I’ve been a financial DIYer for decades, pretty much my entire adult life.

And for most of those decades, it felt pretty straightforward.

• Save as much as I can, while also enjoying life in the present.
• Invest consistently, in a prudently aggressive manner.
• Pick strong mutual funds to benefit from their investment management expertise and deep analyst bench.
• Avoid panic selling during market crashes, allowing dollar-cost-averaging (DCA) to juice performance as the market recovered.
• Let compounding work its magic.

Now that I’m 63, the fact that I’m mostly retired is a testament to how well these habits and approaches work (especially when accompanied by a fair amount of good fortune).

But as I approached retirement, I realized something important.

Yes, I had the skills and temperament to succeed in accumulating a nice retirement nest egg. And yes, I have a fair bit of knowledge and understanding of basic financial planning and taxes, so I could put together a projection spreadsheet that maps a plausible retirement assets, income, and taxes trajectory.

However, there’s one thing I had precisely zero experience with.

Turning all those into a financially successful retirement.

Because the skills it took to build enough wealth to get me here are not the same skills I need to go from here forward, successfully managing our retirement finances. Accumulating assets and drawing from them efficiently pose fundamentally different challenges.

The advisors I worked with to put this article together have a diverse range of credentials, experience, and focuses. But what they all said painted a cohesive and somewhat surprising picture.

During accumulation, picking good investments and avoiding bad ones is very helpful. However, as Warren Buffett famously said, if you don’t have the expertise or interest in picking winning investments, you can do better than most professionals by simply investing in low-cost index funds.

But once the paychecks stop coming, although market-beating returns are still welcome when you can get them, investment selection becomes less critical to financial success than avoiding the pitfalls that can result from unintended consequences of decisions made in separate “silos.” Ones where you decide what to do in one arena, while being oblivious to the eventual implications for the rest of your financial picture.

Let’s call these “interaction mistakes,” which can include:

• Poor withdrawal decisions that increase taxes.
• Poor timing or size of Roth conversions that may increase future Required Minimum Distributions (RMDs).
• High RMDs that can lead to high Income-Related Monthly Adjustment Amount (IRMAA) Medicare surcharges.
• Asset location in the wrong account type that may cause annual tax drag.
• Leaving large Health Savings Account (HSA) balances to heirs leads to poor tax efficiency of the bequest.

In other words, retirement planning, once close to or in retirement, increasingly requires a holistic and coordinated approach that benefits from education, expertise, and experience that comes from helping many retirees succeed.

None of which I had experience with.

And according to the advisors I interviewed, I’m far from alone in that. Many (perhaps most) retirees don’t realize how interconnected these decisions are until the consequences show up, years later, when it’s too late to address them.

Why Retirement Decisions Can’t Be Made in Isolation

Most retirees tend to approach major financial decisions as independent choices. For example:

• Should I contribute to a Roth IRA or 401(k), or a traditional one?
• Should I claim Social Security early, at full retirement age (FRA), or late?
• Which account(s) should I pull money from to fund this year’s spending?
• How much cash should I hold?
• Should I prioritize investing for dividend income, or total return?

But retirement decisions aren’t independent of each other.

Making what seems like a reasonable or even great decision in one area, given the wrong circumstances, can bite us in another area through expensive unintended consequences.

Marcel Miu, CFA, CFP, Founder and Lead Planner at Simplify Wealth Planning, puts it this way, “Most retirement planning focuses entirely on the wrong risks. People spend decades worrying about market volatility, but the real threats are invisible tax traps, uncoordinated decisions, and rigid mindsets. True retirement success means moving away from static math models and building a flexible, dynamic strategy that protects your lifestyle without forcing you to live like you’re broke.”

That “uncoordinated decisions” theme came up often, and is illustrated by Table 1.

Bryant Rivera, Financial Advisor at Fiduciary Financial Advisors, offers as an example how too many investors oversimplify Roth decisions into a binary choice: “One of the most expensive retirement planning traps I see is assuming Roth contributions are always better because ‘taxes will be higher later.’ That sounds simple, but retirement tax planning is not just about paying taxes now versus later. It depends on your marginal tax rate today, your expected tax rate when distributions come out, how much taxable income you can control in retirement, deductions, credits, Social Security taxation, Medicare premiums, and required minimum distributions. 

“A worker in a high-income year may be giving up a valuable deduction by choosing Roth when they could have contributed pre-tax, invested the tax savings, and later withdrawn or converted those dollars in a lower bracket. On the other hand, someone who builds too much in pre-tax accounts may arrive at RMD age with forced income that pushes them into higher brackets.

He then explains how this can play out in a way that can cost you $10k-$20k or more.

“Here’s a simplified example: if someone contributes or converts $100,000 at a 32% federal tax rate when they could have accessed a 12% or 22% bracket later, that rate mismatch alone could represent $10,000 to $20,000 in avoidable federal tax, before state taxes and other retirement tax interactions. That is why advisors do not just ask, ‘Roth or traditional?’ They map the timing of income, deductions, withdrawals, conversions, and RMDs over multiple decades.

“The real opportunity is not choosing Roth or pre-tax blindly; it is building tax diversification and using lower-income years before RMDs to consider strategic Roth conversions.”

That “tax diversification” matters more than many people realize.

A retirement portfolio made up entirely of pre-tax accounts can create problems later, especially once RMDs begin forcing ever-larger taxable withdrawals, whether you need the money or not.

That’s something I’m well aware of, since nearly 90% of our nest egg is in tax-deferred accounts, which leads me to expect our RMDs to significantly outstrip our spending needs less than a decade after RMD age.

Nick St George, founder of St George Wealth Management, shares, “Tax planning is important. People end up stacking up assets in 401(k) plans and IRAs and have limited to no assets in taxable or Roth accounts. They now have increased Medicare premiums and a tax rate that ends up being higher than when they were working. 

“Spreadsheets do not factor all of this in. I once met with a client who had a spreadsheet that showed there would be a $2 million tax benefit to do a Roth conversion of his entire account. That spreadsheet also had him living until 133 years old. A second set of eyes with the expertise to plan for your blindsides is worth more than any fee I could charge.”

Jeffrey J. Smith, Founder and Managing Partner of OWL Private Wealth Advisors, expands, “One of the biggest retirement planning mistakes is waiting until RMDs to withdraw funds from your IRA. In many cases, by delaying the distributions, you will leave yourself with larger RMD amounts, and that can lead to increased Medicare IRMAA monthly costs. Filling lower brackets, Roth conversions, or simply using some of those hard-earned dollars to enjoy retirement a bit more can help manage a tax liability in the future that many DIY investors overlook.”

As mentioned above, asset location is another often overlooked, high-impact decision. 

Miu says, “DIYers routinely underestimate asset location and the true cost of uncoordinated choices. Broad financial industry benchmarks on advisor value demonstrate that comprehensive financial guidance can potentially add significant percentage points of value to net portfolio returns over time, driven heavily by disciplined behavioral coaching and tax-efficient account setup. Many DIYers copy and paste the same investment mix across taxable accounts, traditional IRAs, and Roth IRAs, completely missing out on tax optimization. Information is everywhere, but executing a plan across separate tax, legal, and investment silos is where DIY plans often fall apart.”

For example, actively managed mutual funds and high-dividend investments held in taxable accounts create ongoing tax drag, so they’re better held in tax-advantaged accounts. Index funds and ETFs, on the other hand, have low turnover and dividends, making them more tax-efficient choices for taxable accounts.

 As John Davis, CFP®, EA, Founder and Financial Planner at JKD Financial, explains, “DIY investors tend to struggle the most when managing large taxable brokerage accounts. As a taxable balance grows, it begins to create a significant annual tax drag from dividends, interest, and capital gains. This becomes incredibly difficult to manage smoothly once you overlay outside retirement income sources like Social Security, pensions, and eventual RMDs. It can often lead to analysis paralysis, where it’s hard to decipher how to safely unwind large gains to rebalance, causing the portfolio to drift away from actual risk tolerance, and at times investors start blindly selling assets without realizing the multi-layered tax cliffs they are triggering.”

This isn’t to say that you need to become a tax expert, though having a reasonable understanding of these matters can be helpful.

The point here is to see how most planning decisions aren’t independent of each other. They each have indirect consequences, requiring a holistic approach to retirement planning.

The Retirement Skill Shift That Can Blindside You

As I entered retirement, I gradually realized how big a change this is for financial decision-making.

In our accumulation phase, the challenges are simpler (though not necessarily easy).

Stay employed (or self-employed), increase your income, spend less than you earn, save regularly, invest consistently, ignore market noise, and let time work in your favor.

In retirement, prudent investing is still important, but our focus has to shift and broaden to:

• Managing sequence-of-returns risk through asset allocation.
• Income planning.
• Tax optimization through asset location and withdrawal sequencing.
• Balancing flexibility and safety.
• Making informed decisions that consider all their implications.

And this shift affects more than just the numbers.

As St George says, “DIYers tend to stare in the review mirror, picking best of last year. But what crushed it last year doesn’t typically lead the market the following year, so they end up buying high and selling low. Then they panic even more since they know they have issues and get too conservative because they fear losing even more.”

Miu makes a similar point, “One major mistake is running out of financial oxygen. Without a 5-to-7-year war chest of stable income assets, retirees panic during routine market drops and sell stocks at the worst possible time, which permanently locks in losses.”

That phrase, “financial oxygen,” captures something many retirees feel but don’t usually put a name to.

When you’re still accumulating, you can afford to ignore volatility, because your ongoing income should cover your expenses, so market crashes are just an opportunity to buy assets “on sale” with new contributions, and within a few months or years, the market comes back, so you haven’t lost anything.

In retirement, if you don’t plan for market crashes, keeping enough money in low-risk assets to cover your expenses until the market recovers, your margin between retirement success and failure narrows.

That doesn’t mean you need or can afford to become ultra-conservative with your investments in retirement, since your time horizon is still many years or even several decades long.

As Dr. Steven Crane, Founder of Financial Legacy Builders, says, “The biggest retirement mistakes usually aren’t flashy, they’re small decisions that compound over time. For example, people often hold way too much cash because they’re scared of markets.” 

Retirement is a very different beast from the accumulation phase, as seen in Table 2, and much of what works well during accumulation can become incomplete and sometimes counterproductive, once withdrawals begin.

That last row is especially important. Once you retire, maximizing portfolio size stops being the priority of financial planning.

Instead, the goal becomes to sustain your desired lifestyle over what may be a several-decade retirement, with enough flexibility and margin to cover unforeseen and/or unplanned circumstances.

The Retirement Planning Windows That Close Before Most People Act

One thing that many people underappreciate is the temporary nature of some of the most significant planning opportunities.

As Davis says, “When it comes to losing dollars in the future, the biggest mistake I see retirees make is failing to execute tax strategies while the window of opportunity is wide open. Early in retirement, specifically the ‘gap years’ before RMDs kick in, you have more flexibility to leverage strategies like Roth conversions, capital gain/loss harvesting, and charitable giving.”

However, he warns that even good ideas can backfire if poorly executed: “Waiting too long, or conversely, being too aggressive with these moves in a single calendar year, can severely backfire in the form of higher lifetime tax brackets and steep IRMAA Medicare surcharges.”

Miu adds, “An advisor can be of great value when you enter the golden window, which is the phase right after full-time wage income stops but before Social Security and RMDs kick in. If you aren’t considering executing partial Roth conversions during these years to clear out pre-tax balances at rock-bottom tax rates, you’re potentially missing a massive tax arbitrage window. Another sign is emotional fatigue. If watching daily market movements makes you want to alter your long-term investments, you need a professional to install real, objective guardrails.”

Another timing-sensitive planning window has to do with Social Security claiming strategy.

Miu says, “Claiming Social Security early at age 62 is another trap. People rely on basic life expectancy math, completely missing that delaying benefits until age 70 guarantees an 8% annual payout increase, which is the strongest government-backed insurance against longevity risk on the planet.”

St George sees many people claim benefits too early because they fear the system may eventually become insolvent. He says, “The biggest mistake I see people make with retirement is with Social Security. Most people firmly believe the media noise that the fund is running out and take it as soon as possible, thinking that something is better than nothing. This is compounded when you factor in spousal benefits with either the husband or wife earning substantially more. This can be a $300k+ mistake due to panicking instead of planning.”

Healthcare planning can also create ripple effects that few retirees anticipate.

Miu explains, “Transitioning to Medicare at age 65 seems like a simple, mechanical step, but it isn’t. The government determines your premiums based on your tax returns from two years prior. High earners in their final working years get hit with massive premium surcharges, known as IRMAA, because they don’t realize they can appeal the charge with a simple form based on their new, lower retirement income.”

A final planning window has to do with HSAs.

Because of HSAs’ triple tax advantage of tax-deductible contributions, tax-advantaged growth, and tax-free withdrawals for qualified healthcare expenses, we fully funded our HSA, and instead of using it to cover ongoing healthcare expenses, invested our contributions for the long term, allowing them to grow.

As a result, in retirement, we can take advantage of all the qualified healthcare expenses we had over the years and use HSA tax-free withdrawals to significantly reduce our tax liability compared to drawing the same amount from our tax-deferred accounts.

However, once our RMDs exceed the amounts we need to cover expenses, HSA withdrawals stop reducing taxes. Worse, inherited HSAs largely lose their tax advantages. This means that we have a limited time to draw down our HSA balance, so we need to prioritize that source over Roth balances.

As all the above shows, financial decisions in retirement often have a limited time window to implement optimal decisions, as seen in Table 3. Missing these windows risks negative consequences that are often impossible to fix.

Miu shares another potentially irreversible mistake: “Take, for instance, a client who intends to roll their entire 401(k) balance into a traditional IRA by default. If their account contains highly appreciated company stock, a standard rollover would permanently destroy their ability to take advantage of a unique tax rule. Instead, using the right strategy, we can move the shares to a regular taxable brokerage account, allowing them to pay preferential capital gains rates on the growth instead of high ordinary income tax rates, potentially saving them thousands of dollars in unnecessary lifetime taxes.”

He continues, “The things that are much harder to fix are permanent, structural choices. If you already claimed Social Security early or permanently ruined a corporate stock tax advantage, those mistakes often cannot be undone.”

When a Financial Advisor Is Worth the Cost in Retirement

You’d think that advisors, especially if they charge for assets under management (AUM) or assets under advisement (AUA), would emphasize the value of their investment management.

But the advisors I interviewed emphasized other aspects, instead. They talked about:

• Coordination.
• Managing interactions.
• Identifying blind spots.
• Avoiding unintended consequences.
• Helping retirees make better long-term decisions that enhance flexibility.

And they don’t think that learning to do what they do is beyond the reach of DIYers.

Davis puts it like this, “Hiring an advisor ultimately comes down to two variables: time and expertise. Turning the corner from the accumulation phase to the de-accumulation phase is a massive psychological and technical shift. Managing tax rules, Social Security timing, and portfolio sequencing requires a highly specialized level of expertise that most people don’t have. 

“However, the most common catalyst I see is time. Most of the clients I partner with are highly intelligent individuals; if they wanted to commit the hours, they could likely learn the mechanics of my job. But they simply don’t want to spend their retirement doing that. They want to use their time (the one asset you can never get more of) on their hobbies and with the people they love. They hire an advisor to ‘buy back’ their time and gain the peace of mind that comes with a second set of professional eyes.”

He then addressed whether an advisor can still provide value to a client who comes in already in retirement, “If a retiree comes to me and hasn’t yet claimed Social Security, enrolled in Medicare, or reached RMD age, there is still plenty of flexibility to execute proactive tax planning and distribution modeling. However, once a client hits RMD age, the playbook shrinks dramatically. At that stage, your baseline income floor is essentially locked in, leaving very little wiggle room to alter your tax bracket or mitigate structural income surcharges.”

Miu expands, “If you’re already retired, we can easily optimize your withdrawal strategy. Independent retirement studies on dynamic guardrails indicate that switching to a flexible withdrawal strategy allows retirees to safely step up their initial spending rates significantly compared to rigid, old-school rules of thumb. We can also optimize your remaining low-income years with partial Roth conversions and fix your asset location. 

“Understanding these retirement traps is critical in today’s financial landscape. With rising living costs, evolving tax laws, and high market valuations, traditional rules of thumb simply don’t hold up anymore. Retirees can no longer afford to rely on static models. Surviving and thriving in retirement today requires a dynamic, coordinated approach that treats financial planning as an ongoing evolution rather than a one-time calculation.”

Crane agrees that being retired doesn’t mean it’s too late, “Even when someone is already retired, there’s still a lot that can be improved. Taxes can often be optimized, spending adjusted, portfolios restructured, and estate plans cleaned up. But the hardest problems to fix are usually behavioral. If someone spent decades under-saving, overspending, or avoiding planning entirely, there are limits to what math alone can solve later on.”

He lists important things people tend to underestimate: “People underestimate taxes, overspend too early in retirement, or claim Social Security without understanding the long-term tradeoffs. I’ve also seen people pay off low-interest debt with huge chunks of retirement savings, only to create liquidity problems later. One bad decision in your 60s can cost you six figures over a 20- or 30-year retirement. 

“One area people massively underestimate is withdrawal strategy. Most retirees think retirement is just ‘save money and start taking it out later,’ but where you pull money from matters. Taxes matter. Timing matters. The sequence of returns matters. I’ve seen situations where proper Roth conversion planning and withdrawal sequencing saved clients tens of thousands in unnecessary taxes over time.”

Davis adds, “Many people assume that distributing and spending their money in retirement will be simple, but the reality involves many moving parts. This is especially true when a saver enters retirement holding a mix of account types, such as traditional IRAs, Roth accounts, taxable brokerage accounts, and HSAs. The exact order and sequence in which you draw from those accounts year by year directly dictates your total lifetime tax bill. Managing that distribution sequence correctly determines how much of your savings goes toward your actual retirement wishes versus Uncle Sam.”

The Bottom Line: Retirement Success Requires Coordination, Not Just Accumulation

Not everyone needs a financial advisor. Not even every near-retiree or someone just entering retirement.

But there are certainly situations that justify the expense.

In Crane’s opinion, here’s how you can tell that an advisor could be especially helpful: “The clearest sign you may benefit from an advisor is when your financial life stops being simple. Multiple accounts, pensions, stock options, business ownership, large retirement balances, aging parents, healthcare concerns, taxes, that’s where mistakes become expensive. A good advisor isn’t just there to grow money. They help people avoid avoidable damage.”

St George suggests an even simpler test: “If you’re 10 years or less from retirement and cannot clearly explain where your monthly income will come from in retirement and tell me which accounts you will tap first. You are in desperate need of a financial plan.”

Effective retirement planning is all about coordinating financial moves across a broad range of areas, taxes, asset allocation, asset location, healthcare expenses, withdrawal sequencing, and more. It’s about making decisions that consider indirect consequences, not just the direct results you’re trying to achieve.

Navigating all these areas when your financial picture is already complicated makes it difficult to continue as a DIYer. That’s why I chose to hire an advisor to help dial in our plan and implement it in a way that makes the most of what we’ve been able to amass.

To help us coordinate complex decisions without accidentally creating unexpected, expensive consequences.

To account for how things are interconnected:

• Withdrawal timing and sequence decisions affect taxes.
• Roth conversions affect future RMDs.
• RMDs may affect IRMAA Medicare surcharges.
• Asset location affects long-term after-tax returns.
• Social Security decisions affect spousal planning and longevity protection.
• HSA withdrawals affect current-year taxes and bequest tax efficiency.

It isn’t that I don’t understand these concepts or how they work. It’s that keeping everything balanced benefits from the expertise, experience, and large support team that a good advisor brings to the table.

Even if your situation is such that hiring an advisor isn’t the right decision, you can learn from their holistic approach to retirement planning and decisions.

Because the skills you develop through a lifetime of accumulation aren’t enough for a successful transition to retirement.

Because in retirement, the biggest risks often arise from the unexpected side effects of decisions that seem reasonable individually, but may collide years later, but collide years later in ways that can permanently reduce flexibility, increase taxes, and narrow your options when it’s too late to fix them.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.

Learn More About Opher

It took some doing.

After 20+ years in academia, a notoriously underpaid career choice, followed by a brief stint as an employee in a small engineering services company, I started my own one-person consulting practice.

That let me set my own compensation, and not worry about job security, as long as I could find customers who would pay my rates. Which I did.

Fifteen years later, we decided our portfolio was enough to let me mostly retire, so I did.

The Money Habits That Help You Build Wealth

Beyond increasing our income by taking the solopreneurship path, here’s what helped us reach this point.

• Consistently allocating 2/3 of new income to increase our savings rate. This was the most sustainable way to set aside a large chunk of money without pinching pennies.
• Taking maximal advantage of tax-deferred accounts like Health Savings Accounts (HSAs), IRAs, and individual 401(k) plans.
• Dollar-cost averaging into the market through disciplined monthly investments.
• Investing in a prudently aggressive way, with a 90%+ allocation for equities, and a heavy weighting to the tech sector, using mutual funds to avoid having to pick individual stocks, which isn’t my strong suit.
• Never panic-selling when the markets crashed.

More generally, while we took advantage of opportunities to enjoy the present, we emphasized avoiding excessive spending, even when we could afford it, if it would have come at the expense of building long-term financial security.

We were even cautious with relatively small expenses. For example, we’d buy lower-cost but still good TVs from Costco, rather than splurging on the latest and greatest big-screen experience.

And we avoided unnecessary risk in our investments. 

The Habits That Help You Build Wealth Can Make Retirement Harder to Enjoy

If you’re like me, you’ve spent decades training yourself.

• Delay gratification.
• Save consistently.
• Invest for the future.
• Avoid excessive risk.
• Prioritize future security over present spending.

And, if you don’t come from a wealthy family, it’s those habits that can move you up the financial freedom ladder to the point that retirement is possible.

But once you get there, those habits that were perfectly adapted for accumulating wealth, if unchanged, can make it harder to enjoy retirement.

Because a successful retirement isn’t a game where the winner is whoever dies with the largest net worth. It’s one where winning comes from balancing future security with enjoying your life in the present.

And as straightforward as that sounds in theory, it can be surprisingly hard to make that shift in real life.

After spending decades getting really good at accumulating assets, it’s hard to break those habits. More accurately, what’s needed is to recalibrate those habits enough that you stop optimizing mostly for money outcomes and, instead, optimize for a balance of flexibility, long-term security, and, crucially, fun.

And that’s especially hard to do once your non-portfolio income stops.

Market Volatility Feels Different in Retirement

Dr. Steven Crane, Founder of Financial Legacy Builders, put it succinctly, “DIY investors tend to underestimate the emotional side of retirement. The math is one thing. Actually living through market volatility without a paycheck is something completely different. That’s where people panic, get overly conservative, or start making emotional decisions that hurt them long term.”

When, not if, the market crashes, but you’re still in the accumulation phase, you have the luxury of covering expenses from current, non-portfolio income, and letting your portfolio recover as the market comes back.

In fact, by continuing to dollar-cost average into the market when it’s down, you buy more shares than you would have been able to at the pre-crash prices, so once the market recovers, you’re even further ahead.

But once you’re retired, that opportunity is mostly gone.

Now, you have to draw from your portfolio every month, even in bear markets. There are ways to mitigate the cost of doing that, e.g., by keeping a few years’ worth of expenses in low-risk assets.

But selling any assets when your portfolio is down 20%, 30%, or even more, is emotionally difficult, even when the underlying math still supports the plan.

This is a big change, as illustrated by Table 1.

For many retirees, this creates a low-grade, persistent tension.

At the same time, many retirees are not actually in a financial crisis. A survey from the Employee Benefit Research Institute (EBRI) found that nearly 7 in 10 respondents reported maintaining the same or a higher standard of living in retirement than during their working years, and 6 in 10 felt their spending was about right for what they could afford.

That’s part of what makes this transition so complicated emotionally. Many retirees are doing reasonably well financially in an objective sense, while still feeling uncomfortable loosening habits that helped them build financial security in the first place.

Unless you, e.g., won the “early Bitcoin lottery,” while you may have accumulated enough to retire, by most reasonable measures, you know you’re not financially invulnerable.

Inflation, healthcare costs, longevity, and market uncertainty are still very real concerns. Which means that caution is still rational.

The good news is that you don’t need to flip 180 degrees from following the instincts that helped you win the accumulation phase.

The bad news is that even the appropriate recalibration isn’t emotionally easy.

The “Savings Mindset” Doesn’t Automatically Turn Off

It should be a clear change when you retire. You stop saving and start spending more than your non-portfolio income brings in.

However, the above-mentioned EBRI survey found that the fraction of retirees who retained the “savings mindset,” at 38%, was more than 3 times larger than the 11% fraction of those who managed to switch to a “spending mindset.”

As unfortunate as that is, it’s understandable.

People who spend decades developing, honing, and exercising habits that allow them to build wealth, such as caution, delayed gratification, optimization, and maintaining significant margins, can’t just switch all those habits off when they retire.

For financially responsible people, decades of asset accumulation made increasing assets emotionally rewarding. That emotional pattern doesn’t go away quickly or easily.

EBRI’s survey reflects all this. 

They found that 64% of respondents say that saving as much as possible makes them feel happy and fulfilled, while 31% just feel better when their account balances stay high. 

Morningstar’s Christine Benz described experiencing a similar emotional reaction after selling appreciated stock and setting aside money to pay the resulting taxes. Even though the funds were already sitting in a brokerage account specifically for that purpose, she wrote that “Taking money out feels terrible. I hate it.”

That’s completely understandable. 

After decades of working to keep your account balances going up, the adjustment to intentionally drawing them down is emotionally difficult and takes longer than most people expect.

Marcel Miu, CFA, CFP, Founder and Lead Planner at Simplify Wealth Planning, sees this regularly: “The biggest mistake I see is over-optimizing for a perfect 100% success rate in financial planning software. Data from EBRI’s Spending in Retirement Surveyanalysis shows that 38% of retirees remain anchored in a strict savings mindset rather than a spending mindset. They end up severely underspending and lowering their own quality of life out of habit or vague fears.”

This tendency is reinforced by the way retirement planning is usually framed.

As Justin Fitzpatrick, PhD, CFP, CFA, writing for Kitces.com, points out, retirees and advisors treat higher Monte Carlo “success rates” as automatically better, but that framing biases plans toward underspending in retirement. 

He writes, “The Monte Carlo success/failure framing, in essence, focuses only on minimizing the risk of overspending, hiding a bias towards underspending by calling it a ‘success.’ Or, put another way, a 100% probability of success is exactly a 100% probability of underspending. Which means that solving for higher probabilities of success generally necessitates underspending to the point where clients, while comfortable knowing that they almost certainly won’t run out of money, may have to significantly revise their desired expectations for their standard of living.”

That doesn’t mean retirees should ignore risk or spend carelessly.

But it does imply that retirement planning shouldn’t be treated as a pure financial optimization problem, where higher safety margins equal better outcomes. Instead, plans should balance long-term security and flexibility with intentional spending that lets retirees enjoy their retirement, and especially their healthiest retirement years.

Interestingly, EBRI’s research also found that fear of running out of money was cited by fewer retirees than wanting to preserve flexibility in case of unforeseen future expenses and/or wanting to leave a larger bequest to heirs.

In other words, underspending in retirement is often driven less by fear and more by lifelong habits of maximizing safety, flexibility, and financial comfort.

When Wealth-Building Habits Work Against You in Retirement

As shown above, the habits built over decades of successful wealth accumulation are difficult to “switch off” once we retire, which often pushes us to underspend, limiting our enjoyment of retirement.

Table 2 contrasts the benefits of these habits pre-retirement with their drawbacks once we retire.

Too often, the hardest part about retirement finances is giving yourself permission to use your money.

As I shared elsewhere, when I stepped in to help my mom manage her finances after my dad passed away, one of the most important things I did for her was to repeatedly reassure her that it was ok to spend her own money. 

One such moment sticks in my memory most. It was when she asked me if she could buy herself some new panties.

John Davis, CFP®, EA, Founder and Financial Planner at JKD Financial, expands, “Outside of purely monetary mistakes, the non-financial trap I see is retirees not spending enough while they are healthy. It is far more common for me to sit across from clients in their 80s who say ‘I wish I had’ rather than ‘I wish I hadn’t.’ Money is simply a tool to fund the life you want. More money is not the end goal, and I actively encourage clients to enjoy what they worked hard to save while they are physically able to do so.”

That observation captures something many people miss. 

As we consider retirement, we focus mostly on minimizing the danger of running out of money. 

Less often do we ask whether fear of that outcome may cause us to underspend during the years when we’re still healthy enough to travel, pursue experiences, and enjoy the life we saved for.

That doesn’t mean we should spend with reckless disregard for our financial reality. However, we do need to do a better job of balancing the present-day enjoyment of our retirement with maintaining appropriate margins and flexibility.

As we grow older, temporarily putting off travel, experiences, and hobbies risks permanently missing out on some of the very things that make our lives worth living. 

This brings to mind something our financial planner recently told me when we discussed when we want to downsize our home. He said that planners have to push back when retirees decline to do something now, preferring to plan on doing it a few years later. 

The question they often ask is, “What do you expect to change in these few years that will make you comfortable doing something then that you aren’t comfortable doing now?”

I didn’t have a good answer.

Which was exactly his point.

Many financial decisions in retirement aren’t purely about the numbers. Especially the big decisions are often driven by emotions and emotional inertia.

So, How Do You Recalibrate for Retirement?

Unfortunately, no switch flips automatically once you retire.

The habits and instincts that helped you build enough assets to be able to retire don’t magically go away. They remain emotionally powerful long after you stop working for a living.

And that isn’t necessarily all a bad thing. You still need to keep your eye on the long-term sustainability of your finances.

However, you will benefit greatly from intentionally recalibrating them.

When considering current spending decisions, ask yourself:

1. What experiences am I postponing, and what will make it easier to spend on them later?
2. What specific future risk am I trying to protect against?
3. Am I protecting future security, or maximizing safety indefinitely?
4. Would a reasonable middle ground still leave my retirement sustainable?
5. If I don’t do this, would that be driven by math, habit, or discomfort?

Several other things can also help with the necessary recalibration.

First, and it isn’t a copout, you can reduce the emotional pressure by covering some of your expenses from non-portfolio sources.

As Davis shared, one of his clients took on a “retirement job” earning about $70k annually. Beyond the financial benefits, arrangements like that can make retirement feel less fragile emotionally, especially during market downturns.

This avoids the “all-or-nothing” thinking of many retirees, who go overnight from being fully employed to being fully retired.

That’s why I call myself “mostly retired.” I still consult about 20 hours a month and write, both of which bring in nice annual amounts to supplement our portfolio income.

This sort of arrangement creates some financial and emotional breathing room, letting you:

• Spend more comfortably.
• Avoid drawing as heavily from investments during bad markets.
• Feel less anxious about everyday spending.

Next, recognize that spending from portfolio earnings feels different from spending earned income. You’ve spent decades doing the latter but have little experience with the former.

That’s why it feels so uncomfortable.

Understandably so, but once you recognize why it happens, you can move past it.

Another strategy is to tilt at least some of your portfolio to income-producing assets. Somehow, spending dividends without selling shares is often less emotionally unsettling.

A fourth tactic is to tie spending increases to portfolio performance. That’s the basis of the Guyton Klinger “Guardrails Approach,” which has you trim spending by 10% when your portfolio balance drops by 20% from baseline during the first 15 years of retirement, and increase spending by 10% when it grows by 20%.

Finally, working with a financial advisor can help reassure you when your spending, even if it feels unsafe, is actually on-plan.

None of these will make spending more money feel natural and eliminate any anxiety. However, they can help you gradually recalibrate your habits and emotions from what helped you build wealth to what’s needed to appropriately and sustainably enjoy it.

The Bottom Line: Retirement Is Won by Spending Well, Not Just Saving Well

Even people who have successfully accumulated enough assets to retire aren’t, mostly, “home safe.” They still need to manage uncertainty and risk, which continues to require similar long-term thinking to what they exercised pre-retirement.

The challenge is to balance competing priorities.

• Maintaining future security and flexibility.
• Enjoying the present while alive and relatively healthy.

The habits of our accumulation phase, spending less than we earn, saving and investing more, avoiding major mistakes, and optimizing for building wealth, served us well in getting us to where we are.

However, if we’re to “win” the retirement game, we need to recalibrate and adapt these habits to our new reality, so we avoid unsustainable spending but, at the same time, spend more than we’re likely emotionally comfortable with.

That’s not something you’ll achieve from a spreadsheet.

You need to recognize that holding off on each financial decision until it feels completely safe before allowing yourself to enjoy retirement can easily lead to later regret.

Successful retirement is no longer about maximizing account balances. It’s more about using those balances intentionally to enjoy the life they’re meant to make possible.

It’s about balancing long-term security and flexibility with enjoying the time you still have.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.

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