Stop Working for Money You’ll Never Spend

One of the biggest fears people carry into retirement is running out of money. But for many retirees, the greater risk is something else entirely. Running out of time.

In this episode, James Conole, CFP®, explains why the common habit of delaying retirement “just one more year” can quietly become one of the most costly decisions people make. Many individuals between ages 55 and 65 believe that one more bonus, one more year of saving, or one more market cycle will finally give them the confidence to step away from work. The reality is those goalposts often keep moving, even when the numbers already support retirement.

James walks through the mathematics behind retirement spending and why the fear of running out of money is often overstated. Studies analyzing retirees who follow common spending guidelines show that many households finish retirement with significantly more wealth than they started with. In other words, the portfolio designed to fund retirement often continues growing long after work has stopped.

He also explains a concept known as the retirement spending smile. Early retirement years often include more travel and activity, while spending tends to slow later in life before healthcare costs increase near the end. This pattern means many retirees spend less over time than the projections used in simple retirement rules.

Despite the math, many people still struggle to make the transition from saving to spending. After decades of building wealth, withdrawing from a portfolio can feel uncomfortable, even when the plan clearly supports it. That psychological shift can cause retirees to underspend, delay retirement unnecessarily, or hold back from experiences they once planned for.

The deeper message is not about reckless spending or ignoring financial planning. It is about recognizing that money is a tool. A well-built plan provides confidence that your wealth can support the life you want to live, rather than simply becoming an inheritance decades from now.

The real goal of retirement planning is not ending life with the largest portfolio. It is using your time, health, and resources in a way that actually supports the life you want to live today.

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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

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Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

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Transcript

Make More Money Is An Excuse

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Most people are terrified of running out of money in retirement. But the data shows you should be far more terrified of running out of time. If you're between the age of 55 and 65, you're using make more money as an excuse to actually avoid building a real plan. You tell yourself, you just need one more year, you just need another 500,000 in your portfolio. But those goalposts never stop moving, nor will that change in the future. Here's the reality. If you're like most retirees, you are on track to have far more money at the end of your retirement than you do at the beginning of it. To put it another way, you are currently trading your best years of health and vitality for a windfall that your heirs will inherit 30 years from now. That's why in this video, I'm gonna share a new perspective that you haven't heard before. So you don't make the same irreversible mistake I see far too many retirees make. And I'm gonna break it down into five simple points. Point number one, you need to avoid the trap of just one more year. I just need one more year to get my portfolio in order. I just need one more year to get my plan in order. I just need one more year of maxing my 401k, paying into Social Security, receiving another bonus, et cetera, et cetera, et cetera. This whole idea is wrapped up in the misconception that if I just make more money, maybe one day I'll feel more confident to retire. I am here to tell you that will never be the case. There will always be just one more year. Yes, you think for one more year, what if my portfolio is 10% bigger, 20% bigger? Here's the thing: when you get there, that becomes a new baseline. And when you get to the new baseline, there's a new horizon that you're going to want to reach. So break free of that mindset of just one more year because what it's really doing is it's putting off the more important work. The important work of actually building a plan. So what do I mean by build a plan? This doesn't mean run the Monte Carlo analysis. That doesn't mean ask your financial advisor or you're on track to retire. It means go through a thorough process that understands number one, what are you actually retiring to? Doesn't need to be sophisticated, doesn't need to be fancy, but just what do you want retirement to look like? And number two, how do you create the income to support that lifestyle? Whether it's from social security or pension or investments, do you have a withdrawal strategy that can replace your paycheck with portfolio assets as soon as you do retire? Then number three, do you have the investment plan, the investment strategy to support that income stream? Then number four, do you have the tax strategy to make sure that you're minimizing your lifetime tax liability? Then number five, do you have the security in place? Do you have insurances? Do you have your estate plan in place to protect what you've built? I lay out that process because that's exactly what we do at Root Financials. We work with retirees to help guide them through this phase of life. But make sure that you have that plan in place. Dial in that plan because one more year is never going to come. So if you're stuck in that thinking, it's time to get out of it and actually create a plan. The second thing that you need to understand is the math of excess. So there's a Michael Kitts' study where he said, let's look at retirees who actually use that 4% rule to govern their retirement spending. And when you looked at the study, these numbers are going to surprise you. The numbers show that if you're basing your retirement spending on the 4% rule, then on average, you're going to have almost three times more money in your portfolio at the end of your retirement than you did the beginning. Being over a 30-year retirement, your portfolio sustained your spending needs and you had almost three times as much at the end of retirement than you did going into it. Let me put this another way for you. If you are that person that has$2 million in your portfolio today and you're on the edge about retiring, well, if you were to retire today and spend 4% per year of your retirement value. So using the 4% rule framework, you're likely to have somewhere in the neighborhood of$5.5 to$6 million in your portfolio as a median outcome if you were like the average retiree. So why do you keep working? So why do you keep saying one more year, keep saying max my 401k one more time, keep saying get one more bonus when you already are expected to have more money then than you already do. Now, when you understand this math, what you start to see is your portfolio isn't the problem, it's the mindset that you have with your portfolio, which I'm going to get to in just a second. But before I do that, one more piece of math here, just to show you the logical side of this before we actually go into the big hangups that people have about retirement. The third point that I want to make is around something called the retirement spending smile. So what's the retirement spending smile? So let's use the example we just looked at. You have$2 million and you're looking to retire. Well, if you were to follow the 4% rule, you would start by spending$80,000 per year and then adjust that number for inflation over time. Let's say a 3% increase over time. That is how the math works, but that's not how reality works. In reality, you're spending much more money up front in retirement. These are your go-go years. These are the years where you're traveling. These are the years where you're active. These are the years where you're catching up on lost time because you didn't have the time to do the things you want to do. That doesn't last forever. What happens in your mid-70s when your energy levels start to decline? When your health starts to fall a little bit, you're not spending as much. You have your slow go years. You're really not doing as much. Yes, you're still paying for food. Yes, you're still paying for basics, but you're not taking the same trips. You're not doing the same things. Spending actually declines. Then you have your no-go years. Imagine your 80s, 90s, the latter part of your life. You're not doing any of that. Now, expenses can increase because of medical expenses, but what the retirement spending smile showed is your spending doesn't increase linearly like this. There's more of a smile where it starts high and maybe dips more in the middle, and then it increases again at the end of your retirement. But on average, if you plot starting spending to ending spending, it increases by about 1% less than inflation as a whole. So if inflation increases by 3%, your average spending across retirement increases by maybe 2%. How does that apply? Well, what that really means is we go back to the previous example,$2 million doesn't just triple in the median example. It does more than that because you're not spending the full amount that your portfolio can actually sustain. So as you start to look at this, there's a very compelling math reason to why you shouldn't keep working. But why do people keep working? Well, number four, it's a mindset thing. It's very difficult to shift from a savings mindset to a spending mindset. And this makes perfect sense. You've spent your entire life saving, saved your 401k, saved to buy a home, saved for retirement. All of a sudden, you're supposed to magically flip a switch and change that. Easier said than done. And so what you're going to experience is you're now in a position to where you can retire. You have the money to do so. But there's a mental barrier here saying I cannot go from putting money into my portfolio. Not only am I going to stop doing that in retirement, but I'm actually going to start spending money out of my portfolio. That's a very difficult mindset to break. And the reason for that is your identity is one of a saver. The things you repeatedly do become part of your identity, even in subconscious ways. So when that becomes who you are, it's not easy just to say, go spend 4% per year of your portfolio. Go spend 5% per year of your portfolio. That makes sense on paper, but it's very difficult to actually do. Now here's the thing you can acknowledge that. You can say, yeah, I can see how that would be a hard thing, but let me paint the picture of what's at risk if you don't break out of this. What's at risk? And what I see all the time is people who spend their whole life saving for this portfolio, telling themselves they're going to enjoy it when they retire. And then they retire and they struggle to pull anything out of their portfolio. Or if they do, it's certainly not the full amount their portfolio can support. And their mind, they rationalize it by saying, I don't want to run out of money. But the real risk is they're running out of health. They're running out of time. They're running out of experiences that they can actually have using that wealth as a tool to create them. So don't let yourself get to the end of your life and look back with a tremendous amount of regret, saying, Yes, I saved and I conserved my portfolio, but this isn't going to go with me. There's no value this has once I'm no longer here. So if you can't use it to create those experiences today, time is gonna run out and you're gonna have a massive amount of regret of what could have been had you been able to shift that mindset. And this leads into point number five, which is time is the only non-renewable currency. You can always get more money if you need to. Might be difficult, but you can. You can always cut spending later. You can always do things later. So this is not an invitation to be irresponsible with your money. It's anything but that. What this is is a wake-up call that's saying stop just worrying about running out of money. Instead, think about running out of time. Not saying worry about it. And by the way, I'm also not saying don't have any plan to not run out of money. What you need is a good financial strategy that shows you how much you can spend, that shows you how that's sustainable over a 20, 30 plus year retirement. So then you can focus on what actually matters. What are you doing with your time? What are you doing with this freedom that retirement has created? If you can't understand how the math works, what the numbers look like, you won't be able to fully appreciate the time that you have, the freedom that you have with this portfolio as a tool to support it. So if this is something you struggle with, reach out to us here at Root Financial. This is what we do all day, every day. Yes, the financial strategies, but not just to create those in a vacuum. We do the financial strategies around taxes, investments, insurances, retirement planning so that you can do what you actually want to do. So that you can actually experience the freedom that retirement has to offer. If you're looking for any assistance with that, click the link in the description below. We'd be happy to chat with you. But regardless of where you are, make sure you understand this. Make sure that you understand that the risk that most people face is not running out of money, it's running out of time with nothing to show for it.