Why Affluent Retirees Are Afraid to Spend Their Savings

**Tim Elliott** (0:00)
This is Mira Business FM, it's the Morning Drive, and for decades, the global financial planning narrative has drummed a singular, kind of terrifying warning into us. You are not saving enough for retirement. That's a mantra that my guest has, I think, said to me a few times on occasion. We're constantly told if we don't aggressively build our nest eggs, we're going to run out of money in our golden years. But there is a counterintuitive, kind of psychological shift starting to happen. And it comes from a recent report, and it highlights a structural blind spot, really.
That for millions of affluent retirees, the real risk isn't overspending as you build this nest egg, it's underspending in your life. Counterintuitive, but James Thomas, who is a licensed financial consultant, independent financial consultant, this is kind of encouraging, I've got to say to you.

**James Thomas** (1:00)
Yeah, good morning, yes.

**Tim Elliott** (1:02)
It's...

**James Thomas** (1:03)
When I sent this to you, I saw this article and this research, and I just thought, you know what, this will make, hopefully, quite an interesting topic of conversation. Because as you rightly say, not just myself, but the industry in general, is just doom and gloom, not doom and gloom, but it's this overarching, you must save, you must save, you're not saving enough, save more, save more, build, build, build. But I think people then get indoctrinated, they get so ingrained in them that it's safe, safe.

**Tim Elliott** (1:33)
It becomes a pressure, doesn't it?

**James Thomas** (1:34)
Almost, yes.

**Tim Elliott** (1:35)
Yeah.

**James Thomas** (1:36)
And what, there's been actually quite a few articles I've seen recently saying that actually, and I see it actually, my parents and my in-laws, you've saved your whole life, your whole career has all been about saving, building for that retirement. And then you get there, and you're absolutely petrified to spend anything.

**Tim Elliott** (1:57)
Yeah, it's a very real thing, and it is a mantra. And at the outset, I should sort of say, I mean, as much as you will say to people, you've got to save, you've got to save, you've got to do it, that's more for the discipline of doing it, rather than don't live your life now.

**James Thomas** (2:11)
Always, as I said, hopefully again, that's coming across.

**Tim Elliott** (2:14)
To be fair to you.

**James Thomas** (2:14)
I always say to people, it's got to be a balance. You've got to enjoy life now, as well as plan for that future, you. But, this was just some interesting research and studies that seem to indicate that once you've actually followed that mantra and built that lump sum, we'll go out there and enjoy it.

**Tim Elliott** (2:35)
Well, the first thing, I mean, best place to start beginning, there's a lot to talk about here.
Psychology of wealth retention, there's the fear of the financial unknown, there is how you safely deploy capital in retirement, all of that stuff. But the first point to make is, make sure you start saving in the first place, right?

**James Thomas** (2:52)
Yes, build that, so you have to, because this is a nice problem to have, if it's even a problem, but it's a nice situation to be in.

**Tim Elliott** (2:58)
That's a good way to put it, actually. But there is a paradox. We spend our entire lives learning how to save, but nobody teaches us how to spend.

**James Thomas** (3:09)
No, or very few people do.

**Tim Elliott** (3:11)
Yeah.
So, I mean, I told you this many times. I got a credit card, went a bit nuts, and then learned the lesson, and had to pay back, and pay the interest. And actually, it's a good lesson. But nobody taught me how to spend money, and whether I should treat myself, or splurge on this, or save for this. It took time.

**James Thomas** (3:32)
It does take time. And I think this is even more the case when that money is there to be spent and enjoyed. And the key word there is to enjoy it. You've worked hard to build this nest egg, and yet there's certainly a growing body of evidence that suggests that a lot of people then don't know actually how to do that.

**Tim Elliott** (3:55)
Well, it's the interesting thing, right? That you save all of your life, and then as you get into retirement, you have your kids and then maybe grandkids and other responsibilities, and you're a little bit afraid to spend too much money on your kids, and you want to look after them. And I don't want to be morbid here, but the raw data is that lots of financial planners find that retirees leave this world, if you like, with the bulk of their nest eggs intact. Yes.