Everything went according to plan. Now what? After a lifetime of saving, it can be difficult to justify spending on things that we once considered frivolous.
Meir Statman recently wrote a paper for the Financial Planning Association titled “Are Your Clients Not Spending Enough in Retirement?” that outlines an interesting conundrum for many retirees. Diligent savers sometimes find it difficult to switch from the wealth accumulation phase of life to the spending phase. The widely accepted narrative that there is a retirement crisis in the United States influences these savers to prioritize penny-pinching over their own happiness. Statman calls this “self-induced poverty”.
We’re not suggesting that you should go out and buy a solid gold toilet, but it is important not to lose track of the purpose of your personal wealth accumulation. If it was for a comfortable retirement, are you actively allocating to that? A financial plan is not necessarily a function to maximize wealth. It should also consider how you aim to enjoy that wealth through lifestyle, legacy, and peace of mind.