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How to Start Spending Your Retirement Savings

After decades of stashing money away, the thought of beginning to draw from your nest egg can be daunting

5-minute read

Gwen Moran,

AARP

Published November 05, 2026

A couple riding a giant stack of dollar bills surrounded by floating pop-up windows of expenses.

Glenn Harvey

Key takeaways

Review your expected retirement income and expenses to create a spending plan that supports your lifestyle.
Budgeting extra for travel, renovations and other early retirement costs can give you more flexibility when starting out.
A trial run with your retirement budget may help ease fears about spending your savings.

After a 28-year career as a high school teacher in New Jersey, Jennifer Ansbach, 55, was in the thick of transitioning into retirement and had questions. Since she had a pension and a 403(b) account, should she wait to draw from the 403(b)? Should she and her husband spend some of their retirement savings on home renovations to help them age in place? Could she afford to splurge on a European vacation with her father?

“There [was] that worry that if I use the money for that — if I start drawing down on my accounts — then I might live too long, and then what will happen then?” she says.

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It’s a common predicament. Among people 50 to 75 who are within five years of retiring, 58 percent fear running out of money in their defined contribution plan, according to a 2026 MetLife survey. Furthermore, 42 percent of Americans worry they will regret spending too much money early in retirement, according to Allianz Life’s 2026 annual retirement study.

“It is difficult to start spending down your money when your body and your brain tells you, ‘Oh, you’ve got to keep saving. Gotta keep saving.’ So it is an adjustment period,” says Regina McCann Hess, founder and president of Malvern, Pennsylvania–based financial planning firm Forge Wealth Management.

Here’s how to begin tapping your nest egg.

Expect an adjustment period

Before a fear of running out of money in retirement takes hold, step back and recognize that you’re going through a “massive life transition,” right up there with getting married or divorcing or having children, says psychologist Matt Lundquist.

Lundquist, the founder and clinical director of New York City–based Tribeca Therapy, counsels individuals and families about financial issues. He says it’s common to worry during such big changes: “I think that’s very real and probably is the headline that underlies the significance of that change.”

To navigate the transition, envision what your life will look like in retirement, says Adam Spiegelman, founder of Spiegelman Wealth Management in Alamo, California. “You can only play so many rounds of golf every year,” he says. How you plan to spend your time will inform how much your retirement lifestyle is going to cost — and how much savings you’ll need to fund it.

Identify your retirement income and expenses

Spend an afternoon assessing what your income and expenses will be in your golden years. Gaining that understanding of what will be coming in and going out, and tailoring your retirement spending accordingly, can help provide peace of mind.

To get a full picture, review your last 12 months’ worth of bank statements so you don’t overlook any fees that you pay once a year, such as annual credit card fees. Hess says she helps clients approaching retirement review their basic expenses, like housing, food and health care, to see how they’ll measure up against their retirement income.

She also encourages them to pay off as much debt as possible before retiring to ensure they’re not shouldering a high-interest expense that can strain their nest egg.

Give yourself some wiggle room when starting out

Many people spend more in early retirement — on expenses like travel and home renovations — and then see their spending decrease as they age and settle into routines or become less active. That early phase is commonly referred to as the “retirement spending smile.” In later life, medical expenses and the need for long-term care may raise retirement expenses, creating a U-shaped spending curve — a smile, so to speak.

“I find that most people end up spending a little bit more in the first few years because they’re remodeling things, going on more vacations, things like that, and then things settle down a little bit to a regular path,” says financial consultant Steve Sexton, CEO of Temecula, California–based Sexton Advisory Group and host of the Saving With Steve podcast. As a result, he suggests budgeting roughly 10 to 15 percent more for the first three to five years of retirement, depending on your circumstances.

Consider guaranteed income

Covering basic expenses with sources of guaranteed income can help alleviate the stress around spending that some people experience when they’re entering retirement, says Gal Wettstein, associate director of health and insurance at the Center for Retirement Research at Boston College.

Social Security is one source of guaranteed income for those who meet the requirements. A pension, if you’re lucky enough to have one, is another. Annuities might be a solution for some people, Wettstein says.

“Annuities guarantee that you won’t run out” of retirement savings, he says. “There are all kinds of variations on those, and they are available to purchase, and also more are available inside retirement plans.”

Do a trial run

Another way to get comfortable with spending your savings is to take your retirement budget for a test drive, says Hess, who has coached pre-retirees through the exercise.

Living on your projected retirement income for a year can help you determine whether you’re ready to retire or need to make course corrections, such as working longer or opting for a phased retirement, in which you gradually reduce your work hours to ease the transition.

The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Gwen Moran is a contributing writer for AARP who specializes in business and finance. Her work has appeared in many leading business publications and websites, including Entrepreneur, Kiplinger.com, Newsweek.com, and the Los Angeles Times Magazine.

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