Why We Stopped Saving So Much and Started Living
One lesson I’ve learned from my retired clients is that it’s human nature to feel anxious about spending money – especially when the paycheque stops and you’re drawing down your own savings and investments.
After decades of watching account balances go up, it’s deeply uncomfortable to watch them go the other way. It just doesn’t feel good.
What happens next is often a retirement of chronic underspending.
Even worse, when you really think about it, are the decades of saving too much – forgoing some of life’s pleasures along the way during your working years – only to see that money sit there, untouched, in retirement.
No one wants to die with millions in the bank and regrets in their heart.
Bill Perkins, author of Die With Zero, puts it plainly: the point of life isn’t to die with the most money in your account. And no, it’s not about literally dying with zero dollars, either. It’s about dying with zero regrets.
Turning Off the Savings Tap
I’ve taken this lesson to heart – both through my clients’ experiences and in my own life.
There was a time when I was laser-focused on our savings rate. We lived well below our means, and it worked. We hit our financial goals early and built up a significant nest egg in our 40s.
But as our income grew, our lifestyle didn’t really change. We weren’t paying ourselves more. We weren’t spending more on the things that bring us joy.
If we had stayed on that trajectory – high savings rate, aggressive investing, frugal living – we would have reached retirement with more money than we could ever spend. But at what cost?
Trips not taken. A dream home not built. Memories not made. Our health potentially neglected. Kids passed over for opportunities because we were clinging too tightly to our “plan.”
Even worse, we wouldn’t have developed the spending habits or mindset needed to enjoy the money we worked so hard to accumulate. You can’t just flip a switch in retirement and go from spending $80,000 per year to $160,000. You’d have to become a completely different person.
And most people won’t.
What Spending Looks Like for Us Now
So when a client recently asked how much we budget for travel, I hesitated. Because we don’t have a “number.”
We plan around school breaks – somewhere warm in February, Europe or the UK in the summer, maybe another getaway around Easter or in the fall. That can easily add up to anywhere from $35,000 to $60,000 per year on travel.
I know that number sounds insane.
But we don’t have a trailer, or a boat, or a cottage. For years we drove one vehicle. We’ve built our life to prioritize travel and experiences. That’s where we want our money to go.
Couple that with an uncertain health outlook – my wife’s MS, my own Afib scare – and the fact that our kids are teenagers and won’t be living with us forever, and this chapter in our life is all about maximizing enjoyment.
No regrets for things undone.
I don’t want to scrimp through my 40s and 50s so I can (maybe) live it up in my 60s and 70s. From what I’ve seen, most people won’t do it. They won’t flip the switch.
What We’re Doing Instead
Economists call it consumption smoothing – spending a consistent, reasonable amount over your lifetime, adjusted as your needs and priorities shift. For us, that might look like spending $120,000 per year for life (adjusted for inflation).
That means elevating our lifestyle now – while we’re healthy, active, and have our kids at home – so we don’t reach the end with a bunch of unspent money and a list of missed opportunities.
Last year we took an unforgettable trip across Europe: London, Paris, Zurich, Lauterbrunnen, Lake Como, Venice. We even saw a once-in-a-lifetime concert.
Thirty-five-year-old me would’ve never pulled the trigger on that trip. But forty-five-year-old me? I had the mindset. I had the perspective. And frankly, we had the means.
No regrets. It’s a trip we’ll remember for the rest of our lives.
Balance
This is not about YOLOing today and neglecting your future self. And it’s not about depriving yourself today for a chance to live it up in the future. It’s about balance.
Balance means we’re on track to refill our TFSAs within the next 2-3 years.
Balance means potentially funding international tuition for our oldest daughter after that.
Balance means planning a few more bucket list trips that we can do as a family – in this season of life – before our kids go off to post-secondary and start living independently.
Balance means paying off our mortgage before we semi-retire and decide on our next chapter.
You can live for today while still saving responsibly for tomorrow.
What This Means For You
So, if you’re in the savings phase, here’s my encouragement:
- Yes, save aggressively when you’re starting out. But know that it’s okay to level up when your income allows. Give yourself permission to enjoy the fruits of your labour along the way.
- Practice spending. Seriously. If you never flex those muscles, they’ll atrophy. Retirement won’t feel like freedom – it’ll feel like fear.
- Map your spending to your values. If travel matters, make space for it. If it’s music, or food, or education for your kids – lean into those. Life is short. Make it sweet.
- Run the numbers. A sustainable retirement isn’t about maxing out every tax shelter and living like a monk. It’s about figuring out what you can spend and aligning your money with your goals and values.
And if you’re already retired – or close to it – and feel stuck in saver mode? You’re not alone. You’ve done the hard part. Now it’s time to give yourself the gift of using the money.
Not wastefully. Not recklessly. But intentionally.
Because the real goal isn’t to die with the most money.
It’s to die with the fewest regrets.
Giving yourself permission to spend when you were a saver for 40 years is probably the hardest transition to make in retirement. It’s good if you can ease into it.
As someone who both understands and agrees with the concept, I wish to add that these articles often miss the content of considering donations. This is not only a personal values choice, but with the tax advantages, especially donating shares that have appreciated significantly, it becomes a no brainer.
A post a wish I wrote myself, Robb – it’s perfect. And it’s a perfect reason why I’m thrilled you’re our planner and share many of our family’s values.
Totally agree. Great article. We have been retired for two plus years and are slowly opening up the taps and spending more. I still have that little gut clenching voice pipe up in my mind when we drop $20k on a fabulous overseas trip, but I have learned to tell him to “shush up, you had your say”. Keep up the great work.
What you write here Robb is absolutely spot on, it was like you were speaking directly to me! My underspending mentality has not measurably changed even after 3 years of retirement, even though I easily have the means to be otherwise. Perhaps my first backpacking trip to Europe 50 years ago while living on $10/day cemented these habits, ha ha. Thanks for your wise words of advice.
Robb I was reminded this year how unpredictable life and death can be when it comes to retirement. I lost a friend who lived to 93, then my brother passed away at 55 while on holidays in Los Angeles (he did have travel insurance that transported his body back to Edmonton). The eldest regretted not saving/investing more so he could enjoy more and my brother who was saving enough did not live to enjoy it.
So plan for longevity but enjoy today.
You are the sanest financial planner I’ve ever read. You really do nail the concept of balance like no other. Another great article, full of pragmatic wisdom. Thanks for sharing.
Very helpful post, Robb.
I think we’re over savers and have only just started to make the switch you and the family have made.
How do you practically change your budget to adjust for consumption smoothing?
Pay yourself more, adjust savings rate once a certain trajectory is reached?
I’d love to work this into our plan going forward as we’re leaning to flex our spending muscles now.
Hi Ravi,
“ Pay yourself more, adjust savings rate once a certain trajectory is reached?”
Yeah, that’s pretty much what we’ve done. I recognize the immense privilege we have to be able to do that – T4 salaried employees can’t just say “pay me more this month” – but as business owners we can pretty reasonably control our income and savings rate.
I usually have a plan to just pay ourselves what we paid out last year, maybe adjusted with inflation. But then I use our year-at-a-glance budgeting tool to map out what the year ahead is expected to look like.
Hmm, braces for one daughter at $7,500. Flights and accommodations and spending money for three trips at $xxxxx. A big-old hole in our TFSAs that need refilling – can we do a bit more?
I build that out and then see what it’ll take for personal income to achieve our spending and savings goals, make sure there’s a decent buffer in the business to do that, and then adjust periodically throughout the year depending on how everything goes.
What I’ve found is the savings rate stays at about 15%, and as long as we can comfortably hit that then I’m happy to spend the rest.
Great article.
“Practice Spending”. I think that is a key for pre-retirees. If you constantly try to save every dime, you will find it very difficult to open the taps at some point in the future.
The pandemic was a huge wake up call for me and the main reason we are on exactly this trajectory the past few years (couple that with a few great years of stock market gains and generous RSUs!). Huge mindset shift but one I’m so glad I’ve had while my daughter is still young and living with us!
The approach I’ve tried to take is that if I’m meeting my financial goals (based on working with certain financial planners, haha), and I dont have bad debt and I have an emergency fund, then left over dollars can be spent. That doesnt mean I dont decide to use some to save cash for renovations (rather than financing) or maybe bump up mortgage paydown a bit but it does mean it’s not the first priority with that cash.
Very well written. Will bookmark this one as well. But it sounds like your number is still going up? (Replenishing TFSAs). I’ve been reminding myself over the past year that it’s OK not to max my TFSAs or RRSPs anymore.
Replenishing TFSAs until the next time we drain them – haha!
Basically, of our 15% savings rate it makes sense to throw most of that into TFSAs rather than leave in the corp.
So, just a little “left pocket to right pocket” savings.
Hi Robb,
I agree and we have done some of that balancing before we retired. We did a trip or two almost every year until COVID. Some were taking advantages of business traps by adding vacation time and bringing my wife along. Have a car rental and and did in-depth touring in a small area where we where base for work and really get to to know it. We have also been on 14 cruises which were all picked for the itinerary (get a good cross-section of world experiences, not just mindlessly head to the Caribbean for the winter), no repeats yet and some were expensive but worth every Penny. Cruising since business travel became more of a different country each day as my role changed, so enjoyed the unpacking once etc. As I look back, absolutely no regrets and very happy with the experiences rather than waiting even when challenging the budget sometimes. There is a Dutch saying that roughly translates to pull more out, it is there, which has been true in our disciplined experience. I also feel not getting into lifestyle creep as salary increased helped (we had everything we needed to be happy, lifestyle creep probably would have reduced that).
In retirement, spending money on travel has some challenges. We now like a bit more comfort. We now accept what we feel are high prices of hotels in some areas (but look for a “deal” and not throw money away needlessly), but struggle with flying. I’m over 6ft and struggle with economy, which we now avoid, but do not yet accept the price for premium economy or business for some the locations we are considering (not feeling like good value for money in our early retirement years, but that can change if we are not spending enough). Not worth hurting my knees anymore in economy which gets worse over the years. One big trip next year, but using the points I have left to fly comfortable.
I enjoy your blog and reminds me we share many core values which is why we are one of your clients.
So much depends on career choice(s,) health, having a like minded partner or spouse, and then (investing or) saving for that rainy day.
My wife and I, both retired grade school teachers, were and are so blessed. I say “blessed” and not “lucky” because I was always sickly from childhood and less so, right into my retirement. The year I retired I was diagnosed with a “pre-leukaemia,” so when I am unwell, I can’t help but wonder if this is what I’ve been waiting for.
Now teacher bashers invariably mention the time off that teachers get. I get it and all I can say to that is try it. I have encouraged many others, especially Educational Assistants, to enter the profession.
Both of us have three pensions, four if we count out RIFs.
I still find that so unbelievable as I will soon be an octogenarian!
We didn’t start out with any financial plan or strategy and how we’ve reached this point in our lives still amazes me. Oh we’ve made some stupid mistakes along the way—ok, I did—and still do. The greatest of these was probably assuming control of family financial matters which has left my wife wondering what to do if I kick tonight.
I guess I should have mentioned that I have now been retired 23 years and my wife, 22. We celebrated 50 years of marriage last October. We both have reasonably good health for our ages and we’re both still active with things like Pickleball, golf, fitness and Yoga.
We’ve helped our son and his wife when they bought their first house and again as they prepare to renew their mortgage and I shared an inheritance with my daughters.
I guess we’re now in the decumulation phase as we start to get rid of stuff and prepare to downsize.
So that’s why we’re so blessed.
Great post. I follow quite a few forums on personal finance/planning, and rarely does anyone talk about how expensive travel is (and how much it can hurt as a ‘natural saver’ putting out $10k for a trip even if you have the $ in droves).
Case in point: I’ve started planning our family vaca to Mexico this winter. At our favorite resort, if we book the week where our teen won’t miss any school (ie Dec 28-Jan3), it’s $4500/person. If we leave a scant 2 weeks later, it’s $2000/per person.
We will be homeschooling that week, I figure the financial planning aspect has to be worth something 😉
A game-changer for my wife and me was switching a chunk of our portfolios from growth (fairly aggressive 85/15 equities/bonds) to ones that included ETFs that provide more than sufficient income to satisfy the lifestyle we want to have.
Having investments that provide plenty of income and that doesn’t deplete our capital has made it much easier to flip the saver/spender switch and spend far more freely.
This is a vastly different approach than most financial advisors recommend, however, it’s one that is, thus far, quite successful for us (and for a few of my friends, too).
Congratulations Robb on achieving a wonderful Work/Life balance for your family that too many never realize. You are not only a trusted advisor ( your community is extremely grateful they/I have found you) but also an example of how to live a life worth living!
We have always had a balanced approach to saving vs spending. We avoided debt, never carried a credit card balance, paid off the mortgage by age 40, maxed out our RRSPs every year since mid 20’s, etc. We also have taken dozens of amazing vacations and continue to spend around $50,000 a year on vacations. We fly business class 80% of the time, only economy on short haul flights if we can get emergency exit seats. Even our kids have flown in lay flat business class seats many times. We have a beautiful custom built home but no car payments, no cleaning lady, I cut our 2 acres of grass on a nice new zero-turn mower which I enjoy. We don’t care about prices at the grocery store and buy a lot of premium foods but also joined a farm share coop program with incredible fresh organic produce every week all summer for an incredible value.
Net worth is approaching 8 figures and I’m forecasting we will be able to spend pretty much whatever we want in retirement while still leaving a large estate to our amazing kids. I can see increasing travel budget substantially as we enjoy luxury travel and hope to stay healthy and take many wonderful trips in our 60’s and 70’s. We also plan to be able to help our kids get established and will be able to afford to make sure they are set up and able to live balanced lives in their 30’s and 40’s not just struggling to get by.
So for us, balanced has worked out pretty well.
8 figures? Very impressed but you’re clearly the outlier here, who won’t need to worry about any choices unless they’re really out to lunch. Congrats on getting there, consider how you might invest in your community and those on the margins if your capacity allows – take it from someone who isn’t anywhere close but finds it extremely gratifying.
Love this post – thank you! I’ve made many mistakes over my life, one of which was saying “No” a wee bit too often for the sake of investing money. Now that I’m inching closer to retirement, I’m appreciating the wisdom of the advice to “learn how to spend”. It’s been more challenging than I’d expected it to be. That said, I’m getting better…though I didn’t start getting better until my late 40s.
Decades of investing in my 20s, 30s, & 40s has provided me with a very nice cushion. I have little-to-no fear that my new spending patterns will destroy the financial foundation that I’ve created for myself. Also, I think about how my father died only 2 years after retiring. No one is promised tomorrow so I owe it to myself to try and enjoy the present, to say “Yes” today to the things that I think will make happy, and to create as joyful a life for myself and my loved ones as I’m able.
Best post ever, Robb!
Thanks for all your great advice and help in our financial journey. Life can change in an instant, and this is a great reminder to let loose a little! Otherwise, what are we even working for? Certainly, not to enjoy paying bills!
All the best. I hope this resonates or is a gentle tap on the shoulder for your readers that may need it.