TIMEWISE: Your Plan Retirement

Spending your retirement income: It's a mindset shift

May 24, 2023


Over 8,000 people receive a retirement income from their CSS Pension Plan. Getting to the point of retirement takes a lot of work, dedication, patience and savings. Who would have thought that making spending decisions during retirement was going to be harder than saving for retirement itself. According to some retirement experts, making the mental shift from being a saver to a spender is extremely difficult and, for some, even physically painful1.

Of course, many retirees chose to not spend down their retirement assets for what appear to be good reasons2:

  • Some want to leave funds for their estate.
  • Some want to keep funds for emergencies or unforeseen expenses later in life like healthcare needs.
  • Some indicate that “saving as much as they can makes them feel happy and fulfilled.”


Financial wellness can improve emotional and physical wellness. If retirees are holding on to their assets to support their financial and emotional wellness, then these seem to be very valid reasons indeed. For some people though, spending retirement income can trigger strong emotional responses that are rooted in fear and a scarcity mindset. Learning to shift that mindset is the basis of this article.


Let’s start with this thought. Consider time. Your family, friends and experiences mean the world to you. If you reflect on your life, you will come across missed opportunities, memories not made and time not well spent. As you navigate your retirement, keep this in mind. Embrace and celebrate your retirement years – find experiences, make memories and spend those moments with your loved ones. Invest in time - which means you will need to spend some of your retirement income, without guilt or worry.


Be gentle with yourself. If a fear of spending has consumed you in your early retirement years, be patient as your mind aims to make that mental shift from saver to spender. It takes an average of about 18 months to get more comfortable with spending3. As you work towards that mind set, it may also help to remember that your retirement nest egg is meant to be working for you in the long run and generating an income that you are meant to be using.


Be realistic. Yes, living your best life during retirement is important – but you still must be realistic and cautious. Know your budget, your income and your expenses. Continue to plan for rainy days and life’s bumps. Be sure to account for onetime expenses like a wedding, a vehicle (or two) or a nice big vacation. Know your investor risk tolerance – as investing has its ups and downs, and it is important that you are prepared to ride out the lows and highs of investing in a logical and sensical manner.


"Yes, living your best life during retirement is important - but you still must be realistic and cautious. Know your budget, your income and your expenses."



Strategy "Spending account"

Once you know your income needs for the next year or two, hold that amount in a money market (or cash) account. This account will likely not generate much investment earnings – but it will be there to ride out market volatility. With this strategy, you mitigate the risk of having to sell an investment when the markets are down.

Don’t let the “what ifs” win. Moments ago, we suggested that you be realistic and within that work, we suggested that you plan for rainy days. Yes, you have to plan for the uncertainty of life (e.g., long-term care, medical bills). But you must balance that planning with making the best of your retirement experience. One way to tackle this “what if” thinking is to grow your confidence about your retirement accounts and savings – have a retirement spending plan and talk with a retirement income advisor.


Strategy "Retirement spending plan"

Throughout your retirement years, build a budget that you plan to review and update regularly.


Write out what “rules” you will follow when certain circumstances arise. For example, if the markets go down and your investment account goes down – will you adjust your income down as well?


Document what your “must-have” and optional expenses are; document your one-time expenses. Don’t forget to account for taxes. Having a plan and reviewing that plan regularly will help you to know if you are on track right through retirement. Reviewing your plan will help you to know if you are drawing the right amount from your pension and let you know if it is time to adjust. You can do this by creating your plan through the myCSSPEN Compass Retirement Planner tool available through your myCSSPEN® for members portal.


Update your plan annually. It will help you to know if you are still on track and if it is time to adjust what you are drawing from your retirement income sources like your Variable Benefit.


Be flexible. Inflation and investment performance will have an impact on your spending strategy. CSS has written an article about “spending matters” when it comes to inflation and investment performance – Inflation and your pension. Be willing to spend less money in certain times (e.g., when markets are down); be flexible. Be responsive to the marketplace.


Strategy "Fixed income and flexible income"

We all know that some of our expenses aren’t optional (like the power bill, groceries and housing), but some of our expenses can adjust when we need them to (like that annual hot holiday).


Did you know that your income can work like that too? We usually have some fixed sources of income that will last our lifetime like OAS, CPP and maybe even the CSS monthly pension. The income from your Variable Benefit is flexible (within minimums and maximums) and can be adjusted when the markets haven’t been kind to us or if we have unexpected expenses.


It is good practice to understand which of your expenses are fixed and which are optional and consider how those match up your fixed income vs. your flexible income in retirement. This helps us to reduce our spending and reduce our income from our flexible sources when we get off track.


We're here for you

Here at CSS, your retirement success is as important to us as it is to you. We know that retirement can be an exciting time, filled with new experiences. We also know that making the switch from a spender to a saver can be scary for some.


Please go online to www.csspension.com to find articles and tools to support you through your retirement years. Feel free to reach out to a CSS Retirement and Pension Advisor to navigate your spending plan.


1 Sahadi, Jeanne. October 2022. CNN Business. A surprising hard part of retirement: Spending what you worked so hard to save.
2 Newcomb, Sarah. June 2022. Morningstar. Underspending in retirement: A sign of fulfillment or fear?
3 Coxwell, Kathleen. April 2022. New Retirement. 9 ways to overcome the terror of spending your retirement savings.



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