We saved $900,000 and I panic over a $40 dinner. How do I let myself spend?

The question

An illustrative letter.

The answer

My dear, there is something tender in your letter. You spent forty years saying no to yourselves so that one day you could say yes. Now the day has come, and the habit of no will not let go. That is not foolishness. It is the very discipline that built your $900,000, still on duty long after its shift has ended.

Why is it so hard to spend what we saved?

For decades, your savings only went up when you were careful. Every withdrawal now feels like undoing your life's work. Many people also fear outliving their money, or a market crash, or a costly illness. Those fears are understandable. But when they decide every dinner, they can steal the very retirement the money was meant to fund.

You are not alone in this. Research from the Employee Benefit Research Institute found that retirees who had at least $500,000 just before retiring had spent down only about 12 percent of their savings, at the median, nearly two decades into retirement. About a third of all the retirees studied actually had more money after that time than when they started.

How much can we afford to spend?

That is the question a plan can answer, so that fear no longer has to. A fee-only financial planner can look at your savings, your Social Security, your health, your home and your hopes, then set a yearly spending amount you can sustain. Many planners use a starting withdrawal of around 4 percent a year as a rough guide, adjusted over time. On $900,000, 4 percent is $36,000 a year, about $3,000 a month, on top of whatever Social Security pays you. It is a rule of thumb, not a guarantee, which is why a professional's view of your own situation matters.

Once you know the number, the $40 dinner is not a threat. It is part of the plan.

How do we make it feel like a paycheck?

Turn your savings into income, so spending feels like using your pay rather than raiding your nest egg. Many retirees set up an automatic monthly transfer from their savings or investment accounts into checking, the same amount each month, like a salary. What arrives each month is yours to spend, without guilt. Some keep a year or two of planned withdrawals in cash or safe savings, so a market dip never forces them to sell investments at a bad time, and so they can stop checking balances every day.

Will the government make us spend some of it anyway?

Partly, if your savings are in traditional retirement accounts. For people born from 1951 to 1959, required minimum distributions from traditional IRAs and 401(k)s generally begin at age 73. Those withdrawals are taxable, whether you spend them or not. Planning your spending around them can make the transition smoother.

How do we stop arguing about money?

Agree on the plan together, then let it make the decisions. Some couples add a small fun fund each month, money each person can spend freely with no discussion. When the plan says the money is there, the argument becomes unnecessary. It can also help to agree to look at investment balances only quarterly, or when you meet your planner, rather than daily. Daily swings feed fear without changing anything you need to do.

What if one of us saves and the other wants to spend?

That difference is common, and it can be a strength. The saver keeps the plan honest, and the spender keeps the plan joyful. Let the yearly spending amount be the meeting point. Inside it, the spender need not justify a dinner, and the saver can rest knowing the total has been checked by someone who knows the numbers. Outside it, any large extra goes to a conversation, not an argument.

What about the next market fall?

It will come, as it always has. A cushion of a year or two of planned spending in safe savings means you can keep paying yourselves through a downturn without selling investments at low prices. Knowing that cushion is there is often what lets anxious savers finally relax.

What is the money for, really?

Sit down together and write a list of the things you would love to do while you are healthy: trips, time with grandchildren, a better car, gifts, a donation that matters to you. Put prices next to them. Seeing your savings as a list of experiences, rather than a number to protect, can change how it feels to spend.

What if we want to leave something behind?

That is a lovely goal, and a plan can include it. Set aside the amount you want to leave, and spend the rest with a clear conscience. Without a plan, there is a quiet risk: the money you never let yourselves enjoy simply passes to someone else, and you will never see the joy it might have brought you both.

You did the hard part, my dear. You saved. Now let yourselves do the second part, which is to live. Make the plan, set up the monthly transfer, and book a table for two.

One thing to do this week

Book a meeting with a fee-only planner, and write down five things you would love to do in the next two years, with prices.