The "Rich Retiree" Paradox: Why Investors Who Get Rich Make Poor Spenders in Retirement
- Joe Boughan
- 3 days ago
- 6 min read
Here’s the surprise most people don’t expect:
The people who save the most for retirement are often struggling the most to enjoy it.
Not because they didn’t do enough. Not because they made poor decisions. But because the habits that made them successful don’t turn off just because they retired.
As a financial planner, this is something I see repeatedly. Smart, disciplined retirees reach retirement with more than enough—and yet find themselves anxious, hesitant, and second-guessing every dollar they spend.
This isn’t a math problem. It’s a behavioral one.
If you want a personalized look at how this shows up in your own retirement planning, you can request a free, confidential 5-minute video review here:
The Wealth Building Skills Quietly Contribute to Retirement Spending Anxiety
The discipline that makes someone successful at building wealth is real discipline.
Delayed gratification. Restraint.
Saying no when it would have been easy to say yes.
Those traits compound over decades. But they don’t disappear when retirement begins.
There’s a well-established principle in neuroscience that helps explain why: neurons that fire together wire together. Repeated behaviors strengthen neural pathways until they become automatic.
Research on neuroplasticity and habit formation shows that long-standing patterns don’t simply shut off when circumstances change(see an overview from the National Institutes of Health:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3962618/).
Saving becomes instinctive. Caution becomes identity.
You’re no longer someone who saves—you’re a saver. And savers don’t spend recklessly. They stay in control. They prepare for the worst. All of that sounds virtuous.
Because once you’re living in the future you were preparing for, the same identity that protected you can start to restrict you.
That’s not financial insecurity. That’s financial paralysis.
Why Spending Feels Like Losing
For many retirees, spending triggers an unexpected emotional response.
It feels like loss.
Behavioral economists refer to this as loss aversion, a core insight from prospect theory developed by Nobel Prize–winning economist Daniel Kahneman.
The idea is simple but powerful: losses feel significantly more painful than equivalent gains feel good (a clear explanation can be found here: https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/prospect-theory/).
In retirement, a withdrawal often feels like a loss—even when the plan supports it.
I saw this play out vividly while golfing with a retired client and a few of his friends.
They joked about making a small bet on the course and said, half-seriously, “We can’t bet with you anymore—you’re retired now. You can’t afford to lose anything.”
It was a joke, but it revealed a deeply held belief:
Once you retire, you can’t spend like you used to. Every dollar matters more now.
That belief creates guilt. It invites second-guessing. And it quietly steals the emotional reward of decades of disciplined work.
“What If I Need This Later?” — The Fear That Never Turns Off
The second belief is quieter, but persistent:
What if healthcare costs rise?
What if I live longer than expected?
What if markets disappoint?
What if something goes wrong?
These aren’t irrational concerns. But disciplined savers often default to worst-case thinking. They hold back just in case.
The problem is that no one ever taps you on the shoulder and says, “You’re safe now. You can start spending.”
So you keep waiting.
Research on retiree behavior shows just how common this is. Studies on retirement spending patterns consistently find that many retirees withdraw far less than traditional guidance would suggest—often closer to 2% per year, despite having sufficient assets(Morningstar summarizes this research well here: https://www.morningstar.com/retirement/why-retirees-spend-less-they-can-afford).
Data from the Employee Benefit Research Institute (EBRI) supports the same conclusion: underspending is widespread, even among well-funded retirees https://www.ebri.org/publications/issue-briefs/content/retiree-spending-and-income-patterns.
In other words, many retirees could have spent more—without meaningfully increasing the risk of running out of money.
Instead, they delay experiences. They say “maybe next year.” They stay cautious long after caution has stopped serving them.
When Self-Worth Gets Tied to Not Spending
The third belief is the most subtle—and often the most damaging.
Some retirees tie their self-esteem to financial assets and net worth.
Spending on themselves feels irresponsible. Not because the money isn’t there, but because enjoyment feels undeserved.
Decades of conditioning around sacrifice and responsibility don’t disappear overnight. Those values can be productive while building wealth. In retirement, they can quietly shrink a life.
People sit on assets they never use. They live smaller lives than they can afford because changing their relationship with money feels uncomfortable.
No one ever taught them how to stop being a saver.
The Industry Quietly Reinforces the Problem
Much of the financial industry is designed around accumulation. The dominant narrative is always “save more,” “be careful,” “don’t take risks.” That guidance is often appropriate while building wealth.
It can be limiting once wealth has already been built.
There is comparatively little education around decumulation—how to spend confidently, sustainably, and without guilt. So retirees are left to manage this transition alone, guided more by instinct than by structure.
What Actually Helps: Permission Comes From Structure
The solution isn’t reckless spending or ignoring risk.
It’s permission through structure.
One path is guaranteed income. Research consistently shows that retirees with reliable income streams—such as Social Security or pensions—spend more confidently than those relying purely on portfolio withdrawals, even at similar net worth levels.
Institutional research from JP Morgan’s Guide to Retirement highlights how predictable income changes spending behavior https://am.jpmorgan.com/us/en/asset-management/adv/insights/retirement-insights/.
Academic research from the National Bureau of Economic Research echoes this finding, showing that predictable income reduces spending anxiety https://www.nber.org/papers/w26030.
Another path is education—specifically, understanding dynamic spending frameworks, often called guardrails.
Unlike rigid rules, guardrails allow spending to adjust with market conditions while preserving long-term sustainability. This approach has been studied extensively in retirement income research and practitioner literature(a clear explanation is available through Michael Kitces’ research library: https://www.kitces.com/blog/category/retirement-income/).
The emotional payoff is significant. You’re no longer guessing. You’re no longer hoping.
You’re operating with a plan that adapts to reality.
The Real Cost of Not Spending
This isn’t about spending for the sake of spending.
It’s about what gets lost when fear stays in control.
Time with family. Experiences while health is good. Years that don’t come back.
Long-term research on happiness and well-being consistently shows that relationships, time, and meaningful experiences matter far more than continued accumulation.
The Harvard Study of Adult Development has reinforced this for decadeshttps://news.harvard.edu/gazette/story/2017/01/over-nearly-80-years-harvard-study-has-been-showing-how-to-live-a-healthy-and-happy-life/.
Money is most powerful when it supports life—not when it remains untouched.
The question isn’t, “Can I afford to spend this? ”It’s, “What am I giving up by not spending it?”
Recalibrating, Not Rewriting, Who You Are
The most successful savers often struggle the hardest in retirement—not because they failed, but because they never recalibrated.
The habits that built your wealth are good habits. They just need to evolve.
The goal isn’t to abandon discipline. It’s to pair it with intention.
If you want help making that transition—building a spending framework that aligns money with what actually matters—
You can request a complimentary 5-minute video review here:
You built this retirement. You deserve to experience it.
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