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How to Prevent Fear of Spending From Spoiling Your Retirement

If you’ve got enough dollars, resist “spendaphobia.”

Much of the advice on managing your finances in retirement focuses on controlling spending to ensure that assets last a lifetime. And that certainly makes sense, especially for people who are short on savings. But many retirees face a different problem: They have sufficient resources to support themselves, but are so loath to draw on their nest egg that it continues to grow throughout retirement.

That may be just fine for their no doubt deserving heirs. But it can prevent them from enjoying their post-career life as much as they could. Here’s how to stop “spendaphobia” from undermining the retirement you’ve worked and saved so hard to attain.

Researchers including American College of Financial Services chief academic officer Michael Finke found a “retirement consumption gap” when they examined retiree spending habits between 2000 and 2012 for a study published earlier this year. Specifically, except for households of low to modest means, the retirees they tracked were spending less on average than the amount available to them from Social Security, pensions and income from retirement accounts. In the case of wealthy retirees, the researchers calculated that they were spending less than half the annual amount they could actually afford to spend.

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