You'll probably never spend your retirement savings — so don't live your golden years in fear. What the data really says

For many retirees, their biggest fear is outliving their money. A sudden market crash or intense wave of inflation wiping out purchasing power could unlock a dreaded outcome: poverty in old age.

This could be why 67% of Americans surveyed by Allianz Life (1) said they were more worried about running out of money in retirement than death.

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But this survey is based on sentiment. Another report by researchers David Blanchett and Michael Finke focused on actual spending data and came to a surprising conclusion: many retirees are actually underspending.

Here's why there's a good chance that your fears of draining your portfolio are overblown.

In a 2024 study published in the CFP Board's Financial Planning Review journal (2), Blanchett and Finke found that retirees display a "behavioral resistance to spending down savings." Instead, retirees focus on spending income from various sources such as Social Security, pensions and wages. In fact, nearly 80% of their lifetime spending is fueled by these sources.

The report also found that a typical 65-year-old couple only withdraws 2.1% from their portfolio annually, while a single 65-year-old withdraws just 1.9%. Both are significantly lower than the standard 4% rule (3) that is widely recommended by financial experts.

Additionally, this study focused on 65-year-olds, meaning these retirees are still in the 'go-go' years of retirement — or when spending is expected to be highest.

Simply put, millions of seniors and retirees with robust sources of income and modest portfolios could be needlessly living in fear. Their chances of outliving their money are probably lower than they believe, although it's always important to take your health into consideration.

If the data hasn't eased your concerns, here's how you can boost your life satisfaction and peace of mind in retirement.

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Once you're aware of this subconscious need to preserve savings, you can plan around it. For instance, hiring a professional financial expert could help you counter-act your behavioural bias towards spending from Social Security rather than withdrawals.

Advisor.com 's powerful matching engine can help connect you with an expert for free, and their network includes fiduciaries who are legally obligated to put your interests first. Once you have an experienced co-pilot by your side, you can mitigate the fear and make money moves with more confidence.

Better yet, Advisor.com lets you set up a free initial consultation , with no obligation to hire, to see if they're the right fit for you.

Another way to mitigate this subconscious bias is to create buckets of money with clear "labels" to make pre-planned decisions easier. For instance, you could automate a certain withdrawal from your retirement accounts to flow directly into a high-yield account like a Wealthfront Cash Account that is clearly designated "spending money."