Behavioral Finance in Retirement Planning: EDU #2536

September 3, 2025

Chris’s Summary
Jim and I look at behavioral finance in retirement planning, noting that spending from secure income feels safer while drawing from assets feels like a loss. People resist balances going down after decades of saving, even though the money was built to be spent. We highlight how framing savings as deferred spending and covering the Minimum Dignity Floor™ with income addresses uncertainty, complexity, and the tendency for retirees to underspend.

Jim’s “Pithy” Summary
Chris and I dive into two listener-sent pieces — a Kiplinger’s article and a research report from Blanchett and Finke — and they line up perfectly with what we’ve been saying for years. Folks, this is behavioral finance! Retirees spend Social Security, pensions, and annuity checks with ease, but hesitate to touch their own savings. I call it the bottomless cup of coffee: when the pot keeps getting refilled, you drink. When it’s just a thermos, you guard it and leave joy on the table.

We also get into how framing makes all the difference. Too many people see their IRA as wealth to preserve instead of deferred spending to use. That’s why Required Minimum Distributions suddenly feel like permission slips — people spend because they think they’ve been told they can. And while loss aversion is real, taxes push those same buttons too.

This is why we push to cover the Minimum Dignity Floor™ with secure income. If food, utilities, transportation, housing, and healthcare are guaranteed, you take uncertainty and complexity off the table. That’s what gives you the confidence to pursue your Fun Number™, knowing the basics are covered and you can spend without second-guessing every dollar.

Show Notes:
Blanchett and Finke Report