Essential Conversations with Dr. Amy: “Decumulation” as a benefit of aging

It seems a universals practice for people to focus on the loses associated with aging, rather than the benefits. Yet, there are some notable pluses that occur as we mature, including wisdom from our lived experiences, more comfort with who we are and what makes us uniquely us, and more freedom to choose how we spend our time and money.

For many of us, that last benefit is where things may get a little tricky. We likely spent the better part of our adult years saving for the later chapters of our lives. The goal was to be able to stop working and to shift from accumulating money to spending it! We envisioned enjoying that money we saved and using it to have an excellent quality of life throughout our older years.

What might get in the way of us fully enjoying our hard-earned savings is the discomfort of moving into what the financial services industry terms “decumulation.” Decumulation is when we shift from accumulating money for our retirement to spending that money we saved. This transition requires a big change in our thinking. Now, instead of watching our savings grow, we are watching it slowly decrease. After a lifetime of habitual saving, this can feel very scary.

Here are three suggestions that may help you navigate this transition more easily:

  1. From a practical standpoint, it may be beneficial to work with a financial advisor who can provide guidance about how much you can comfortably spend and still have sufficient funds to last your entire life. In fact, with some financial software, you can see this depicted in a chart or other diagram. This reassurance can be extremely helpful, and you may choose to do regular check-ins to ensure you are still on track over time.

  2. The second suggestion is to acknowledge that moving from accumulation to decumulation is a notable transition and deserves to be treated as such. Think about it in terms of shifting gears in your car. You wouldn’t go from reverse into drive without putting your foot on the brake, pausing slightly and then shifting into drive. Yet most people try to go from decades of saving money (accumulation) into decumulation without first consciously pausing and considering the impact. This life shift can be both joyous and a bit anxiety provoking, so it makes sense to let it soak in gradually—after all, it is uncharted territory!
    This is also a great time to acknowledge all of your hard work and deferred spending that will now allow you to really enjoy this next chapter of your life. If you find that, like many people, you are a bit anxious when you are spending the money you’ve saved, it might help if you have a couple of mantras you can repeat to help calm yourself. For example, you could say to yourself, “This is exactly why I saved money all of those years.” Or, “It’s ok for me to spend this money. That is what I worked so hard and saved for!”

  3. A third suggestion that may be helpful is to consciously focus on the many benefits of being in this chapter of life, including the freedoms that are part of aging. You worked very hard most of your adult life and now you have the ability to choose how you want to spend your time and your money. And you probably now know what really brings you contentment and makes you happy. It might be spending time with the people who matter most to you or doing activities that you truly enjoy. You may just cherish having a pace of life that is less harried and filled with endless to-dos. And likely part of the benefits is being able to spend the money you saved on what matters most to you.

To help you fully embrace all of the benefits of aging, you might consider visualizing yourself shifting your car from reverse to forward. At the same time, picture yourself moving forward in your life into a wonderful new chapter filled with more freedom and independence; one in which spending money on yourself isn’t a guilty pleasure but something that adds to your enjoyment, comfort and wellbeing.

Aging is often portrayed as a season of losses. However, right along with those losses are many benefits. You may just need to give yourself permission to fully embrace all of rewards for your lifetime of hard work. Remember, decumulation can feel scary, but if you reframe it into its proper place, you may see it as one of the great gifts of aging.