Too Thrifty for Too Long – how to say ‘yes’ to spoiling yourself in retirement

Note: the following is not intended as professional financial advice.

There’s been a lot in the news lately about the level of pre-retirement savings required if retirees are to enjoy the life they have been accustomed to once they stop working. While the figures have had some quietly sniggering behind their hands, it has many seriously concerned. What’s not being talked about, however, is the folk who are saving more than they actually need to, and who are being unnecessarily thrifty, and hard on themselves, while they do so. So what is driving these folk to do this?

Take the time

One of the problems affecting over-savers is they are often so busy working hard and scrimping and saving, they’ve never actually taken time to sit down and work out how much they already have. This includes how much interest their savings will bring in throughout their retirement years. When they do, they’re often shocked to find they will have more annual income available in retirement than they did during each of their working years.

Habits don’t often change

Retirement savings advice sometimes take it for granted a retiree has big plans once they retire –they’re going straight out to buy the tickets for the big OE they never had in their youth. Or they plan to buy the Harley Davidson they couldn’t afford when they were twenty-something. Habits don’t necessarily change simply because we grow older. If you’ve lived wisely during your working life, it’s unlikely you’ll suddenly want to splurge. When planning for retirement savings, ask yourself realistically, what your goals are, and save according to your own plans, and not someone else’s.

Just another 6 months …

It’s very tempting, once you’ve reached the age of superannuation, to tell yourself ‘I’ll work for just another xxx months to put a little extra in the bank’. That’s fine if you’re enjoying work and don’t want to give it up. But scrimpers and savers often feel they should keep working (even when they’d rather not) out of fear they’ll ‘run short’. As they carry on with their job, the very years they are supposed to be enjoying (often with a partner who wishes they would retire), quickly disappear. It can take something like an illness before they finally give up – and by then it can be too late to enjoy the remaining time they have.

What’s the answer?

If you feel you may be over-saving, it can make sense to talk it over with someone you trust. If you’d rather plan alone, check out the internet for free retirement planning apps to help (just be aware some of these can be influenced by commercial sites). If you’ve been a serious saver all your life, perhaps it’s time to bend the ear of your bank manager, and discuss future investments and access to your funds once you retire.

In the meantime …

While you investigate whether you really are saving more than you need for your retirement, practise treating yourself from time to time to see how it feels. No one is asking you to go overseas on a luxury holiday, or even to treat yourself to a meal at a Michelin starred restaurant. Start small with a weekend away at a nice AirBnB; shout you and your partner lunch out at a cafe; take the grandchildren to the movies. Let yourself experience what retirement (with even just a few treats), might feel like. Who knows – you may not even notice the small decrease in your savings – and the rewards may more than make up for it!