Here’s the 1 big reason millions of retirees secretly struggle in America — and it’s not because they don’t have enough money

A tough change in mindset

“Lifetime habits of discipline and prudence aren’t easily dismissed just because you reach what you’re told is a different ‘stage’ of life,” Dr. Brian Portnoy, founder of Shaping Wealth, told Forbes. “Habits are part of our identity, and each of us defends our identity fiercely.”

For many retirees who spent years in the workforce, it was easy enough to get into the habit of contributing to a retirement savings plan and leaving it alone over the years.

After all, the IRS discourages workers from tapping into their savings prematurely by imposing a 10% early withdrawal penalty for IRA or 401(k) plan removals taken before age 59 ½.

But once strong savers reach retirement age, many are struggling to actually spend their nest eggs. And that largely boils down to the fear and discomfort Portnoy mentioned.

A 2024 survey by Allianz Life Insurance found that 63% of Americans worry more about running out of money than death. And it pointed to factors such as inflation, Social Security, and taxes as big drivers of these fears.

Since mid-2021, annual inflation has soared. And while recent inflation levels aren’t the norm, it’s easy to see why a lot of people worry about having to raid their savings accounts just to make ends meet.

Meanwhile, Social Security is in the throes of a financial crisis. The program’s Trustees estimate that Social Security’s combined trust funds will run dry in 2035. At that point, benefit cuts are a real possibility.

Changes to the tax code could also upend retirement finances. A rise in tax rates and changes to other policies could leave once well-off retirees increasingly burdened. And the middle class aren’t immune to negative changes, either.

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How to get more comfortable with spending money

If you're worried about running out of money in retirement, your solution may be to simply spend as little as possible. It's a solution that works, in theory, but it may lead to a less fulfilling lifestyle.

One way to feel more at ease with retirement spending is to sit down with a financial adviser and devise a strategy and a budget that will fit the life you imagine living in your golden years.

For years, financial experts have touted the 4% rule, which has you withdrawing 4% of your savings balance during your first year of retirement and adjusting subsequent withdrawals in later years for inflation. This system is designed to help your nest egg last for 30 years.

But the 4% rule isn’t optimal for everyone. A better bet is to work with a financial professional to establish a safe withdrawal rate based on your investment mix, age, life expectancy, daily needs, and retirement goals. Someone who retires in their mid-70s, for example, can generally get away with a higher withdrawal rate than someone who retires 10 years earlier.

A financial adviser can also help set you up with predictable income during retirement, while accounting for factors like taxes. Municipal bonds, for example, can be an excellent retirement investment because they pay interest at scheduled intervals and their interest is federally tax-exempt.

That said, while a financial adviser can help you manage your savings to lower your risk of running out, only you can change the way you feel about money.

One thing that may help is to remind yourself why you worked so hard to save in the first place. If your goal was to set yourself up for a comfortable retirement, spending your money isn’t straying from that goal. If anything, it’s staying consistent with it.

Also, if you’ve been hesitant to dip into your savings, think about how much satisfaction you'll get from spending more of your money. If dining out a few extra times a week lends to a better quality of life, then it’s worth doing.

Finally, remember that, in many contexts, you need to actually do something in order to realize that your actions haven’t had negative consequences.

Under a financial adviser’s guidance, spend your money for a year and see what happens. You may find that your nest egg is in better shape than expected because it’s still invested for growth.

From there, you may feel more confident spending your money throughout your golden years.