Bruce Helmer and Peg Webb
For many folks who are planning for their financial futures, the cardinal sins are well known: overspending and under saving.
But for high net worth investors who have already achieved financial security many times over, a different kind of mistake may be quietly taking root, and it may be costing more than money. The real risk? Not spending enough of your wealth while you can still enjoy it.
Traditional financial planning guidance focuses on accumulation: saving diligently, investing wisely and avoiding lifestyle inflation. This advice is irrefutably sound, but only up to a point. What happens when you’ve already “won the game”? You’ve saved more than enough to retire comfortably, your portfolio is healthy, and your children’s educations are funded.
Yet many still live as though scarcity lurks around the corner.
Recent research reveals a surprising trend. A recent Wall Street Journal article reported that married retirees with at least $100,000 in assets withdrew just 2.1% annually — barely half the commonly recommended 4% rule. Even among the wealthy, a deeply ingrained fear of running out of money often keeps people from tapping into savings, preferring to rely on guaranteed income sources such as a pension or Social Security.
This caution is understandable but often unnecessary. Many families are in a financial position where thoughtful spending poses no real threat to long-term security. Instead, underspending can result in missed opportunities during the healthiest and most active years of life. In some cases we see older parents whose wealth could help move their children and grandchildren to greater financial security but choose not to.
And it’s not just about spending more on travel and luxury. Many delay meaningful experiences — supporting family goals, philanthropy, or even health-enhancing investments — until it’s too late. Gerontologists and financial advisers alike know this to be true: by the time people feel “safe enough” to spend, their energy, health or time may be in short supply.
Why do so many people fall into this trap? Decades of saving can entrench a scarcity mindset. Cognitive biases like loss aversion cause people to avoid drawing down assets, even when logic suggests they can afford to. Mental accounting, where money is treated differently depending on its origin, also plays a role. Many retirees view their investment accounts as “untouchable,” preserving them for future generations or rainy days that never come.
So what’s the alternative? First, consider dynamic withdrawal strategies that adjust based on portfolio performance, rather than rigid rules. Second, explore converting part of your portfolio into guaranteed income strategies that can provide psychological permission to spend a bit more freely. Finally, work with a financial adviser who doesn’t just plan for asset growth, but helps coach you toward a life well-lived.
At the core, wealth is a tool, not just for security or legacy, but for joy, purpose and presence. If you’ve done the work to build a strong financial foundation, don’t let an outdated mindset hold you back.
Because sometimes, the biggest financial mistake isn’t spending too much — it’s not spending enough.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.
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