't constant. Most retirees go through an active early period with higher spending on travel and hobbies, a gradual slowdown in the middle years, and a later period that often brings increased healthcare costs but lower spending in most other categories. Building in that natural arc, rather than assuming flat spending for thirty years, may in many cases allow for higher spending in the early years when retirees are most active and most likely to enjoy it.

Guardrails, Not Guesswork

One of the more effective approaches to retirement spending is built around what's called a guardrail system. Rather than picking a fixed withdrawal rate and hoping it holds up for thirty years, a guardrail approach sets upper and lower boundaries around spending. As long as spending stays between those boundaries, the plan stays the course. If the portfolio grows and spending drifts above the upper guardrail, it may signal room to spend more. If markets pull back and spending drops below the lower guardrail, it signals that a reduction may be needed, along with a sense of roughly how much.

This type of plan also accounts for factors that many static plans overlook, including inflation adjustments, changing spending patterns with age, Social Security timing, tax considerations, and the reality that a 65-year-old and an 80-year-old have very different planning horizons.

The benefit of this approach isn't purely mathematical. Instead of making spending decisions without context, retirees are working from a framework built on probabilities and real data. It doesn't provide certainty, because nothing can, but it provides a much clearer picture of where things stand and what the options look like when conditions change. Having that kind of structure tends to shift the conversation from one driven by fear to one driven by information, and when the market does pull back, the adjustment is already part of the framework rather than something that has to be figured out under pressure.

The stress of retirement spending, in the end, isn't really about the math. It's about the uncertainty. A plan that's built on historical data, stress-tested against real downturns, and designed to adjust as conditions change doesn't eliminate risk, because nothing can. But it replaces the guessing game with a framework that's grounded in data and designed to adapt, and for most people, that's the difference between making spending decisions out of fear and making them with clarity.

Tad Jakes, CFP®, EA, ECA

Disclaimer: The concepts and research referenced in this article reflect publicly available data and are intended for educational purposes only. They do not constitute personalized financial, tax, or legal advice. Retirement planning decisions are highly individual and depend on a wide range of personal, financial, and health-related factors. Please consult a qualified financial advisor regarding your specific situation.