Every client is different, and therefore every conversation is different, but there are also a number of similarities. A couple of meetings I had last week demonstrate how similar our conversations can be at times. In two separate meetings with two separate longtime clients, I had the same piece of advice: "Go spend some money" was my message to both.
That advice might sound funny coming from someone who makes a living by trying to get clients to save and invest for their future. But in these two cases, the advice was certainly appropriate. And based upon the report "Living Too Frugally? Economic Sentiment & Spending Among Older Americans," by Matt Fellowes, CEO of United Income, it's probably appropriate for a lot more people.
Both meetings I am referring to involved at least one spouse who is more than 80 years old. They are both still healthy, although both admit to starting to slow down a bit. The other thing they have in common is, both couples were very good savers through their working years and are very comfortable financially. Not rich, but comfortable. Both couples have nice-sized individual retirement accounts. And both are taking just enough from each to barely satisfy their required minimum distributions.
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My advice to go spend some money is based on my philosophy that because we get to go around only once in this life, we should limit the "I wish we would have …" thoughts before it's too late. A financial life-planning approach should aim to limit the regrets they may have at the end of life. "I wish we would have taken more family vacations," "I wish we would have traveled more," and "I wish we would have given more" are all examples of regrets.
I certainly understand the desire to keep a healthy level of funds available in the event of a long-term-care need. In fact, I support it. The time bomb ticking inside of anyone's financial plan is the potential for a long stay in a nursing home. So I'm not advocating they go on some wild spending spree. But I don't want them so concerned about a potential need that they miss out on what life has to offer.
The research report I mentioned earlier confirms that my clients are not unique in this regard. It suggests retirees are not spending enough in retirement to live out their lifelong dreams. The report indicates that, for a lot of seniors, a lack of confidence in future economic growth and their own financial well-being keeps them sitting on large portfolios.