loader from loading.io

The 2% Trap: Why Retirees Spend Far Less Than They Could, Ep #391

Retirement Starts Today

Release Date: 03/10/2025

Mailed, Stolen and Cashed: a $114,000 Retirement Check show art Mailed, Stolen and Cashed: a $114,000 Retirement Check

Retirement Starts Today

This week’s headline reads like a financial horror story — and unfortunately, it’s a true one. 😱 33-year-old Mr. Handy changed jobs and did what millions of Americans do every year: he requested a rollover of his 401(k). Paychex, the provider managing his old employer's plan mailed him two paper checks: one for his traditional 401(k), and one for his Roth 401(k). They were intercepted in the mail, and over $114,000 vanished. Gone. Just like that. This situation raises some serious questions. According to a recent report from Capitalize, 43% of people doing rollovers are still being...

info_outline Monetizing a Hobby in Retirement show art Monetizing a Hobby in Retirement

Retirement Starts Today

According to BankRate, 23% of Americans 60-78 have a side-hustle. Maurie Backman says in an article by Kiplinger that this would help with two key areas in retirement planning: It provides us with something fulfilling to do after our primary career and provide a little extra cash in retirement.   The benefits of a side hustle: Mental Engagement Extra Income Social Connection Sense of Purpose The Pitfalls of a side hustle: Tax Complications Outspending your retirement budget in search of business profits Medicare Premium Creep (IRMAA) Lifestyle Clash Time Commitment Also in this...

info_outline Why Are So Many Retirees Filing for Social Security Early? show art Why Are So Many Retirees Filing for Social Security Early?

Retirement Starts Today

info_outline The Father of the 4% Rule - an Interview with Bill Bengen show art The Father of the 4% Rule - an Interview with Bill Bengen

Retirement Starts Today

If you've been anywhere close to a retirement podcast over the last 10-20 years, you've heard of the 4% rule. And like many people, you might have questions about it. We're going to hear about it directly from the horse's mouth as we talk to Bill Bengen, who first articulated the 4% withdrawal rate as a rule of thumb for withdrawal rates from retirement accounts. The 4% rule is not a rigid rule but a guideline. Its application requires careful consideration of individual factors, including health, life expectancy, and specific financial circumstances. Bengen encourages retirees to tailor their...

info_outline Who Has Actually Saved $1 Million for Retirement? show art Who Has Actually Saved $1 Million for Retirement?

Retirement Starts Today

Only 3% of Americans have saved $1 million for retirement. according to 24/7 Wall St. & AOL. I’ll break down what that means—and why your personal number might be more important than any national average. After that, I answer a listener question where we tackle how to cover healthcare costs in early retirement—specifically for a 58-year-old retiree with a non-working spouse and three adult kids under 26 still on the family plan. We’ll explore ACA strategies, income planning, and a clever way to help the kids get their own coverage at a big discount. Resource:  AOL article by...

info_outline What to do with RMDs you don’t need show art What to do with RMDs you don’t need

Retirement Starts Today

What do you do with RMDs you don’t actually need? If you’re retired and over age 73 — or 75 if you were born in 1960 or later — you know the IRS requires you to start taking Required Minimum Distributions (RMDs) from your traditional IRAs and workplace retirement accounts. Even if you don’t need that money for living expenses, you still have to take it - which means more taxable income, higher Medicare premiums, and a bigger chunk of your Social Security benefits becoming taxable in some cases. Today I share "", an article by Greg Hammons from TheStreet.com. Reinvest in a Taxable...

info_outline 10 Sources of Emergency Cash, Ranked From Best to Worst show art 10 Sources of Emergency Cash, Ranked From Best to Worst

Retirement Starts Today

What happens when your emergency cash runs dry—and life keeps happening?  A recent article lays out a ranked list of ten ways to access emergency cash, starting with the best options and ending with the ones you’ll want to avoid unless it’s truly a last resort: Emergency Fund / Short-Term Securities Low-Risk Assets in Taxable Accounts Roth IRA Contributions Life Insurance Cash Values 401(k) Loan Home Equity Line of Credit (HELOC) Hardship Withdrawals from 401(k)  Reverse Mortgage Margin Loans Credit Cards The takeaway? Know your emergency funding hierarchy before a crisis...

info_outline Maximizing Memories With Money show art Maximizing Memories With Money

Retirement Starts Today

“By the time your child turns 18, you’ve spent 95% of the time you’ll ever spend with them in your lifetime.” This comes from research by the American Time Use Survey, highlighted by Our World in Data. And let’s be honest, when you first hear that, it stings a little. Especially as a parent. You can’t help but wonder, “Have I been a good steward of that precious time?”  But here’s the twist: this isn’t about guilt. It’s about awareness. It’s a gentle, data-backed nudge to savor the moments that feel small now—but that become the biggest memories later. So how do...

info_outline How Often Should I Rebalance in Retirement? show art How Often Should I Rebalance in Retirement?

Retirement Starts Today

We’re talking about rebalancing! Rebalancing is key to any retirement plan, but how often should we do it? That’s the topic of today’s retirement headlines segment, where we’re going to look at an article by by Jennifer Reed Key discussion points: 💵 Financial Considerations 💔 Emotional Considerations 🧩 Relational Considerations 📊 A Look at the Numbers Resource: Article by Jennifer Reed: Is The Optimal Rebalancing Strategy To Not Rebalance At All?   After that, I answer a listener question: “Could you discuss the financial emotional and relationship issues with...

info_outline Should We Move to Save $$$ on Taxes? show art Should We Move to Save $$$ on Taxes?

Retirement Starts Today

What are the perceived benefits of moving to a low-tax state in retirement? Is it all it’s cracked up to be?  We’re gonna cover a Wall Street Journal article by Debbie Carlson that delivers an important dose of nuance: “Don’t let the income-tax tail wag the total-spending dog.” I also answer a very thoughtful question from Lynn about sequence of returns risk, as well as average returns vs order of returns.  Key topics from the article:  🏠 Real Estate & Insurance Can Eat Up the Savings 📊 For Middle-Income Retirees, Sales & Property Taxes Matter More 💵...

info_outline
 
More Episodes

Click here to work with us!

Many retirees enter their golden years with the goal of financial security, but what if the biggest risk isn’t running out of money—it’s not spending enough of it? A surprising new study reveals that retirees are withdrawing just 2% a year from their savings—barely half of what’s traditionally considered safe.

This cautious approach might seem responsible, but it often leads to unnecessary frugality, missed experiences, and larger-than-expected tax burdens later in life. The hesitation to tap into personal savings, even when there's plenty available, raises an important question: What’s stopping retirees from spending with confidence?

Research shows that retirees feel much more comfortable spending guaranteed income from sources like Social Security and pensions while being reluctant to withdraw from their own investments. This behavioral tendency can leave money unspent for decades, only to be forced out later through required minimum distributions (RMDs) that create tax inefficiencies. Meanwhile, large inheritances often arrive too late to make a meaningful impact on the next generation.

Rethinking the 2% mindset means understanding what keeps retirees locked into ultra-conservative spending habits and finding ways to turn savings into income that feels reliable. A simple shift—such as automating monthly withdrawals or adjusting expectations around financial security—can open the door to a more fulfilling retirement. The money was saved to be spent, and spending it well can be just as important as saving it wisely.

Spending too little can be just as costly as spending too much. With the right approach, retirees can enjoy their wealth now while keeping future financial security intact.

Outline of This Episode

  • (0:00) Why Retirees Spend Far Less Than They Could
  • (1:46) The study: Retirees underspending their savings
  • (3:33) Why the 2% problem exists
  • (6:10) The impact of underspending on taxes & an inheritance
  • (8:11) The role of financial planning & behavioral coaching
  • (9:20) Possible solutions: Turning savings into reliable income
  • (11:04) Listener question: A simple withdrawal plan

Resources & People Mentioned

Connect with Benjamin Brandt

Get the book - out now!
Retirement Starts Today: Your Non-financial Guide to an Even Better Retirement

Follow Retirement Starts Today in
Apple Podcasts, Spotify, Overcast, Pocket Casts, Amazon Music, or iHeart