Investors spend decades of their working lives developing best practices around finance—avoiding unnecessary debt, contributing as much as possible to retirement accounts, maybe even making some spending sacrifices along the way. These habits aren’t easy to build, but they are essential tools for wealth building.
These strong habits can create a challenge when it comes to retirement, however. After decades of learning how to build wealth, some investors find it surprisingly difficult to start using it.
A 2025 analysis from the Retirement Income Institute found that married households age 65 with at least $100,000 in financial assets withdrew an average of just 2.1% per year from savings.1 That is well below the commonly cited “4% rule,” which is the guideline suggesting a retiree can withdraw 4% of a portfolio in the first year of retirement, then adjust that amount for inflation each year thereafter.
To be sure, the 4% rule is not perfect, and it should not be treated as a personalized retirement plan. Every household has different income needs, tax considerations, health risks, estate goals, and market exposure. But the comparison is still useful, in my view, because it shows that many retirees may be spending far less than their financial resources could reasonably support.
If this pattern describes your situation, you’re not alone. In fact, it’s so common that behavioral economists have a name for it: “the retirement consumption puzzle.”2
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For many investors, saving becomes part of their identity. It represents discipline, control, responsibility, and security. Spending, by contrast, can feel like moving in the wrong direction. Even when a withdrawal is planned, seeing an account balance decline can make a die-hard saver uneasy.
That uneasiness is totally understandable. Retirement can last decades, markets can be volatile, healthcare costs can rise, and unexpected expenses can happen. Fear of running out of money is not irrational.
But consider what the other side of the coin looks like: reaching the later stages of retirement with experiences postponed, gifts never made, trips never taken, and opportunities missed. That’s not an outcome retirees should want, either.
I’m not suggesting the goal should be to calculate the maximum possible withdrawal rate and then try to hit it. The goal is to understand what your wealth is meant to accomplish and then build a plan that allows you to use it with confidence. For some families, retirement wealth is designed to fund travel, hobbies, or time with children and grandchildren. For others, it may be used to support charitable causes, help younger generations, purchase a second home, or simply make daily life more comfortable.
As with many things retirement-focused, it comes down to building a solid plan and answering questions like:
These questions are not answered once and then set aside. The spending level that feels right at age 65 may look different at 75 or 85, as markets shift, your health changes, and family needs change. A thoughtful retirement income plan can help retirees understand what is possible, what is prudent, and what trade-offs may be involved.
In some cases, the plan may confirm that caution is appropriate. But in many others, it can create something retirees may not realize they need: confidence. That could mean saying yes to meaningful experiences, helping family when it matters most, supporting causes you care about, or simply enjoying the flexibility you spent decades working to build.
Bottom Line for Retirees
I want to reiterate that my goal here is not to encourage retirees to find ways to spend more. The goal is to understand the difference between restraint that is required by your financial plan, and restraint that is driven by habit, fear, or uncertainty. After a lifetime of saving, that distinction is not always easy to make.
At Zacks Investment Management, we help retirees and soon-to-be retirees build income plans designed around their goals, risks, and long-term needs. A plan cannot remove every uncertainty from retirement, but it can provide the clarity needed to use your wealth with more confidence and intention. Confidence in retirement spending usually starts with getting the foundational decisions right—download our free guide: Looking To Retire In 2026? Your Guide to Social Security and Medicare Decisions That Matter3.
Disclosure