I Saved $3m, Was Scared to Spend It When I Retired After Being Frugal

I spent a lifetime skimping and worrying about my retirement portfolio and savings, and by the time I was 58 in 2020, they were worth $3 million — more than enough to retire and cover healthcare for the rest of my life.

Yet, I worried about worst-case scenarios, such as hyperinflation leaving me destitute. So I worked another year. And another.

For decades, I’d heard retirement advice encouraging me to “save more!” But no one explained that at some point, I’d need to radically shift my lifestyle and “spend more!”

I fixated on saving until an old college classmate died at age 59 in 2022. I was the same age, and his death deeply disturbed me. Realizing I had more money than time, I decided it was time to stop working.

A few weeks later, one day before my 60th birthday, I left my full-time job as the head of pricing at a software company. I’d made the transition to the next phase of my life, but my savings-oriented mindset struggled to change.

I was proud of my disciplined approach to saving

I’d been saving for retirement since the beginning of my career, when I worked as a junior portfolio analyst at a financial planning company. I opted to have my company deduct 10% from each of my paychecks and place it into a retirement fund. They partially matched my contributions, too, and drummed into me the importance of saving for retirement.

I continued this habit throughout my 20s and 30s. As I got older, I strove to make the maximum 401(k) contribution allowed by the IRS each year, including the extra catch-up amount they permit once you turn 50. Fortunately, my career as a product and general manager across various industries, including banking, media, and technology, provided me with the means to steadily contribute to my retirement plans.

Over nearly 40 years, I had put money into retirement accounts from almost every paycheck, deferring today’s joys to ensure tomorrow’s happiness.

To maximize long-term returns, I invested in equity mutual funds in each of my employer’s retirement plans, mainly aggressive US funds plus some international ones, too. Every time I moved companies, I rolled over my funds with my former employer into low-cost Vanguard IRAs. I didn’t worry if the market went up or down, as I knew in the long term, shares significantly outperformed cash or bonds.

By my late 50s, thanks to the power of compound interest, my savings had grown to over $3 million. Plus, I owned my home. My gut felt I probably had enough money to retire, and I then confirmed this by reading reams of investment articles, talking to experts and friends, and building a multi-page spreadsheet breaking down my finances.

I was financially, but not mentally, ready to retire

At first, it was uncomfortable seeing my savings declining, and I had such a work-until-I-drop mentality that I couldn’t even think of myself as “retiring.” I told myself I was just taking a three-month vacation before deciding on the next stage of my career.

I realized I needed to rewire my brain and approach to personal finance to ease my transition into retirement and enjoy spending as much as I’d loved saving. That helped me stop working more willingly.

When my three-month “vacation” ended, I extended it by a few months and then a few more. I just started my 38th month of vacation. And now, when my taskmaster mind is distracted, I even tell people I’m retired.

I give myself a ‘paycheck’ and have a ‘war-chest’ for fun experiences

I budgeted that I’d need $7,500 a month to cover expenses during retirement, which I initially manually transferred from my savings to my checking account. But then, my frugal instincts kicked in, and I wondered if I could get by with $6,500 instead by cutting back on things like eating out or buying clothes.

An automatic monthly transfer was a much better solution. I discovered this approach in a retirement article, but took it further by naming it my “paycheck.” This language eased my angst, and as a result, I never have to fret about how much I’m withdrawing, nor am I tempted to skimp on anything.

Another effective anti-saving tool is my “war-chest,” which is a pot of money I set aside each year for fun experiences, some of which is taken from my monthly “paycheck.”

I aim to pay myself around $50,000 a year for this war-chest, so I can travel extensively while I’m still in my early 60s, physically fit, and in my “go-go” stage of retirement. I’ll reassess the annual war-chest amount as I get older, reaching the “slow-go” and “no-go” stages of retirement. My financial planning suggests I’ll be able to stick to my $7,500 a month “paycheck” and war-chest withdrawals, both increasing annually at the rate of inflation, until I’m 95.

In the spirit of carpe diem, I’ve enjoyed recent war-chest experiences such as witnessing the Great Wildebeest Migration in Kenya, paying extra to get nearly invisible hearing aids that make me less self-conscious, and watching my girlfriend’s delight when I replaced her broken dishwasher. At the end of the year, I view any money left in my war-chest as lost enjoyment, not savings.

For decades, I acted like Aesop’s proverbial ant, who worked all summer to store food for winter, while the grasshopper played and later starved.

Thanks to my vacation mindset, paychecks, and war-chest, I’ve become wiser. I enjoy retirement because I both toiled like the ant in the past and now safely revel like the grasshopper in the present.

Do you have a story to share about saving for retirement? Contact the editor, Charissa Cheong, at [email protected]