The adage that old habits die hard is especially true when it comes to finances. Patterns that you've built up over decades can be hard to break away from even when a major life event requires you to shift gears - such as retirement.
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One of the biggest and most challenging adjustments new retirees must make is shifting their financial mindset from saving money to spending the money they've saved up.
"Now you have this lump sum and have to draw it down. For some it's almost physically painful," David John, a senior strategic policy advisor at the AARP Public Policy Institute, said in an interview with CNN.
CNN pointed to research showing that among retirees with savings, many go to great lengths to avoid tapping into their savings accounts. Instead, they try to live off fixed income sources such as Social Security, pensions or part-time work. The vast majority of retirees still have at least 80% of their savings two decades after retirement, according to a study from BlackRock.
The downside is that you sacrifice your quality of life by cutting corners when you might not even need to. Certified financial planner Kyle Newell has to remind her clients that the money they worked so hard to save is there to help them live well in retirement.
"I tell them, 'Now the money is doing the work [so] they don't have to.' That seems to help people," Newell told CNN.
Transitioning from a savings mindset to a spending mindset requires strategizing over how to tap into retirement accounts. One common strategy is the 4% rule. Under this rule, you add up all of your investments and then withdraw 4% of that total during your first year of retirement, according to the Charles Schwab website. In subsequent years, you simply adjust the dollar amount you withdraw to account for inflation. The formula is designed to ensure that you don't outlive your savings during a long retirement. It's not for everybody, but it does provide a foundation to build on.
Beyond that, you should think about the role money plays in your life.
"I try to ask [clients] what's the purpose of the money: To have it? Or to use it as a tool to do what you want and to avoid what you don't want?" CFP David Edmisten told CNN. "A lot more time needs to be spent thinking about purpose in retirement. Those who know what their purpose is and what they want to do report being more satisfied."
A good first step is to make a budget and develop a plan to cover your expenses. This will require keeping a record of your discretionary spending as well as your everyday expenses such as housing, food, utilities and health care. Next, assess how those expenses might change in retirement. For example, you might decide to downsize your home to lower your monthly mortgage or rent payment. You should also account for one-time expenditures such as taking a big vacation or buying a new car.
Finally, you should assess the fixed income you'll get in retirement, such as Social Security or pension payments. The difference between that income and your expected expenditures equals the amount you'll need to draw from your savings every month.
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"A year before you retire you should have 12 to 24 months' worth of cash," Edmisten said. "If we get into a recession we should never have to sell a stock to meet spending needs when the market is down."
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This article originally appeared on GOBankingRates.com: Retirees Are Hesitant to Spend Their Savings - How to Change Your Mindset