Turn Up the Dial: How to Actually Enjoy Spending in Retirement

I spend a lot of time telling people to automate their savings, keep costs low, invest in index funds, and stay the course. But do you know what might be even harder than saving?

Spending.

I see this all the time with retirees. The math says they can safely spend $120,000 a year, yet their current spending sits around $60,000. They know they are fine. They see the charts. They trust the projections. Yet the idea of doubling their lifestyle makes them deeply uncomfortable.

I get it. If you have spent the past thirty or forty years living below your means, flipping the switch from saver to spender can be incredibly difficult. It feels risky. It feels unfamiliar.

Besides, it’s not like you’re suddenly going to double your lifestyle overnight. To go from Best Western to butler service at the Four Seasons would require you to become a completely different person. That doesn’t happen on Day 1 of retirement.

But here is the thing. You saved all your life for this moment. If you cannot bring yourself to spend your money, someone else will. Your beneficiaries. The government. And that money might arrive at an inopportune time for your kids (they may already be retired and financially secure), or for your estate when the government takes a giant bite out of your still-too-large RRIF account.

So how do you give yourself the permission and the confidence to spend (or give) more now, while you can truly enjoy it?

The Money Dial Approach

A concept I like is called money dials. These are categories of spending that bring you the most joy. Travel, home comfort, fitness, dining out, convenience, generosity. Everyone has a different mix.

Any retiree can turn up one or two of those dials and significantly increase their happiness without feeling wasteful.

Related: Why we stopped saving so much and started living

Start with travel. Many retirees rank that dial at the top:

• If you normally stay at a budget hotel, try a classy boutique or a luxury resort. You might love it. And if it’s not your thing, now you know.
• If you always fly in the cheapest economy seat, try premium economy or business class for comfort.
• If you usually go for one week, extend it to three. If you take two trips a year, make it four.

And consider combining joy with generosity. Rent a beach house or villa large enough for your adult kids and grandkids to join. They get a holiday they may not be able to afford. You get the family time. It’s okay if it feels like a forced family reunion. You paid for it.

The Research Says You Are Underspending

Morningstar researcher David Blanchett studied how spending actually changes throughout retirement. His work shows that inflation-adjusted spending typically declines for the first 10 to 20 years before rising again much later in life due to healthcare costs (keep in mind this is American research). It creates what he calls a retirement spending smile.

In plain language: most retirees spend less than they could, exactly when they are healthiest and able to enjoy their money the most.

Behavioural economists point to identity as a major factor. You have viewed yourself as a saver for decades. Spending more feels wrong, even when the spreadsheets prove it is safe. This saver mindset is powerful, and it takes intentional behaviour changes to loosen its grip.

Spend Joyfully and With Purpose

There are many high impact ways to increase spending while improving your life and the lives of others:

• Help your kids build wealth early. Fully fund a First Home Savings Account (FHSA) for them ($8,000 per year x 5 years). Help with TFSA contributions. A gift of $10,000, $25,000, or $100,000 for a down payment can be life changing at their age and stage of life.
• Support your grandchildren. Fund $2,500 per year into their RESPs. Take that burden off your kids’ shoulders.
• Level up your giving. Increase that favourite charitable donation from $100 to $1,000 or more (turn up the dial). Create a scholarship fund at your local college or university. A $50,000 gift creates a $2,000 annual scholarship in perpetuity. Talk about leaving a legacy.
• Become the 100% tipper for local baristas and servers.

Pro tip for charitable giving: If you donate appreciated investments from a taxable account directly to charity, you avoid capital gains tax entirely and receive a donation tax credit for the full value. The charity gets more. The CRA gets less. You feel great.

Three Ways to Turn Up the Joy Dial

• Upgrade one thing. Take something you already enjoy and increase the quality.
• Spend to create memories. Bring family or friends along for the ride.
• Give while you live. Generosity offers more joy when you can see the impact.

Let Your Imagination Spend a Little

I have had clients purchase a sailboat and learn to navigate across the ocean. Others bought an Airstream trailer and hit the road for months at a time. One couple now spends every winter living steps from the beach in Mexico. The money was always there. They just needed someone to show them it was okay to enjoy it.

Your only limit is your imagination.

The Bottom Line

Retirement should not feel like a financial waiting room where the goal is to die with the largest account balance. You have permission to spend more. You earned that permission through a lifetime of smart decisions.

Turn up one dial. Try it for a year. If you do not like it, turn it back down and try something else.

But do not wait until it is too late.

You can afford to enjoy the ride.