Is It Possible to Spend Too Little in Retirement?

Transcript of Podcast Episode 390

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: is it possible to spend too little in retirement?

It has been well documented that the biggest fear people have in retirement is running out of money. Incredibly, according to a 2024 survey by Allianz Life, 63 percent of Americans were more fearful about running out of money than they were about dying.[1]

That may be taking things to an extreme, but there’s a valid point. It’s perfectly reasonable to worry about running dry when you’re used to a certain lifestyle and you no longer have a steady paycheck. And mortality tables these days are more favorable than many people realize. For example, the odds are better than 50-50, if you’re a married couple both age 62, that at least one of you is going to live past age 90.[2] So, you may have to figure out a spending plan—without the employment income you’ve become used to—for potentially 30 years or more.

Retirement is a huge turning point in most people’s lives. You’re switching from a savings and accumulation mindset to one where you’re living (at least partially) off of those savings. You might have gotten used to seeing your net worth go up considerably over the last few years. But for most of us, those days are over once you make the crossover.

It’s a major psychological barrier, so of course you’re going to be concerned about overspending. But how much is too much, or more appropriately, how little is too little? Do you think you might look back during your last years, and feel like you could have done more with your family, and you don’t really need all that money you have now?

The risks of overspending, particularly in the early years of retirement, should be obvious. But what exactly are the risks of underspending? According to an article by Greg Iacurci for CNBC, one big risk is “Not living as fulfilling a life as one could have.”[3] This could mean foregoing a big family trip, that could give your children and grandchildren memories to last a lifetime, because you’re afraid you’re going to run out of money years down the road.

Then there’s the issue of inheritance. Many parents hope to leave a certain amount of money to their children and grandchildren when they’re gone. That could be a factor in your calculation. Cutting back on your spending now would likely benefit them later on. But is it worth it?

But perhaps there’s another way. How about purchasing some additional life insurance? The right amount of life insurance might make you more comfortable with the idea of living the life you’ve already earned. It’s a straightforward idea: the more life insurance you have, the less you need to worry about your kids’ inheritance.

There is data to indicate that underspending is more common than people realize.[4] In a recent study by the Employee Benefit Research Institute, 33 percent of retirees still have 100 percent or more of their initial savings amount remaining by the time they get to their mid-80s.[5]

Recent medical developments have complicated the equation. Progress against diseases such as cancer, Alzheimer’s and heart disease could extend all of our lives further than we expected. That is, of course, great news. But it could cause some financial complications.

Another approach, advanced by some, is that we need to adjust our spending based on what “phase” of retirement we are in. The argument goes that there are three “phases” of retirement: the “go-go,” the “slow-go” and the “no-go” years.[6] You’re certainly less likely to be travelling the world during your declining years, so chances are you’ll be spending less. It could be a way to justify spending more during the early “go-go” years, although you also need to consider the possibility of increased health care costs during your later “no go” years.

So why wouldn’t you spend a little extra while you have the opportunity to enjoy it?

The truth is that every situation is different, and there’s no one correct answer. It is possible to spend too little during retirement, but the consequences of spending too much can be far more significant. Perhaps the best you can do is focus on time with your family. Quality time creates lasting memories. That could mean a few vacations to exotic places, but it doesn’t have to be that way. Sometimes a simple visit or gesture can go just as far.

The transition to retirement is filled with uncertainty. “Have I saved enough?”, “How long will my savings last?”, “Can I afford to live it up a little bit?” Such questions will likely arise, but you don’t need to go it alone. Your Security Mutual Life insurance agent can help. Your Security Mutual Life insurance agent can augment or help assemble your planning team. They’ll help coordinate with your attorney and tax professional to review your situation and to determine the insurance plan that will best suit your needs and objectives.

[1] Allianz Life Insurance Company of North America. “Nearly 2 in 3 Americans Worry More about Running Out of Money than Death.” Allianzlife.com. https://www.allianzlife.com/about/newsroom/2024-Press-Releases/Nearly-2-in-3-Americans-Worry-More-about-Running-Out-of-Money-than-Death (accessed June 9, 2026).

[2] Wohlner, Roger. “Living Past 90: How to Play the Long Game on Retirement, Tax Planning.” Thinkadvisor.com. https://www.thinkadvisor.com/2025/03/26/how-to-plan-for-clients-who-might-live-to-90-and-beyond/ (accessed June10, 2026).

[3] Iacurci, Greg. “Retirement ‘underspending’ is risky, advisor says. Here’s why.” Cnbc.com. https://www.cnbc.com/2026/06/08/retirement-risk-underspending.html (accessed June 9, 2026).

[4] Id.

[5] “New EBRI Research Finds Guaranteed Income Streams May Help Retirees Preserve Assets Later in Retirement.” Employee Benefit Research Institute.. https://www.ebri.org/retirement/content/summary/new-ebri-research-finds-guaranteed-income-streams-may-help-retirees-preserve-assets-later-in-retirement (accessed June 9, 2026).

[6] Dougan, Scott M. “How to Plan for Retirement’s Go-Go, Slow-Go and No-Go Years.” Kiplinger. https://www.kiplinger.com/retirement/plan-for-retirement-go-go-slow-go-and-no-go-years (accessed June 9, 2026).

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