For years, even though we saved the maximum in our 401(k)s, I used to joke with my husband that I didn’t want to end up a “Bag Lady.” The truth is, it wasn’t really a joke — deep down, I worried we might run out of money one day.
That fear has always stayed with me. On the one hand, I watch every dollar carefully. On the other, I do allow myself to enjoy the things I love — whether that’s travel, dinners with friends, or spoiling the grandkids. Like most people, I fall somewhere in between.
The more I’ve read about money in retirement, the more I’ve realized that we all carry a unique money mindset — shaped by how we grew up, what we’ve experienced, and the choices we’ve made. One book that really struck me is The Psychology of Money by Morgan Housel. He writes:
“Your personal experiences with money make up maybe 0.000000001% of what’s happened in the world, but maybe 80% of how you think the world works.”
That rings true for me. Growing up, my parents fought about money a lot. We didn’t own a home until I was in sixth grade. If I wanted something, I had to babysit or get a job to earn it myself. Having my own money felt freeing — but it also left me determined never to feel like I couldn’t afford something again.
Fast forward: when I left my full-time job to help my husband with his business and semi-retire, those old worries resurfaced — even though we had been saving diligently for years. That’s when I began to see how powerful money mindsets can be, especially in or nearing retirement.
Take this quiz, which of these three money mindsets describes you best?
Understanding Money Mindsets
Money beliefs guide financial behavior, especially when you are in or nearing retirement. Many people worry about having enough money, even with consistent savings. As you enter retirement, which Mindset starts to creep into your mind. Let’s explore each one. The benefits and risks of these beliefs.
1. The “Careful Steward” Mindset
- Core Belief: “Money is a tool to be managed wisely.”
- Typical Story: You balance your checkbook every month. You have a strict budget. You plan and track spending weekly or daily. You enjoy dinners out, family trips, and hobbies, but only after making sure it fits your plan. You’re not afraid to spend, but you also don’t overspend. You are ridged in your beliefs.
- Risk: Over time, being too rigid could limit spontaneity or generosity. You may focus so much on “managing” that you forget to fully enjoy life. You will struggle with the spend down phase of life.
Shift Strategy:
Practice saying “yes” to meaningful opportunities even if they’re not budgeted to the penny. Create a “Fun Fund” so you mentally have room for spontaneous travel and experiences. Keep your planning habits but add flexibility to your life. We are only given one life and we don’t know how long it will be so making sure to add a little of the YOLO (You Only Live Once) mindset to your life can add more joy.
2. The “Bag Lady/Man Syndrome” Mindset
- Core Belief: “I’ll run out of money and end up with nothing.”
- Typical Story: Even with a healthy retirement portfolio, you may still worry about outliving your money. You may find yourself saving grocery store bags to use as garbage bags, hesitating to book trips, or feeling guilty buying new clothes — even though you can afford them.
- Risk: Fear leads to a smaller, less joyful life. You may sacrifice experiences and comfort unnecessarily.
Shift Strategy:
- Build a retirement income plan with clear numbers (so you see that your money will last). If you have a good financial advisor, they have software that can give you a clearer picture every quarter – building a plan so you don’t run out of money.
- Make sure you have a year of emergency funds in a safe money market account. Markets fluctuate an emergency fund will give you peace of mind and eliminates the need to sell investments during a down market.
- Practice spending a little “guilt-free fund” each month on something that brings joy. Dinner with friends, a new outfit or something fun for the house.
- Create your bucket list and work on experiencing things you have dreamed of doing. Experiences will create lifelong memories.
3. The “YOLO Spender” Mindset
- Core Belief: “You can’t take it with you, or you don’t know how long you will live – so spend it now”
- Typical Story: You have worked your whole life, retirement is for living large! You finally buy the dream car, take first-class trips, or spoil your grandkids without hesitation. You’d rather enjoy the present than worry about the future.
- Risk: Spending too quickly could jeopardize your later years, especially with rising healthcare costs or long-term care needs. You also run the risk of needing to take funds out of investments in a down market, locking in losses you might not want to take.
Shift Strategy:
- Keep enjoying the moment, but pair it with a realistic long-term plan.
- Build into your plan at least one year of emergency funds in a safe money market account to access when markets fluctuate.
- Consider a hybrid strategy: Between being YOLO and Careful Steward Mindset. Set aside base funds for essentials, then give yourself “play money” guilt-free.
- Regularly review your portfolio to ensure your lifestyle is sustainable. Again, if you have a good financial advisor, they will have software to help you run those scenarios often and make sure you are on the right track.
Reflection
As you think about your own retirement money mindset, ask yourself:
- Which money mindset feels most like you today — Careful Steward, Bag Lady/Man, or YOLO Spender?
- How did your childhood experiences with money shape the way you view spending and saving now?
- What’s one thing you’ve been hesitant to spend money on that could truly add joy or meaning to your life?
- If you lean toward over-saving, what small “guilt-free” splurge could you try this month?
- If you lean toward overspending, what step could you take this week to strengthen your long-term financial security?
- When was the last time you reviewed your retirement income plan — and does it still align with your goals?
- What experiences or memories do you want to invest in over the next year?
- How do you want your money to reflect your values in this stage of life?
Retirement isn’t just about preserving money — it’s about using it wisely to create a life you love. Finding balance between security and joy is the key.
👉 If you’d like a simple tool to help bring clarity to your own numbers, download my free Retirement Budget Starter Workbook. It’s a practical first step to easing money worries and building confidence in your financial future.
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