The Fear of Running Out of Money in Retirement

Work with Taylor: https://taylor-demars.showrunner.one/r/7a25a8f6cb18

One of the biggest challenges in retirement isn't building wealth—it's feeling confident enough to use it. The fear of running out of money retirement is incredibly common, and it often affects people who have saved diligently for decades. Even financially secure retirees can struggle with retirement psychology, making it difficult to enjoy the lifestyle they've worked so hard to achieve.

In this episode, Taylor explains why retirement spending fear is so powerful, why so many people are too scared to spend retirement savings, and how retirement anxiety can quietly reduce the quality of life. He also explores how a retirement identity crisis develops after leaving a career, why many people remain stuck in a retirement accumulation identity, and what it takes to make a healthy retirement mindset shift.

He'll break down practical approaches to retirement portfolio spending, discuss how to give yourself retirement permission to spend, and share the Richard and Ellen retirement case study to demonstrate how these emotional and financial challenges play out in real life. We'll also cover the retirement fear of markets, explain the research behind the retirement spending smile, and discuss why spending patterns naturally change throughout retirement.

If you've ever wondered whether you can retire with 4 million, or you're dealing with retirement savings anxiety, this episode will help you separate emotions from facts. He'll explain why using wealth while you have health is such an important retirement principle, how to overcome retirement spending guilt, and why understanding retirement fear vs plan can lead to better financial decisions and greater peace of mind.

We'll also discuss retirement couples' money conflict, including why spouses often have different comfort levels with spending, and review the latest retirement spending research to understand why many retirees consistently underspend—even when their financial plan shows they can safely spend more.

If you're approaching retirement, already retired, or helping someone prepare for this next chapter, this episode will give you practical insights to help you spend with greater confidence while staying financially secure.

Resources:

Website:  https://www.demarsfinancial.com/

Phone: (509) 536-9556

Schedule an introduction call with Taylor: https://bit.ly/demarspodcast

Check out Taylor's YouTube Channel: https://www.youtube.com/@TaylorMadeRetirement

Taylor's Newsletter: https://demars-financial-group.kit.com/827c64fe0e

Disclaimer: Since we don't know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Demars Financial Group, LLC or its members cannot be held liable for any use or misuse of this content. Advisory services offered through Demars Financial Group LLC, a Registered Investment Advisor. Demars Financial Group is not affiliated with LPL Financial.

Transcript

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SPEAKER_01 0:00

Today's content is pulled from Taylor's YouTube channel. If you want to watch the video version or catch more great content, subscribe by clicking the link in today's show description. Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life. With third generation certified financial planner Taylor DeMars.

SPEAKER_00 0:28

If you've been saving for retirement for 20 or 30 years, there's probably one fear that's been sitting in the back of your mind the entire time. What if I run out of money? It shows up when you check the portfolio after a rough week in the markets. It shows up when you see a headline about inflation or the next recession impending. It shows up at 2 a.m. when you're lying awake doing the math in your head that you've already done a hundred times. And everything you've been told about retirement from the news, online calculators, YouTube, well-meaning friends has reinforced the same message. The danger is real, and you need to be careful. But our firm has helped hundreds of families with substantial savings for retirement transition into this phase. And I need to tell you something that almost nobody in this industry will say out loud. For someone with substantial savings, running out of money is almost never the real danger. The real danger is something much quieter that's harder to see. And if I'm going to be honest with you, it's probably already costing you something more than any market crash could. My name is Taylor DeMaris. I'm a third generation retirement planner and CFP. And today I want to show you what the fear of running out of money actually does to people who have more than enough, why that fear exists and why it's so hard to let go of, and what changes when somebody finally sees it for what it really is. I want to walk you through this through the eyes of a client couple I'm going to call Richard and Ellen. Their names and details have been anonymized, but they share a pattern among plenty of clients I see too many times to count. Richard is 65 and Ellen's 63. He retired about two years ago from a career in corporate finance, where for nearly 30 years he was closing the books for the same manufacturer. And she stepped away from her job at the school district about a year before that. Together, they saved nearly $4.6 million. Most of it was instead of his 401k, then her 403B. They had some money in a taxable brokerage account, and then the rest in the bank. Their home was paid off, Social Security was waiting to be triggered. And by every measure that exists, this couple made it in every way that you're supposed to do. They came to our firm about six months into retirement, where you'd expect the conversation to revolve around the basics, income planning, maybe Roth conversions, which account they should be withdrawing from first. But there was a layer underneath that that felt like I was getting a front row seat at what the fear of running out of money really looked like. Richard happened to be checking his portfolio every morning before breakfast, sometimes before his feet even got out of the bed. But the money wasn't the point. If he skipped a morning, that anxiety would build up into him until he couldn't think about anything else. They also had a trip planned to New Zealand that they've been talking about for 15 years. Ellen kept bringing it up every few months, yet every time Richard's answer was some form of maybe next year, or we'll run the numbers after this season. He's still driving the same car he bought 15 years ago, and he'll tell you it runs just fine. But the true answer is that buying something new just feels like going backwards. At one point, he even told me, half embarrassed, that when he retired, he was just diligent about turning down the thermostat two degrees in the winter. The reality is the heating bill was never going to matter against his retirement portfolio. But he felt it was irresponsible not to. And whenever the market happened to have a bad week, just as it does from time to time, Richard just didn't sleep well. He would, again, be up late running math over and over, he's done a hundred times. But from Ellen's perspective, the irony in all this usually comes through the words of the spouse who's not the numbers person. And they usually say something to the tune of, I thought once we finally had enough, this worrying would stop. But I don't get why it gets worse. So here's what their situation actually looks like on paper. We took their plan and put it through the meat grinder. Monte Carlo simulation with over a thousand scenarios, projecting weak markets all happening at the beginning of retirement, stubborn inflation for decades, and what if they left through their mid-90s? How about if a long-term event care happened for many years for one of them in particular? And in the overwhelming majority of those scenarios, Richard and Ellen still didn't run out of money. They finished with more than they started with. And not just a little bit, but a lot more. They're not just some lucky exception. EBRI is one of the big research groups out there that follows real retirees for decades, and they keep finding the same trend. People retiring with meaningful savings almost never come down to spending at all. A decade in, most have at least 80% of what they started with, and nearly half have more than that. And when I show these results to Richard, it's not like it made him relax. He just distrusted it and asked me to run the numbers again. That reaction tells you the whole story. If the numbers were the problem, then the numbers would have fixed it. So why is a person with $4.6 million still dialing down the thermostat? Because the fear of running out of money was never about the money, but here's what it is about, what it's costing Richard. And it's something that I don't think anyone ever laid out for him in plain English. If you're watching this with over $2 million saved for retirement and any of what I'm describing sounds familiar, the link in the description is where you can book a call with me so we can walk through your specific situation and find out whether the fear you're carrying matches what reality faces. But to see why Richard can't put this fear down, you need to see where it comes from. It didn't show up magically in retirement, but earned its place over decades. For most of his working life, it was the smartest thing Richard had going. Through his 20s and then 30s, the voice in the back of his head was simply right. He didn't have enough. He had a mortgage, two young kids, and a hundred good reasons to spend every month first on saving. And it kept telling him that same thing for years to come. Keep putting away money first. Figure out the rest later. And then 2008 happened. By this point, Richard is in his late 40s, and he's watching a third of everything he had slaved away for disappear in a few months. People around him panicked and sold. Colleagues his age got out near the bottom and then spent five years clawing back to try and get to even. So the voice said in his head, don't you dare stop. Fortunately, he kept contributing straight through the worst market of his lifetime. And that stretch of stubbornness is a real piece of why his number today starts with a four. By 55 years old, his statement crosses a line he never thought he'd see. But standing there looking at a number most would call extraordinary, he keeps hearing the same message. You don't have enough yet, keep pushing. And he said something in one of our first meetings that captures all of it. Something to the tune of, we've been saving forever, right? That's just what we do. Note he didn't say that's what we did do, it's what we do in the present sense. Because somewhere along the way, it stopped being a strategy and evolved into part of his identity. And let me be fair to the fear here. It has built everything that you have are looking at up until this point. It's the reason your statement is in the seven figures instead of you looking at retiring at your age 70. And it may be the reason you're looking at your own version of a New Zealand trip. That's exactly why this next blind spot surprises most people. Because the voice that carries Richard through 2008 never accepted that 2008 actually ended. And as retirement where that starts to finally cost him. Recall how, from Ellen's perspective, the bigger their savings grew, the more she thought that the stress would melt away. Almost everyone assumes that the fear fades once the number gets big enough. You're gonna hit the target and the anxiety should go away and retire with you, right? I don't actually see that happen with clients. Because for a lot of people, the fear gets louder the more they get closer to retirement. And it's the reason that this fear has been gnawing in Richard's gut for the first few months of retirement. Because for every two weeks in his entire career, the paycheck landed like clockwork. Money came in, contributions went out, and the number on the statement in his investment accounts kept climbing. Then one month, retirement, it doesn't come. And then a few weeks later, Richard is watching his first plan withdrawal actually leave his account, money moving in the opposite direction he spent his whole adult life preventing. I often hear clients say something to the effect of it feels like they're cracking open the piggy bank once they see that first withdrawal come out. And here's why. All those years, it feels like that rising number wasn't just money or numbers. It's feedback. Every statement is proof that you're doing it right. And whatever financial worries came up for Richard, he always had a move in his back pocket. Maybe bump up his contribution rate by a percent, cut a subscription or two, grind towards the next raise or promotion. There's always another option. Retirement eliminates those options. You can't contribute more, you can't earn your way to a bigger cushion. Because for the first time in decades, there's only one lever left. How much money comes out of the portfolio? So too many people grab that last lever with both hands, and that's manifested through the thermostat, the 15-year-old car delaying the New Zealand trip again and again. In reality, none of that really matters financially against the $4.6 million. But every one of those small restrictions gives Richard a tiny dose of the feeling he used to get from saving, proof that he's still in control. Now, if any of this lands close to home for you, you might be familiar with the strange part about this. You might have more money than you'll ever spend, but still feel your chest tighten over a $200 dinner bill. I'm not saying that's a character flaw. It's just 30 years of a habit and training manifesting itself in exactly what it's supposed to do. However, the other side of the coin is the sad part, where eventually the Ellens of the relationship stop bringing up New Zealand. Not because they don't want it anymore, but because they start to feel that sense of guilt seeing their spouse tense up every time the idea comes up. Many times a spouse tells me that they start to feel like that wanting a trip or to actually live the retirement they've saved for is making them irresponsible. That's despite having lived an entire lifetime saving right along their spouse. And this dichotomy between the yin and the yang of the spouses can often put them at odds where the Richard of the couple is feeling like he's guarding the money, but the cost of that guarding it was landing on the person he built it for. And this is exactly what I say to the Richards of all my clients, as plainly and politely as possible. For someone who has saved as much as you have, this stopped being about money a while ago. This becomes about control. For 30 plus years, money was the one part of your life you knew exactly who you were. The person who builds, the one who says no now, so they can say yes later. And retirement is asking you to do the opposite, start to spend, let the balance fall on purpose, and trust a plan instead of building one. So for these decades, the paycheck was filling the accounts. Now the accounts need to fulfill the paycheck. And this is that transition Richard was actually in. Again, never a math problem in of itself. If any of this I'm describing sounds like something you or your spouse are going through right now, it's not something you need to figure out alone. The link in the description is where you can book a call with me, where we can walk through your situation together to find out whether the fear that you're holding on to matches reality, or if the plan you have is actually strong enough that the fear just hasn't gotten the memo yet. Now, I call you crazy if you weren't going to push back a little on me right now and telling me, well, it's the paranoid that survived, right? The whole reason I've gotten here in the first place. And you're right, it is. But it's what makes this next part so hard to see coming. So let's go back to that bucket list trip. At age 65, Richard can do the New Zealand trip the way that they pictured it since their 40s. It's a 14-hour flight. He can hike fjordland. They can drive a camper van down to the South Island for two weeks and come home with stories that they'll be telling for decades. But at 75, that same trip looks different. The flight is harder on the body, the hikes turn into guided walks with plenty of rest stops, and the camper van excursion becomes just staying at one hotel that has an elevator. A good trip, don't get me wrong, but not the trip that they have been imagining. Fast forward to age 85, New Zealand isn't in the cards anymore. You're probably living through others' experiences on social media and telling each other about this trip that they almost took. Notice what changed between these three versions. It's not the money, because the money's still there at 65, 75, or 85. It's Richard and his body that changes. For someone who saved what he has, the fear of running out of money almost never makes them actually run out of money. What it makes them run out of is time, the narrow stretch of years where you have the health, energy, and independence to do the things you were saving for all along. And those years will spend themselves, whether Richard books the flight or not. The research puts numbers on what I see in my office every week. Spending in retirement falls on its own as people age, often naturally around 1 to 2% a year every year. My clients in their early and mid-60s are flying overseas, finally doing the kitchen renovation, picking up the tab for their family. But by their mid-70s, that pace has visibly slowed, and by their 80s, it shifts towards the spending being mostly healthcare and the basics. The years when a dollar buys the most life are the exact years that are saying hold back. And that's the part that Richard couldn't argue with. The cost of waiting doesn't show up as a red number on a statement or spreadsheet. There's no alert for it. It just quietly compounds, well, everything on paper looks fine. There's a line that I've worn out in client meetings that a few people are starting repeating back to me, which is using your wealth while you have your health. Because the people who never hear it don't end up broke. They end up in their late 80s with money they never touched, on track to being the richest person in the nursing home. Being careful is what got you here, and I never asked you to stop measuring twice to cut once. But you deserve to know what it trades away every time it says, not yet. Which brings us back to Richard and the moment he finally saw the bill. The shift, when it came, it wasn't overnight nor dramatic. It wasn't a single meeting where everything clicked and he walked out a different man. Usually I see this translated for clients over the course of a few months of working together, one piece of the plan at a time, where we're going through everything, where the money will come from each month, from which account, in what order, what the tax picture looks like for the next five years, what their spouse's financial life looks like if they pass away first, how to afford healthcare if they're retiring pre-Medicare, what the plan looks like if the market drops like by 30%, right at the worst time. And in Richard's case, we rebuilt the thing that retirement took away from him. Because on the first of every month, money lands in their checking account, the same amount, same day, like a paycheck. It comes from an intentional portion of their portfolio that conflicts whether the market is having a good year or a bad or something in between. And it doesn't ever prevent them from being able to book the trip. Somewhere in this process, Richard's question changed. He stopped asking, Do I have enough? And in fact, one day he asked me something that I've repeated to other clients since, something to the tune of, what have I actually been giving up by living like this? And that question changed the whole mindset because for the first time, the cost of the fear was visible to him. And it wasn't in dollars, but in years. He could see that the thermostat and the old car that he was driving and the morning portfolio check weren't actually protecting him from something real. They were more like rituals, little ceremonies of control that the plan had already made unnecessary. And Ellen told me the first sign of a real mindset shift she saw was small. One Saturday night, Richard suggested they stop at a different restaurant, somewhere where he didn't already know the bill. And to anyone else, it might seem ridiculous, but to her, it was the first money decision she watched him make in years where fear wasn't part of the equation. A few months later, they ended up booking the New Zealand trip. Now, I want to be honest about what changed and what did it. The fear doesn't just disappear. Richard still looks at the portfolio most mornings, but it's more out of curiosity and compulsion. And yes, spending still catches in his chest sometimes when he sees a big bill, but 30 years of a voice doesn't go silent in one season. The difference for him is that the voice no longer makes the decisions for him. The planning does. He knows where his next month's income is going to come from. He knows what happens in the bad scenarios because we've walked through them in advance. And once he could see the whole picture instead of just having a gut feeling or hopeful that it would work out, the fear lost authority on him. And the portfolio, after almost two years of actually living on what they've saved, the trip and the looser spending included, their balance is actually no less than it was when the day they retired. Ellen actually told me a while ago that she doesn't wait for the right moment to bring up a trip anymore. She just says it off the cuff. She even suggested that they go bungee jumping for fun to see what he'd say. And if you're wondering if any of this is for you, there's a version of Richard's question you can run tonight, which is the next time you say no to something that you may be able to afford, ask yourself, is it the plan saying no or the fear? That's the honest truth that I wish someone handed Richard about a decade ago. The fear had done its job to help him grow his nest egg. The money was built. And the voice that built it does not get to spend your last good years as well. Because for someone who saved as much as you've worked for, running out of money is no longer the real danger, but making the fear make your decisions until what it was supposed to protect runs out on its own. That's what I see the fear of running out of money actually do to people who are the least likely to experience it. The fear is just one of the several things that can cost you the retirement you save for, but nobody points it out in plain English. That's exactly why I made this video right here, where I share five pieces of honest advice I'd give to anyone who retired with 2 million or more, including the one thing that I think everyone at that level needs to hear before they make any other decision for retirement.