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Retirement planning for affluent expats: The right balance between spending and saving

By David Norton - March 10, 2022

Many senior international professionals are worried about not having enough money when they retire.

But once retired, then comes the challenge of balancing spending and saving. 

I think this comes down to behaviour. 

To how people change – or fail to change – their attitudes about money...

Particularly as they transition from work to retirement.

I've seen many examples of both excessive spending and saving. 

Both of which cause equal amounts of anxiety.

If balancing our spending and saving habits is indeed a matter of human nature...

Then there are three basic points to consider.

At the end of each, I encourage you to ask yourself some honest questions. 

1. Your financial well-being

This is a feeling of having as much as you need. 

Of course, some wealthy people feel a sense of high financial well-being.

As do many middle class people who earn adequate incomes, save enough and spend sensibly in retirement. 

Low financial well-being afflicts the poor.

But it can also be felt by the wealthy, depending on their mindset towards money. 

Take, for example, people who spend more than they earn, either because they have a happiness mindset and want to enjoy life now...

Or because they are committed to helping out friends and family - and are motivated by love.

It can also affect the frugal, those with a fear mindset who deprive themselves, their family and the needy. 

Pensions can promote financial well-being.

Those lucky to have them typically don't need to save much for retirement and don't fear running out of money.

(Likewise for those with retirement savings in tax-advantaged accounts).

But it can be just as difficult saving enough during your working years (with constant needs and temptations),

As it is spending the right amount in each year of your retirement.

A fear of running out of money haunts most of us, including those who are wealthy.

Many people are justifiably concerned about the cost of long-term care, reluctant to accept aid, and adamant about maintaining their dignity. 

It's something my clients certainly raise with me, particularly when it comes to not wanting to 'burden' future generations. 

Ask yourself, how might changes to your behaviour and money mindset, improve your well-being?

2. Your ability to exercise self-control

Saving and spending comes down to self-control.

We compartmentalise our money into “capital” and “income,” and set self-control rules around saving and spending.

Income might include your salary, pensions, interest, and dividends. 

Capital might include houses, bonds, stocks, and other investments.

In your self-control toolbox, you might have automatic transfers from your income such as your salary, to capital such as your retirement accounts, and automatic reinvestment of interest and dividends.

Those fortunate to earn good incomes during their working years – and use their mental tools successfully – accumulate substantial savings.

But these tools can turn into obstacles in retirement, when income diminishes and it is time to dip into capital.

Many of my very wealthy clients struggle initially with the boundary between income and capital, and justifying their spending.

When self-control is weak, the desire to spend today overwhelms the desire to save for tomorrow.

Take premier league footballers.

It's well documented that a large percentage end up broke within years of hanging up their boots. 

They enjoy very large income spikes that amount to substantial wealth, but the need for instant gratification ("wants" for spending today) often overwhelm any desire to save for the future. 

Bankruptcy filings of many premier league footballers (Ronaldinho to name a more famous example) begin soon after the end of their careers.

Some people are savers by nature and nurture.

Like your money mind, there are five personality traits discussed by psychologists...

  1. Conscientiousness
  2. Neuroticism
  3. Extraversion
  4. Agreeableness, and
  5. Openness.

Conscientiousness is the trait most closely associated with self-control.

But excessive self-control is just as prevalent as insufficient self-control.

Moreover, excessive self-control can induce a mindset where spending is "what irresponsible people do".

Ask yourself, is it hard for you to spend money?

3. Spending decreases as you age

Inflated estimates of life-expectancy usually go hand-in-hand with concerns about money in retirement.

Perhaps with reason...

The oldest person ever whose age has been independently verified is Jeanne Calment (1875–1997) of France, who lived to the age of 122 years and 164 days. The oldest verified man ever is Jiroemon Kimura (1897–2013) of Japan, who lived to the age of 116 years and 54 days.

The oldest known living woman is Kane Tanaka of Japan, aged 119 years, 65 days. The oldest known living man is Juan Vicente Pérez Mora, of Venezuela, aged 112 years, 285 days.

The 100 oldest women have, on average, lived several years longer than the 100 oldest men.

But financially speaking, physical limitations mean older people spend less.

And are less inclined to spend for personal reasons.

According to research conducted in the US, spending on the cinema, theatre, opera, and concerts declines by more than 50% between the ages of 60 and 80.

The death of a spouse or close friend, and not a lack of wealth, being the main reason.

However, spending on hearing aids, nursing homes, and funeral expenses increases by more than 50%.

Giving while living is the process of passing on wealth while still alive, rather than storing it all up (if not needed), until death. 

An older person with even modest wealth should see the attractions in passing on some of their wealth during their life rather than storing it up until their death.

First and foremost, wealth passed on before death is more likely to reach adult children and/or grandchildren earlier in their lives, and potentially at a time when it can have more impact.

Obviously, there is more pleasure to be had in seeing the recipient of your generosity enjoying the gift rather than no longer being around when the wealth is passed on. 

Ask yourself, are there more opportunities for you to give with a warm hand (while living), than a cold one?


You should talk to your planner about your spending and savings worries, and if they are justified. 

Next, learn your mindset towards money, and ask yourself if you get pleasure from spending, or saving.

Getting the balance right for your retirement will come down to your goals and your very nature as a human being. 

We offer a second opinion review on portfolios of £500,000 or more.

Each review comes with absolutely no obligation but could provide greater clarity, confidence and control over your future.

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