468: The Psychology of Spending More in Retirement to Increase Happiness with Dr. Michael Finke
Retire With Purpose - The Retirement Podcast
Casey Weade
4.7 • 564 Ratings
🗓️ 18 November 2024
⏱️ 59 minutes
🔗️ Recording | Apple Podcasts | RSS
🧾️ Download transcript
Summary
Today, I'm talking to Dr. Michael Finke. Michael is the Professor of Wealth Management at the American College of Financial Services. His research is focused on retirement income planning, retirement spending, life satisfaction, cognitive aging, and investor behavior. He's published over 50 peer-reviewed articles, and I'm thrilled to have him back on the podcast today.
One aspect of retirement that many retirees struggle with is spending money that they've saved. It's a mental block for many who have focused on saving money, even for those who have saved enough to live comfortably and enjoy their retirement years. For some, spending money on leisure and enjoyment seems like an irrational financial decision.
In our conversation, we explore the link between human nature and finance and why the fear of death and running out of money prevents us from making rational financial decisions. We also discussed the pros and cons of annuities and how retirees are often happier with guaranteed income versus a larger nest egg.
In this podcast interview, you'll learn:
- How Dr. Finke's early research into food consumption led him to a career as a finance professor.
- Reasons why so many people are uncomfortable spending down in retirement–and how to restructure your finances to shake common misconceptions.
- The benefits of spending more in your 60s and 70s–even if you plan to live to 100.
- The advantages of annuities and guaranteed income in early retirement years.
- The psychology behind how using guaranteed income for spending leads to increased happiness.
- The key factors that determine happiness for countless retirees all over the world.
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Transcript
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| 0:00.0 | We frame income as money that we can spend. We frame our wealth as money that we're supposed to preserve. We don't want to lose. We want to grow that money. When we focus on our wealth, we have a different set of objectives than when we focus on our income. You don't get happiness from money. You get happiness from using the money for something that actually does bring you joy. But the reality is that, again, there's only two things you can do with your wealth. |
| 0:22.8 | You can either spend it or pass it out. |
| 0:33.0 | You're like many retirees. |
| 0:34.6 | You're challenged with spending in retirement. |
| 0:37.4 | And if that's you, we're going to be focusing on that today. We're going to talk about the psychology of spending in retirement. We're going to talk about the psychology and the challenges of shifting from that accumulation mode to decumulation mode. We're also going to be talking about life satisfaction in retirement and how you're spending in retirement can elevate |
| 0:55.6 | your happiness and the meaning you experience. Hey, my name's Casey Weed. I'm the host of the |
| 1:00.5 | Retire with Purpose podcast, where it is my mission to deliver clarity and purpose and elevate |
| 1:04.8 | meaning in your life. If you're new to the show, I want you to know what I mean by that. |
| 1:10.1 | So I thought this was a financial podcast. |
| 1:11.9 | Well, this is a retirement podcast. |
| 1:13.7 | We take a holistic approach to retirement planning. |
| 1:16.6 | We're going to be sharing with you content both financially related and non-financial in nature. |
| 1:22.4 | We like to bring you a variety of different guests, week in and week out, on a variety of different |
| 1:27.9 | expertise. And today, I'm really excited to bring somebody and welcome them back to the podcast, |
| 1:33.3 | one of our most downloaded episodes of all time and really excited to bring them back. |
| 1:37.9 | We have Dr. Michael Finca here with us today, who is a professor of wealth management |
| 1:43.1 | at American College of Financial Services, |
| 1:45.9 | holds a doctorate in consumer economics. He is a nationally renowned researcher with a focus |
| 1:50.8 | on retirement income planning, retirement spending, life satisfaction, cognitive aging, |
| 1:56.1 | and investor behavior. He has published more than 50 peer reviewed articles of which we have |
| 2:00.7 | focused and shared |
| 2:02.2 | many of those here on the podcast with you, both on the podcast and in our weekly email that we |
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