Many of those most afraid to spend money in retirement have savings they will never exhaust. UK data shows how slowly Britain's retirees actually draw down, and a shortage of money explains only part of it. 40 years of saving is a hard habit to put into reverse.
A couple in their mid-80s and late 70s hold more than £1 million in accessible savings, and more again in property. Everything they need is covered by the state pension, the result of a lifetime of thrift. Health problems have started to surface. They freely admit they will never spend any of it.
Adam Cockerham calls them Mr and Mrs W in his book Your Money and Your Mind. Asked what could be done, their answers weren't calculations. 'I just like seeing it there.' 'If something bad happens, I can use it.' 'It makes me feel safe.' 'This is how we've always had it.' 'I know this makes no sense but I can't change it; it's a big jump.'
Mr and Mrs W are unusual. Anyone in their late 50s or early 60s who has saved diligently for 30 or 40 years faces the switch that couple couldn't make: stop adding, start subtracting. Some of the caution around it is sensible. Some of it has very little to do with money.
How slowly people actually spend their pensions
Many people with substantial retirement savings are drawing on them so slowly that the money will still be there when they die.
The Institute for Fiscal Studies, in its 2025 report Individuals' challenges managing pensions through retirement, looked at defined contribution pots worth £250,000 or more from which regular withdrawals were being made in 2023 to 2024. Around 124,000 pots fell into that group. Of those, 26 per cent were being drawn at annual rates below 2 per cent, and a further 30 per cent at between 2 and 4 per cent. The IFS concluded that at those rates, the pot is unlikely to be exhausted at or around death.
Two per cent sounds abstract. On a £400,000 pot it is £8,000 a year, on top of whatever the state pension provides. The savings aren't so much being spent as maintained.
But the pattern isn't confined to pensions, and that's the part that matters. Median real net financial wealth among people born between 1940 and 1944 fell by 5 per cent between the ages of 66 and 79. For the 1930 to 1934 cohort it fell 13 per cent between 75 and 89. An earlier IFS briefing note, The use of financial wealth in retirement, tracked the same behaviour from the early 2000s to the middle of the last decade. It found real net financial wealth falling by 17 per cent between the ages of 70 and 80, and by 31 per cent between 70 and 90. Among the wealthier half of the population, the fall was 39 per cent.
And housing tells the same story. Only 3 per cent of non-retired homeowners in their 40s and 50s, surveyed between 2018 and 2020, planned to use equity-release products to help fund their retirement. When older owners do move house, the median share of the property's value they release is 9 per cent. Whichever route you look at, the money mostly stays where it is.
The good reasons for holding on
There are sound reasons to hold on to money in later life. Anyone arguing that retirees are too frightened to spend has to deal with them first.
The research settles on three. French, Jones and McGee (2023) surveyed the evidence in the Journal of Economic Perspectives. The leading explanations were the wish to stay in your own home, the wish to leave something behind and the need to insure against the cost of care. De Nardi and colleagues (2025), working with US data, find bequest motives the key driver at the aggregate level. That is purposeful behaviour, not a malfunction.
Longevity risk is real, and it has moved. The chance that a 60-year-old British man reaches 95 rose from 4 per cent in 1981 to 14 per cent in 2024. For women it went from 10 per cent to 23 per cent. Someone planning for a retirement that might run 35 years isn't being timid.
But one finding cuts the other way, and it should be said plainly. O'Dea and Sturrock (2023) show that people in their 60s and early 70s systematically underestimate how long they'll live, putting lower odds on reaching a given age than the life tables imply. That ought to push spending up, not down.
The IFS declines to adjudicate. It cannot tell, it says, whether the slow decline in wealth it observes represents optimal behaviour or whether people are getting the trade-off wrong. Neither can anyone else.
The rational explanations don't cover the whole field, though. The IFS notes, almost in passing, that financial wealth held outside pensions is drawn down just as slowly. That money never carried the inheritance tax advantage that made pension pots worth preserving over the period the data covers. The behaviour was there regardless.
Why savers are afraid to spend money in retirement
Retirement asks people to reverse, more or less overnight, a habit they've been rewarded for across an entire working life.
Part of what makes it hard is a straightforward mistake about the future. People talk themselves into deferring by assuming they'll want less as they get older. A separate IFS report, How does spending change through retirement?, found the opposite among better-off households born between 1939 and 1943. Their real spending per person rose by 7 per cent, about £1,200 a year, between the ages of 67 and 75. Holidays were the main driver, up £430 a head over the same stretch. So the wants don't reliably shrink. Sometimes they arrive late.
The rest is harder to measure, and here the best available account comes from advisers rather than researchers. Cockerham's term for it is the shift from a growth mindset to a decumulation mindset, and he says it isn't discussed enough. The shift calls for a complete change in how you think about money. It can't be flicked on and off like a light. When people who can plainly afford to stop working find they can't bring themselves to do it, he says, the cause is usually not a shortage of funds. It's an attachment to accumulation.
His comparison is a mountaineer. Going up is only half the job, and nobody is supposed to stay at the top once they get there.
From his own client work, Cockerham identifies three things that keep people at the top. The first is identity. If you've spent decades associating your sense of purpose with bringing a wage home, giving up the wage feels like giving up a measure of your worth, even though the worth was never in the work to begin with. The second is attachment to the income itself. The money arriving each month has become the reason everything feels all right, so any change to it registers as a threat. The third is what he calls the fear of a diminishing number: the prospect of a falling balance producing a sense of being unsafe, so that people defer, and keep deferring, to protect a feeling.
