Another reason to spend your savings!

Readers of this blog will know that I am a fan of academic research into retirement habits. I’m also keen to make sure that people get the right balance between having enough money for the rest of their lives and making sure that they make the most of their retirement.

A new study from the University of Michigan suggests that there is a good reason to spend money early on in your retirement. Their research suggests that our enjoyment of activities declines throughout retirement. Putting it another way, you get more enjoyment per Pound of spending in early retirement than you do in later retirement.

The study showed that people don’t reduce their spending throughout retirement due to financial constraints – and the evidence for this is that people increase their spending on gifts and legacies as they age. A recent UK study showed that people save more as they age, and this could be seen as a further indication of this trend. The US study also revealed that fewer people in their 80s feel financially constrained than people at conventional retirement ages.

The University of Michigan researchers state that the reduction of enjoyment is linked to worsening health and an increase in widowhood with age. These may be sad facts but they are an incentive to get on and do things in early retirement, rather than waiting.

So, now you have academic research as an argument to spend your savings in retirement.

I’ve already explained to Louise that I need another new bike as I just won’t enjoy it as much next year…

If you would like to read the academic paper, you can follow this link:

Philip Wise |

Managing Director and Chartered Financial Planner

This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.

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