Why your retirement income may stretch further than expected

Financial experts say many older people are so cautious about spending that they miss the chance to enjoy their later years.

For many, retirement promises a slower, more comfortable life. Paying for it, however, can feel harder than expected.

Research by investment and retirement firm LV= found that 63% of UK adults worry they could run out of money after they retire - nearly two in three people.

Older people appear especially anxious, financial experts told BFIA.

"As people confront ageing, physical decline, and mortality - frightening realities they cannot control - they may hold more tightly to the parts of life where they still feel some agency," Reynal said.

On the BFIA Talks podcast, Reynal has already explained why spending money can make some people feel guilty. That discomfort seems especially strong among retirees.

Why do retirees find it hard to spend money?

Emotions are only part of the problem. Cognitive habits and behaviour also make spending difficult for many retirees. Reynal said that moving from a regular salary to relying on savings can be a tough adjustment.

"It's money they worked hard to protect and, until now, have focused on growing," she said.

Cultural habits may also make some people wary of spending.

Money coach Dennis Harhalakis said many Britons take pride in being thrifty and frugal. They identify with the belief that "self-denial is virtuous."

"People still notice when someone shows off a new car or an expensive television. That kind of status signaling remains part of our culture."

Harhalakis said that different generations also develop distinct attitudes toward money, and those attitudes shape how they spend.

Many people retiring now were raised by parents shaped by the postWorld War Two years, when life was more austere and "part of people's ethos was saving, making do," he said.

Lucie Spencer, a partner at wealth manager Evelyn Partners, said retirees often need "permission" to spend their money once they stop working.

Many clients nearing retirement remember the 1970s and 1980s vividly. Mortgage rates reached roughly 15% to 17%, and they worry those difficult conditions could return.

"They've spent years thinking, I have to save,' so accepting that it's okay to spend can take a real mental adjustment."

What to do if youre worried about spending money in retirement

A financial adviser can help you work out a retirement spending plan that reflects your savings and the lifestyle you want.

The service costs between 100 and 350 per hour, according to the government advice website MoneyHelper.

Evelyn Partners Spencer said she works with clients to prepare cash-flow models, then reviews them periodically - typically once a year.

Cash flow models show how your income, expenses, savings, and investments may change over time, including the financial effects of different lifestyle choices.

They give you a practical estimate of what you could spend in retirement and show how individual decisions might change the money available to you.

Reynal said a clear financial plan can bring some peace of mind. If anxiety continues, seeking help may be worthwhile.

"In some cases, therapy can help," Reynal said. "Having a place to discuss and confront fears about dependency and ageing may keep those fears from becoming tied to material or financial concerns."

It helps to pause and ask what the money was meant to accomplish. How much could you spend without being overwhelmed by fear or guilt, rather than automatically choosing to spend as little as possible? What would you regret missing while you still had the health and opportunity to do it? And are you guarding against a real risk - or trying to remove uncertainty completely?

How much do you need in retirement?

There's no single figure. The amount you'll need depends on your expected lifespan, your savings, and the lifestyle you want to maintain.

To get a rough idea of the income required, start with Pension UK's Retirement Living Standards.

These standards estimate the income one or two people would need to maintain three levels of living, not counting rent or mortgage payments.

Jon Doyle, founder and financial planner at Juniper Wealth Management, said he advises clients to keep a "Sleep at Night" fund - enough emergency savings to cover essential living expenses for six to 12 months if the worst happens.