Retirement's toughest money move may be spending your savings

No one wants to see their retirement savings account balances sink — even when they're retired.

Fewer than 1 in 3 retirees are comfortable drawing funds from their savings, and 7 in 10 say it's very important that their nest egg doesn't shrink in retirement, according to a new report from Corebridge Financial.

That sounds strange considering it's the reason that we've saved for so many years.

"There is a disconnect between people's retirement expectations and a broad resistance for people to actually spend money or decumulate their assets when they get to retirement," Corebridge's president of individual retirement and life insurance, Bryan Pinsky, told Yahoo Finance.

More than a third (38%) of retirees admit they've held back from spending just to protect their savings stash, per the data.

And this isn't because they have the altruistic desire to leave an inheritance to someone they love or an organization whose mission they hold dear. The majority of them (83%) plan to leave "whatever is left over."

"There's a psychological aspect here," Pinsky said. "Wealth is often defined as how much you have saved. It's a massive change to go from getting a paycheck every two weeks knowing that your income is paying for your expenses to going to a place where you get no more income from an employer."

It's a spending roadblock. "Retirees need education to help shift their mindset from their accumulating and investing days to spending and decumulating, so they can actually live the retirement that they've been dreaming about and planning for for so long," he added.

The truth is, most Americans don't understand how to make a pile of money last for the rest of their lives. And many have skipped even the simple step of running a retirement calculator.

Only a fraction (14%) of the retirees surveyed have put together a detailed strategy to manage even their Required Minimum Distributions (RMDs), let alone day-to-day spending needs. Roughly 3 in 10 pre-retirees age 55 or older have a plan for retirement account withdrawals in general, according to this report.

"It's all part of the shift from pensions to 401(k)s," said personal finance expert Jean Chatzky, who collaborated on the report.

"We've got to take this big chunk of assets that we've spent years and years and years accumulating in our 401(k)s and figure out, largely on our own, how to make it last," she said. "And that's really scary. I watched this happen with my mother, not spending anything that was not Social Security, a pension, or interest."

What makes this even more critical to a financially secure future is that the majority of these retirees expect to spend at least 20 years in retirement, and 45% expect to live to age 90 or older.

What can help? Budget, use a retirement calculator, and ask for help from a financial adviser, said Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, which recently published its annual study on retirement security in the US.

These moves may sound simple, but they can make a huge difference in a person's ability to retire and spend without stress.

Retirement calculators are widely available online. Check out AARP, Bogleheads, Fidelity, Schwab, or Vanguard to start.

"People don't think about how much they're going to spend," said Chatzky. "They don't think about how much they're going to need. They don't think about what could go wrong and how much of the deaccumulation part they're going to have to do themselves."

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky and X.

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