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Many people begin a financial advisory relationship with a familiar set of expectations. They assume their advisor will urge them to follow a strict budget, rely on conservative assumptions, and prioritize risk mitigation above all else. In short, they expect a process that feels more restrictive than enjoyable.
There is wisdom in those expectations. A financial advisor should be prudent, conservative, and responsible. It is our belief that an effective financial plan must also strike a healthy balance between financial discipline and lifestyle fulfillment. Clients do not spend 50-plus years working, saving, and sacrificing simply to cover utility bills and Medicare premiums. Many clients envision a retirement filled with travel, family time, hobbies, and meaningful generosity. It is the advisor’s responsibility to help clients achieve both objectives: long-term financial security and a rewarding lifestyle.
A Family Anecdote: The Value of Intentional Enjoyment
To illustrate this balance, I often share a personal story (with apologies to clients who have heard it before). In 2024, my family traveled to the Yucatán Peninsula for vacation. We treat vacation savings as a fixed monthly expense—no different from an electric bill or insurance premium—because we know these experiences matter to us. By the time the trip arrives, the funds are already set aside and ready to be used.
During the trip, my two school-aged sons were eager to visit the Mayan pyramid at Chichén Itzá. The site was extraordinary, but like many tourist destinations, it was surrounded by vendors selling overpriced souvenirs: sombreros, toy hatchets, crystals, figurines, and more. Naturally, these were exactly the items my sons wanted.
As both a father and a CFP® professional, my instinct was to resist spending $20 on a rubber hatchet. But my wife reminded me that we had saved all year for this exact purpose. These small indulgences were part of the experience we had planned and budgeted for. So I handed each boy a $20 bill, and they were thrilled.
The Parallel to Retirement Spending
Many clients behave similarly with their retirement savings. They spend decades accumulating wealth through discipline and sacrifice. But once they reach retirement, they often struggle to transition from accumulation to distribution. The habits that
helped them build wealth make it difficult to enjoy that wealth.
This is not an argument for irresponsible spending or unrealistic lifestyle expectations. A client’s budget, long-term goals, and lifestyle priorities form the foundation of any sound financial plan. But once the analysis is complete and conservative assumptions have been applied, it is entirely appropriate to use accumulated wealth to support the lifestyle the client has worked so hard to achieve.
Understanding the Natural Pace of Retirement Spending
Another important consideration is the pace at which spending typically occurs in retirement. When asked about their desired lifestyle, clients often provide a single monthly figure—$6,000, $10,000, or another round number—and assume that spending will remain constant throughout retirement. In practice, this is rarely the case.
Retirement spending generally follows a predictable pattern:
- Ages 60–75: The most active and expensive years, often filled with travel, hobbies, and family experiences.
- Ages 75–85: A gradual decline in discretionary spending as activity levels change.
- Age 85 and beyond: A significant reduction in lifestyle spending, followed by a potential spike at the end of life if long-term care becomes necessary.
Understanding this natural rhythm helps clients maintain the balance between financial prudence and lifestyle maximization. It helps to ensure that they enjoy the early years of retirement—when they are healthiest and most active—without jeopardizing long-term security.
