You Can Afford to Spend More in Retirement. Most People Still Won't.

293 words against your ~300 ruling. Here it is:

Jobs fell, records rose. Wall Street read a weak labour report as the Fed's cue to stay patient.

The quick scan: Friday closed out the strongest week for stocks since April. July payrolls showed the US economy unexpectedly shed 23,000 jobs against a forecast of 80,000 added, and unemployment ticked down to 4.1% as more people simply left the workforce. Traders took the miss as confirmation the Fed won't need to raise rates soon, and bought accordingly. The S&P 500 closed at a fresh record, its second in a week. All three major indices finished the week higher, led by a chip-stock rebound.

S&P 500: +0.62% to 7,757.64 – a new record close, topping Tuesday's high; up 3.6% for the week, its best weekly gain since April
Dow Jones: +0.28% to 54,036.93 – Salesforce and Nvidia led gainers; up nearly 3% on the week
NASDAQ: +1.30% to 26,690.62 – outperformed on a chip-stock bounce; up 5.2% for the week

What's driving it: A soft labour print is being read as good news for stocks, because it lowers the odds of the Fed tightening further. Markets have effectively taken a September rate move off the table. The catch: a falling participation rate – down 0.7 points this year as roughly 1.4 million people exited the workforce – complicates that reading. Fewer people looking for work also pushes unemployment down mechanically, not just through stronger hiring.

Bottom line: A weak jobs report driving a record close feels backwards until you remember markets are pricing the Fed's next move, not the labour market itself. For L-Plate Retirees, the lesson isn't to chase the rally – it's to notice how quickly "bad news" gets repriced as "good news" when rates are the dominant story. Don't let one strong week reset your risk tolerance.

You Saved For Decades. Why Won't You Spend It Now?

The scoop: You spent your working life saying no to yourself, so that one day you could say yes to this. And now that you have arrived, you still can't quite say yes.

That is not a rare glitch. It is, according to new reporting from The Week on retirement spending, close to the default setting for retirees who did everything right.

The habit that won't switch off.

The instinct to underspend rarely comes from a spreadsheet. It comes from decades of practice. If you spent thirty or forty years living below your means, tracking every dollar, and treating saving as a fixed cost rather than a choice, that behaviour does not politely step aside the day you retire. It becomes part of how you see yourself. Frugality stops being a strategy and starts being an identity, and identities are far harder to retire than jobs are.

That is the uncomfortable part of this finding. The habit that got you to retirement with money in the bank is the same habit now standing between you and using it.

This is not really a story about arithmetic. Most of the retirees in question already have the numbers on their side. What they don't have is a working substitute for the identity spending replaced. For decades, restraint was the proof you were doing this right. Nobody hands you a new proof point the day you stop earning. So the old one, tightening the belt, stays in charge long after the reason for it has quietly expired.

The fear behind the frugality.

A recent Employee Benefit Research Institute survey found that more than three in four retirees agree they can afford to spend freely. Read that again: not "some retirees think they might be okay." Three in four say, plainly, that the money is there.

And yet nearly half of that same group still underspends anyway, out of fear they will run out. The gap between "I can afford this" and "I still won't do it" is not a financial gap. It is an emotional one. No amount of additional saving closes it, because the shortfall was never really about the number.

Some of that fear is entirely reasonable. You cannot know exactly how long you will live, and you cannot know how markets will behave over the next twenty or thirty years. Both of those uncertainties are real, and both make caution feel like the responsible choice.

The risk nobody warns you about.

Most retirement conversations focus on the risk of running out. Fewer focus on the risk sitting on the other side of the ledger: retirees who never run out because they never really start spending.

Financial advisors describe this as amounting to much the same outcome as overspending, just quieter and less alarming from the outside. Certified financial planner Marianela Collado put it simply: underspending "represents a life not lived, the vacations you didn't take because you were afraid you were going to run out of money."

Nobody schedules an intervention for a retiree with a healthy account balance. Nobody sends a warning letter. The cost of underspending doesn't show up on a statement. It shows up as the trip that never got booked, the grandchild's flight never paid for, the small indulgences quietly talked out of, year after year, until the years run out instead of the money.

Yes, you can leave what remains to your children or to a cause you care about. That is a legitimate choice, made deliberately. It is a very different thing from money going unspent by default, out of a fear that was never actually matched by the facts of your own situation.

A better way to think about the number.

Part of the problem is that people look for a single correct withdrawal figure and expect it to hold for the rest of their life. According to retirement researchers at Morningstar, the "right" withdrawal rate is far from settled science, because you are working against uncertain markets and a time horizon nobody can know in advance. Treating it as a fixed rule you set once and never revisit is where a lot of the anxiety comes from.

The alternative is what's known as a flexible withdrawal strategy: one that moves with your portfolio rather than against it. In a strong year, or after a market rally, you allow yourself to spend more. After a big-ticket year of travel, or during a downturn, you pull back a little. The rate is a conversation you keep having with your circumstances, not a verdict you hand down once at sixty-five and never revisit.

This matters because a rigid, overly conservative rule doesn't actually protect you from the thing you're afraid of. It just guarantees a different, quieter loss: the version of retirement where the money outlives your ability to enjoy it, rather than the other way around.

Think of it less as a dial you set once and more as a conversation you keep having with your own life. A good year in the market, or a year where your health and energy are both cooperating, is a reasonable cue to spend a little more freely while you can. A rough year, or one where the unexpected shows up, is a reasonable cue to ease off. The point of a flexible approach is that it responds to your actual circumstances instead of a number you picked years ago under a different set of fears.

The permission you may still be waiting for.

If you built your savings through decades of discipline, nobody is going to hand you permission to loosen that discipline now. It has to come from you, and it usually has to come deliberately, because the habit that built the number will not talk you out of using it on its own.

The maths, for a majority of retirees, already says you can. The rest is a decision, not a calculation.

Actionable takeaways for L-Plate Retirees:

• Check whether your fear matches your actual numbers. Most retirees who underspend already have enough. Before you decide to hold back another year, sit down and work out, honestly, what you can afford to spend, not what feels safe out of habit. The two are often different numbers.

• Name the identity, not just the budget. If restraint has been part of how you see yourself for decades, retiring doesn't switch that off automatically. Notice when you're saying no to something out of genuine necessity versus out of a reflex that no longer serves the purpose it once did.

• Replace a fixed rule with a flexible one. Instead of picking one withdrawal number and defending it forever, treat your spending as something you revisit each year against how your portfolio and your life are actually going. Spend a little more in strong years. Ease off after a downturn or a big-ticket year.

• Separate deliberate legacy from accidental hoarding. Choosing to leave money to your children or a cause you care about is a real decision, and a good one if it's made on purpose. Underspending by default, out of fear that was never matched by your own numbers, is not the same thing.

• Put a name on what the caution is costing you. The price of underspending doesn't show up as a number. It shows up as the trip not booked, the help not offered, the small pleasures quietly talked out of. Before your next "not this year," ask what specifically you're protecting yourself from, and whether it's real.

Your Turn:
Have you checked, honestly, whether your fear of running out matches what your actual savings can support - or are you still spending based on old habits rather than current numbers?
Is there something you've quietly talked yourself out of in the last year that you could actually afford - and what stopped you from doing it anyway?
If you knew for certain you had enough, what is the first thing you would let yourself spend more freely on?

👉 Hit reply and share your thoughts – your answers could inspire fellow readers in future issues.

☕If today's issue made you question whether your own fear of running out is bigger than what the math actually supports, consider supporting L-Plate Retiree on Ko-fi. Your support keeps these honest looks at retirement money psychology coming.

Resources:

The Next Level Options (NLOMBA) course is a solid, all-in-one roadmap for mastering options investing. You’ll learn what options really are, how to invest in different market conditions, and how to pick strong companies using Buffett-inspired fundamentals.

Inside, the lessons walk you step-by-step through strategies like BOSS and Strategy X, so you’re not guessing – you’re following a proven structure that helps you invest with clarity and confidence.

What to see everything that’s included?
👉 Check out the Options Workshop