February 2025
The idea that we should aim to die with less money, rather than more, often provokes a strong reaction and can seem at odds with what society typically encourages. Most of us are taught to save diligently for retirement, sometimes to the point of over-saving, with the expectation that we will need every penny to ensure a comfortable future.
This belief is rooted in the fear of running out of money, a fear that many Canadians face as they approach retirement. For some, this fear is compounded by the reality that they may never save enough to achieve financial security in their later years. But for those who are fortunate enough to have saved enough to meet their needs, the challenge is how to spend in a way that allows them to fully enjoy their golden years. That is, to enjoy them without sacrificing experiences for the unnecessary fear of outliving their savings.
This is the dilemma many of us face: the tension between maintaining a financial safety net and living in the moment.
The Emotional Weight of Spending
Retirement brings a different kind of financial challenge, one that requires a change in mindset. After years of contributing to a retirement account and focusing on the future, it is natural to feel anxious when that account starts to dwindle. Spending the savings we have worked so hard to build up can feel like an emotional burden. We worry about running out, about losing the safety net we have spent decades building.
This is a common emotional reaction, but it is also why it is so important to address these concerns head on. The reality is that our retirement savings are there to give us the freedom to enjoy life, not just to secure the future. The purpose of all that saving was to ensure that we could live well in retirement. This includes using our savings to enjoy the experiences that make us happy.
The Fear of Running Out
One of the main reasons we are reluctant to spend is the fear of running out of money. This is understandable, as there is no certainty about how long we will live or what unexpected expenses
we may face. But this fear does not have to paralyze us. Planning is the key. With a thoughtful strategy, it is entirely possible to manage our withdrawals in a way that ensures our savings last throughout retirement. In fact, careful planning can give us the confidence to spend, knowing that we are prepared for the long term.
The important thing to remember is that the fear of running out of money should not stop us from living life to the full. Spending does not mean jeopardizing our financial future. It means using the resources we have worked hard to accumulate to enrich our lives in the here and now.
A Balanced Approach to Spending
Spending in retirement is not about recklessness, it is about balance. It is about using our savings in a way that supports both our current lifestyle and our future needs.
The truth is, there is a fine line between saving for security and holding on to money out of fear. Our retirement savings were never meant to just sit in an account. They were meant to fund the life we wanted in our later years. And living that life to the fullest does not necessarily mean spending extravagantly. It means carefully allocating our resources to the experiences and moments that matter most to us.
Whether it is travelling, spending more time with family or taking up a new hobby, the aim is to use our savings in a way that enhances our quality of life, not just sustains it. And with careful planning, there is plenty of room for both security and enjoyment.
The Pressure to Leave a Legacy
Another challenge faced by many is the expectation to leave a financial legacy for the next generation. This is admirable, of course, but it can also create a false dichotomy: the idea that we must either save every penny for others or spend it all on ourselves.
The reality is that a meaningful legacy is not just about the money we leave behind. It is about the experiences we share and the lives we enrich while we are alive. The best way to make a difference is not necessarily by accumulating wealth for our heirs, but by living fully and demonstrating how to prioritize what really matters.
By making the most of our retirement years, we also set an example for our loved ones, teaching them the value of living in the present, not just the future.
Reframing Our Approach to Retirement
The goal of retirement is not just to survive, but to thrive. While it is important to maintain financial security, it is equally important to enjoy the fruits of our labour.
Spending our retirement savings does not mean living irresponsibly, it means living consciously. It means making thoughtful choices that allow us to enjoy the life we have earned without worrying about every dollar. It means saying yes to the experiences and moments that make us happy. It means understanding that our savings are there to support those experiences.
Ultimately, retirement is about finding peace of mind. Not just through financial security, but through living well. The money we have saved over the years is not just a buffer against uncertainty, but a tool to help us create the life we want in retirement.
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Disclaimer
This report is for the purpose of providing some insight into Pembroke and the Pembroke funds. Past performance is not indicative of future returns. Any securities listed herein, are for informational purposes only and are not intended and should not be construed as investment advice nor is it a recommendation to buy or sell any particular security. Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Pembroke seeks to ensure that the content of this document is correct and up to date but does not guarantee that the content is accurate and complete and does not assume any responsibility for this. Pembroke is not responsible for decisions or actions taken or made on the basis of information contained in this document.
