Congratulations!
You did it.
You worked for 40 years.
You saved.
You invested.
You skipped things you wanted because retirement was more important.
Now you're retired.
Whatever you do, don't spend the money! It would seem that’s how quite a few Americans feel.
According to a study by Allianz in 2026, 71% of working Americans expect they'll be reluctant to spend their retirement savings because they want to preserve their account balance:
One might assume that’s just workers imagining how they’ll feel some day.
Nope.
According to the same study: Nearly two in five (39%) retirees are reluctant to spend to preserve their savings.
Further, about one-third of retirees say, "It felt wrong to start drawing down on their assets in retirement after accumulating for decades."
That's understandable.
Saving money is one of the most important things investors can do to prepare for retirement. Learning to invest and delay gratification is precisely how many become financially independent.
Then retirement arrives and presents a strange problem. The behavior that helped you build your retirement isn't necessarily the same behavior that helps you enjoy it. You spent 40 years training yourself not to spend the money. Now you’re allowed to spend it, and many aren’t prepared for that part.
Don’t Be an Idiot
Before deciding how much money to spend in retirement, it might help to figure out what you’re retiring to.
I would love to know how long everyone sat in that meeting staring at the letter U before someone finally said, “How about… Use?”
This is genuinely good advice.
Find a reason to get up in the morning
Spend time with family and friends
Take care of your health
Stay active
Sorry, I just have to say that I think they could’ve done an acronym that’s more fun. For instance, how about "POSH"? Replace “Use” with “Observe others and criticize their performance for any weaknesses.”
Retirement isn't just about the day you stop going to work. It’s suddenly having an extra 40 to 50 hours a week and figuring out what to do with them.
Afraid of Running Out
Allianz asked Americans about one of the biggest fears in retirement. The results showed “record highs”…
That's two-thirds of Americans who worry more about money than they do death.
On the bright side, one of those problems permanently solves the other.
Jokes aside, that fear isn’t completely irrational. Retirement has a specific set of problems that most workers didn’t have to solve. While working, money is continually coming in. While in retirement, you have to plan for a finite amount of money lasting for an undetermined amount of years. How long will retirement last? 10 years? 20 years? You’re my readers on Seeking Alpha, so I hope most of you are aiming for 40 or higher. Customer churn is the worst.
On top of that, add in some inflation, healthcare expenses, home repairs, market crashes, and the staggering cost of long-term care. It makes complete sense that retirees would fear running out of savings. The problem occurs when a reasonable amount of caution turns into fear that paralyzes you.
Retirement Budget
One of the findings in JPMorgan's 2026 Guide to Retirement is how inconsistent retirement spending actually is:
Six out of ten new retirees experience spending volatility during their first three years of retirement. That's important. Retirement expenses probably won't look like this:
$50,000
$50,000
$50,000
They're more likely to look something like this:
$50,000
$45,000
The air conditioner died
$62,000
Note: Double that for married people. If you live in a higher-cost area, just pump the numbers up higher. Also, my assistant prepped that part. I get the feeling he might have overpaid for an A/C unit. Remember to get multiple quotes. If they want to charge for a quote, that’s a sign that part of their business process is getting paid for providing quotes customers won’t use. A provider who expects to win the customer is eager to provide a quote.
That’s one of the problems with trying to determine exactly how much money you’ll spend each year. Life refuses to cooperate with your retirement spreadsheet. Some years will be relatively cheap. Some won’t. You might travel more during the first few years. Healthcare costs can change. Vehicles break. Houses require repairs. Your wife requires shoes. Situations change.
Your goal shouldn’t be to predict everything.
You can’t.
Could I predict how many racks I would have to assemble to hold my wife’s shoes? No, I could not.
However, you can build a retirement plan that doesn’t crumble to pieces when the predictions are wrong.
The Market Has Terrible Timing
Unexpected expenses are only part of the problem. The other problem is that the stock market has no obligation to your retirement plan.
There’s quite a bit going on in this chart. First, I’d like to draw your attention to the green line called “Bad start / great end.” You may notice that the "great end" doesn’t actually look all that great, ending at approximately $0. That’s not an error.
The investment returns have a great ending.
The retiree doesn’t.
Maybe we should call it "Bad start / eating cat food end."
The example starts with a $1 million portfolio and an initial withdrawal of 4% ($40,000). They also adjust the withdrawal annually for 2.5% inflation.
The black line assumes a steady 5% annual return. The blue and green portfolios experience good and bad years at different times. The green portfolio gets hammered in early retirement while the investor is also withdrawing money.
On the other hand, the blue portfolio gets good returns in the earlier years. Despite eventually suffering bad returns, it still finishes the example with about $1.6 million.
Same starting portfolio
Same withdrawals
Different timing of returns
Wildly different retirement.
This is what you would call sequence-of-returns risk. It’s one of the reasons retirees need flexibility in their portfolios. A retirement plan that works perfectly so long as the market behaves isn’t much of a retirement plan.
Don’t Panic
After looking at the previous chart, you may have developed an exciting new strategy:
Sell everything before the market goes down!
Brilliant.
There's just one minor complication. You have to know when the market is going down.
Further, getting out is only half the job. You also have to figure out when to buy back in. The market has this irritating habit of scheduling some of its highest return days remarkably close to some of its lowest days. Missing only a handful of those highest-return days can have an enormous impact on long-term returns.
The lesson from the previous section isn’t that retirees should hide from the market. It’s that your retirement portfolio shouldn’t require you to predict it.
You Don’t Know What’s Coming
The market will always find new ways to surprise us. We know recessions happen. Markets crash. Interest rates change. Dividends are cut.
Sometimes, we get something a bit more creative. We recently covered the preferred shares from PennyMac Mortgage Investment Trust (PMT).
Good luck putting that one in your retirement calculator. That’s one of the reasons diversification matters. The goal isn’t to own a few investments where you can admire all your ticker symbols. The goal is to avoid having any single investment, sector, or unexpected event decide whether or not your retirement plan works.
We spend a great deal of time researching preferred shares for precisely that reason. Investors can find attractive income opportunities without betting everything on one company:
Preferred shares can be particularly useful for income investors because they often provide a middle ground between the common stocks and traditional bonds. We track dozens of preferred shares and price targets. We often trade in and out of preferred shares.
We've written an article on Seeking Alpha on why preferred shares and baby bonds are one of our favorite areas for investing. In that article, we demonstrate how preferred shares from CIM and NLY had strong long-term returns with materially less volatility than the common stocks in the mortgage REIT sector.
For retirees, preferred shares can be attractive. A security yielding 8% to 10% doesn't need significant capital appreciation to produce a good return.
We also cover the equity REIT and mortgage REIT sectors. We’ve recently covered Welltower (WELL) and Terreno Realty Corporation (TRNO). These are two great examples of when it’s best to wait on the sidelines for a better price. We had a sell rating on both of them, which you can see in the following images:
I admit it. I was probably a couple of days early on TRNO. Nobody is perfect. We looked at the trend in interest rates and valuation. It’s a great REIT, but the valuation was getting too high. In my opinion, the Welltower article is the more engaging one, though. The multiple there is just amazingly high. The growth rate looks amazing, but it has to maintain that growth rate for a long time to ever earn the current price.
Diversification won’t eliminate risk from individual securities. But if it's done well, it should reduce the risk of getting one of those bad start / cat food endings.
Diversification Beyond REITs
We spend most of our time researching REITs and preferred shares, and that's where we have our greatest advantage. That doesn't mean investors should build an entire retirement portfolio out of them.
For broad exposure to the U.S. stock market, something like the Vanguard Total Stock Market ETF (VTI) can help a great deal. It provides exposure to thousands of U.S. companies. Further, the expense ratio is only 0.03%. We are huge advocates for low expense ratios. No need to throw money away.
Another benefit to VTI is exposure to many sectors. We don't need to become experts in every sector. We can use an extremely low-cost index fund for the broad market while concentrating on sectors where we have an advantage because of our research.
Retirees may also want to invest in short-term Treasuries. The Vanguard Short-Term Treasury ETF (VGSH) is one option. It currently has treasuries with an average duration of 1.9 years. And one of our favorite parts, just like VTI, is that it comes with an expense ratio of 0.03%.
We also use short-term Treasury ETFs to park cash. Rather than leaving excess cash earning nothing, investors can earn some income while keeping money in a relatively low-volatility investment.
That can also be useful when waiting for another opportunity in the stock market. We don't need to invest every last dollar into the market. We can collect some income while sitting on the sidelines. Then, when an opportunity comes up, we can redeploy the capital. For retirees, it can also provide a source of funds for unexpected expenses.
Final Thoughts
Retirement can and likely will create some strange situations.
You spend decades learning to save your money. You learn to delay gratification. You’re taught to invest instead of spending (hopefully). You then watch your portfolio grow and hopefully reach a point where working becomes an option instead of a necessity.
Then, suddenly, everyone congratulates you and says:
Now start spending it!
It’s no surprise that feels weird. Clearly, the solution isn’t to abandon everything you’ve learned that got you this far. However, it also isn’t about spending your time staring at your brokerage balance, refusing to touch it.
Retirement requires a plan. Expenses can be unpredictable, and the market will occasionally crash at random times. Some investments won’t work out as you expected.
You can’t predict everything.
You don’t need to.
You just need a diversified portfolio, reasonable spending, and enough flexibility to adjust when circumstances you can’t control pop up. The goal isn’t to die with the largest possible portfolio. The goal is to build enough wealth so that you can actually enjoy retirement.
So don’t spend all the money.
But maybe spend some of it.