We have all heard of spendaholics, but what about spendaphobics? FORO, or the fear of running out of money in retirement, means a surprising number of people remain reluctant to spend, even when their savings indicate they could comfortably afford to do so.
Continuum’s Managing Partner Martin Brown joins leading financial journalist Ruth Sunderland to explore the art of mindful spending and why we need to reframe inheritance as creating a living legacy. As a leading nationwide financial services firm, Continuum explores how trusted advice can help savers enjoy their post-work years with confidence.
Martin Brown, managing partner at Continuum talks to leading journalist Ruth Sunderland about the art of mindful spending and why we need to re-frame inheritance as creating a living legacy.
RS: How common is FORO, or as I call it TSTS Syndrome, which stands for Too Scared To Spend?
MB: I think it affects a significant number of people. According to government figures only 23pc of 60-64 year olds are fully retired, only 9pc of people aged 55-59 and between 65 and 69 still only 66percent are fully retired. A lot of people still work in their late sixties.
Some carry on working because they want to or really need to. But some are still working because they thinkthey need to. They are worried they might run out of money when they could retire, they just don’t realise.
RS: People are living longer which is great, but it does mean their retirement savings have to stretch further. There are issues such as care costs later in life and unexpected expenses. Is that fuelling the FORO?
MB: People could have the life they want if they plan with a trusted adviser. Retirement can be twenty or thirty years for a lot of people and that is all the more reason to live life as well as you can. People in their sixties are still young.
If you have a healthy pension you should enjoy life. The problem is that if you have been saving all your life, it can be an adjustment to draw on that money. A trusted relationship with an adviser can give reassurance that it is OK to spend. People phone our advisers and ask: “Can I move house, can I go on holiday, can I have a new car?” It is that reassurance people need.
Conquering the fear of running out of money in retirement
RS: Is it part of the planner’s role to give people a green light to enjoy life?
MB: Absolutely. You cannot over-estimate the impact and the value a trusted financial planner will bring. They will help you achieve a better life. But only around one-in-ten people take financial advice. So why don’t more people do it? Trust is the single biggest factor. A recent FCA Financial Lives survey said more than three million people would have taken financial advice if they could find a brand they could trust. We need to do more as an industry to raise awareness.
Moving beyond one-size-fits-all retirement decumulation strategies
RS: The fear of getting it wrong, spending too much and then not having enough money can be very hard to conquer. Retirement Living Standards suggest a single person needs around £13,900 a year for a basic lifestyle, £32,700 for moderate and £45,400 for a comfortable living standard. But how much is enough really? And is we used to hear about the ‘4percent rule’ but is there such a thing as a ‘safe’ withdrawal rate?
MB: I think the one-size-fits-all philosophy has never really existed in true financial planning. If you have been ticking along earning a salary, then when you retire you may have to manage your money differently and that is a big adjustment.
This is why retirement should never be entered into flippantly. It can be the most enjoyable experience of your life. Why work all your life and then not enjoy every day to its maximum?
“If you have been saving all your life, it can be an adjustment to draw on that money. A trusted relationship with an adviser can give reassurance that it is OK to spend. People phone our advisers and ask: ‘Can I move house, can I go on holiday, can I have a new car?’ It is that reassurance people need.”
Martin Brown, Managing Partner
Mindful spending and cutting wasteful costs
RS: When you are talking about spending, I think what you really mean is mindful use of money on things that really matter to you. We are not talking about wasteful frittering or thoughtless splurges, are we?
MB: A couple of people who work for us have done a Money Awareness Month where they track everything they spend and put it in a spreadsheet. Invariably, what they actually spend is significantly more than they think, generally, a 20-25percent overshoot.
Cutting down on wasteful spending can make a big difference. Somebody might waste £100 a month on stuff they don’t need. But overpaying £100 a month on a 25 year mortgage of £200,000 could lop nearly four years off the term. That could mean you can give up work earlier and have four years extra in retirement.
Living your legacy through proactive inheritance tax planning
RS: Do you think a lot of people, after lifetime of saving, feel guilt about spending?
MB: I would be 100pc sure that in many households, guilt comes into play. I hear stories about “Oh I can’t spend it, that is for the children.” But you don’t want to be the richest person in the graveyard. Then there is the question of inheritance tax. The IHT take is at record levels.
RS: Is it a failure of planning to die with a large IHT bill? Is spending mindfully a form of IHT planning?
MB: Absolutely. If you use money to create experiences for yourself, your family and friends, you are living your legacy.
RS: I love that idea of ‘live your legacy.’ If you don’t do that, are you in effect depriving yourself and your loved ones in favour of handing money to the taxman?
MB: Yes. People make their own decisions, but IHT is a nasty tax.
RS: The concept of ‘live your legacy’ means the most important thing you leave behind is not cash or assets but the memories you have created. Should we think about legacy differently?
MB: Absolutely. If you spend money on experiences, those memories last forever.
“I hear stories about ‘Oh I can’t spend it, that is for the children.’ But you don’t want to be the richest person in the graveyard… If you use money to create experiences for yourself, your family and friends, you are living your legacy.”
Martin Brown
Overcoming the fear of running out of money in retirement is not about reckless splurging; it is about having a structured, personalised plan that gives you clarity and permission to enjoy your hard-earned wealth. If you are looking to balance long-term financial security with creating lifelong family memories, speaking to an independent financial adviser can help you plan your next steps. Contact Continuum today to arrange your free initial consultation.
Corporate insights: Managing retirement spending and wealth transition
- Tackling retirement anxiety: Addressing the psychological barriers of decumulation to help individuals overcome the fear of running out of money in retirement.
- Proactive estate strategies: Introducing living legacy inheritance tax planning concepts to help families use wealth meaningfully during their lifetime rather than facing avoidable tax liabilities.
- Cash-flow clarity: Promoting mindful spending in retirement by replacing rigid withdrawal formulas with adaptable, lifetime cash-flow modelling.
- National infrastructure support: Backed by Continuum’s award-winning nationwide financial services firm, our UK-wide advisers support individuals through every stage of retirement planning.
