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Written by Dana George for The Motley Fool->
The unknowns in life can cause many to hoard their money rather than spend it.
It's up to you to weigh whether or not to give up new experiences.
With a good plan in place, spending money doesn't need to mean running out.
What do you do when you've worked your entire adult life with the goal of one day enjoying retirement, only to find that once you are retired, you're too anxious to spend the money you worked so hard for? It's not an uncommon issue. In fact, there's a name for the issue -- the "retirement consumption gap."
After decades of prioritizing saving over spending, it can be tough to retrain yourself to find a happy balance between financial security and enjoying your life. If you find yourself imprisoned by a fear of spending, the following tips may help.
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Planning for retirement is great, but it may not be enough to help you find balance. Instead, consider creating a spending permission plan. Simply put, this plan divides your assets into "buckets." You can label your buckets any way you'd like, but here's an example:
The beauty of buckets is that they give you permission to spend from designated accounts without guilt. For example, if you dip into your emergency reserve, you know you're not taking the money from the essential expenses bucket.
This retirement withdrawal strategy involves setting up automatic monthly transfers from your investment accounts to your checking account. The goal is to mimic receiving a monthly paycheck, just as you did when you were working. You may find that spending feels more like business as usual than depleting assets.
Consider whether you're truly "living," doing the things that can make life so rich. While spending may feel uncomfortable for a while, excessive frugality in retirement may lead to:
You've already spent decades saving, which is a good thing. However, dying with unused assets means you may have under-lived. Refusing to spend your money means you're serving it; it's not serving you (or anyone else).
Sure, spending assets can be scary, but you must decide whether you'd rather be surrounded by untouched assets or collecting new, rich experiences. And if you've been hoarding your funds for a while, it can be a hard habit to break. As with any habit, it pays to start small. For example:
Finally, calculate your "enough" number. You do this by using conservative assumptions to determine a realistic worst-case scenario. Would you have enough money to carry you through if that thing happened? This is a good point to consider working with an experienced financial or retirement advisor who can use software to model potential scenarios.
Like many retirees, you may find that you can spend significantly more than you do each month without risking your future.
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