For decades, Gerald followed every piece of financial advice he could find. He maxed out his 401(k), stayed invested through downturns, and even bought a modest rental property for extra income. Now, at 61, with $2.8 million saved, no mortgage, and two grown children, he should feel ready to relax. Yet every time he thinks about retiring, he freezes.
"I've run the numbers," he says. "But the moment I picture pulling money out instead of putting it in, my stomach drops."
Gerald's fear is surprisingly common. Studies show that anxiety about outliving savings is one of the top financial worries among older Americans. In a Northwestern Mutual survey, more than half of U.S. adults said they believe they'll run out of money during retirement. Among people already in retirement, roughly 40% admitted they still fear the same thing.
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Part of that fear comes from what psychologists call "loss aversion." Humans feel the pain of losing money more intensely than the pleasure of gaining it. When you've spent forty years saving and watching your balance grow, the idea of watching it shrink — even for good reason — triggers the same part of the brain that registers danger. Retiring means flipping the switch from accumulation to decumulation, and emotionally, that feels like stepping off a cliff.
And while Gerald's nest egg might sound enormous, it's not hard to see why he's uneasy when stacked against national averages. Federal Reserve data shows that Americans aged 55 to 64 have a median retirement balance of about $185,000. The average is around $537,000, skewed upward by higher earners. That means most retirees have barely enough to last more than a few years without Social Security.
So yes, for many, the fear of running out of money is justified. But for someone like Gerald — who has nearly fifteen times the average — how much could he safely spend?
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Financial planners often reference the "4% rule," a guideline suggesting that retirees can withdraw about 4% of their portfolio each year without depleting it over a 30-year horizon. On $2.8 million, that would give Gerald roughly $112,000 annually. If his investments continue earning a conservative 5% per year, his nest egg could last indefinitely while still leaving a cushion for inflation.
That number aligns with what most retirees actually spend. According to the Bureau of Labor Statistics, the average household led by someone 65 or older spends about $57,000 per year, including housing, food, transportation, and healthcare. Gerald could nearly double that and still preserve his balance. On paper, his fear doesn't add up. But emotionally, it's real.
Behavioral finance experts say this hesitation to spend stems from deep psychological conditioning. After decades of saving and delayed gratification, retirees often struggle to reverse course. The money becomes a symbol of security rather than a resource to enjoy. Add in unpredictable markets, medical costs, and longer life expectancy, and many retirees default to hoarding rather than spending — even when math proves they're fine.
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That's where professional help can matter. A licensed financial advisor who specializes in retirement income planning can help clients like Gerald translate their balance into a reliable paycheck. By mapping out steady withdrawals, setting aside cash reserves for near-term expenses, and keeping the rest invested for growth, retirees can replace uncertainty with structure.
For Gerald, that may mean dividing his portfolio into buckets — one for fixed income, another for growth, and a third for emergencies — then letting the system handle the withdrawals automatically. The point isn't just financial efficiency; it's peace of mind.
After all, retirement isn't about never touching the money you've built. It's about learning how to use it without fear. Gerald may never stop checking his balance, but with a plan and perspective, he can finally give himself permission to enjoy the freedom he spent decades earning.
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