Saving always came easy for me.  Even when I wasn’t earning much, and had debt to deal with, I wanted to save.  My mind was willing even when the checkbook was weak!

Once my debts were paid, my natural instincts could flourish and my saving habit (or addiction??) began. Retirement accounts: check.  Brokerage account: check.  529 accounts: done.  Saving in my HSA: why not?  Emergency fund: done.

For 20+ years (yes, it usually takes that long for those of us not named Zuckerberg), it was great.  Watching the wonders of compounding and “Dollar Cost Averaging” validated my instinct to save.  This stuff actually works!

Then the day came…… College

My wife and I had fully prepared for the day (financially, not so much emotionally!).  The money was waiting patiently in a 529 account, ready to be sent off to college with our daughter.

Don’t get me wrong, it was tough to take my daughter to her campus, knowing she wouldn’t be coming home with us.  Much tougher than the financial side of it!  But I could comfort myself in knowing that she was coming back.

The money in the 529 probably wasn’t coming back, though. I was surprised how hard it was to break into the college funds.  The habit built over decades of saving, saving, saving suddenly had to be reversed!  The balances would actually be going down, not up.

I really struggled with tapping into the 529 account.  But that’s why we saved, so I forced myself to work it according to the plan. Over her college career it became easier and easier to use the funds, but it never seemed natural to me.  Fortunately, she graduated this month so I won’t have the trauma any longer.  The bad news: her younger sister graduated from high school this month, too, so now it starts again!

I recently had another episode of the same issue.  I retired from full-time work earlier this year at 49 years old.  Not surprisingly, I haven’t retired from eating, so the money to cover my expenses has to come from somewhere! My wife and I decided to reserve funds in an online savings account for the first couple of years’ expenses and set up an auto-draft to transfer a set amount into our checking account each month. 

As funds from financial coaching and consulting projects trickle in, they end up in the online account and partially replenish the balance.  The plan all along was to slowly transfer funds from our nest egg to make up any deficit (maybe once a year).  Initially, these funds would come from our taxable brokerage account (as I’m too young to easily tap into the retirement accounts).

Earlier this year, our investment portfolio had increased enough that I decided to peel off some of the profits and lock in the gains.  Emotionally, I had no problem selecting some tax advantaged shares to sell.  Once the proceeds were credited to the money market in the brokerage account (it was an ETF so it took three days), I was going to log in and transfer the proceeds to our online savings account.  At least that was the plan.

As scheduled, I logged on and prepared to transfer the funds.  Then I froze.  I couldn’t do it.  This was worse than the 529 experience described earlier.

Suddenly, I was filled with questions:  Is this the right thing to do now? Why did it bother me so much to reduce the balance in our investment accounts? If this was the plan all along, why does it feel so uncomfortable?

Once again, the 25-year habit/addiction was trying to override our carefully thought out retirement financing plan.  The habit won that day – and is still winning – because I didn’t transfer the money and I still haven’t done so. I know I will – I have to! Just not today.

I have one more situation where this issue will raise its ugly head: our HSA account. 

Over the years we’ve left our contributions to our HSA invested and growing. Our plan is to keep our receipts and then get reimbursed sometime in the future, after the funds have continued to grow tax-free, of course.  Some of these funds may be in the HSA for 20, 30, or maybe 40 years.

I don’t want to think about how it will feel to tap into those funds! I’m hoping I’ll be so used to using our retirement funds that it won’t hurt, but I’m not optimistic.

Doing a U-Turn: Moving From Accumulation to Withdrawal

I suppose the lesson is that the switch from accumulation to withdrawal isn’t an easy one, at least for those of us who are natural savers. Long-term habits can be hard to break.

I’m still working on the issue (obviously), but here are a few things I’m focusing on to help my situation:

  1. Remember the plan! I’m trying to focus on the plan, not my feelings.  Emotions are great but can lead us astray.  Stick with the plan!  Review it as necessary until you are comfortable again.
  2. Remember how plans worked in the past. Having the 529 experience work so well should be (and is) reassuring to me.  The plan we had in place to pay for college worked.  Part of the plan was actually using the money!  The same is true for our retirement funding plans and the usage of the HSA.
  3. Remember other options exist if needed. If retirement funding plans go astray for whatever reason, options exist.  Reduce spending.  Get a new part-time job.  Sell a kidney (just kidding, or am I?).  The point is that a misstep or a temporarily under performing market probably isn’t fatal to our financial plans.  We can adjust as needed.

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Carrie Rattle
Dec 5, 2016 9:47 am

Hi John,
I relate entirely. Your emotions are tied to your money beliefs, which may be “money is security”, “money is survival”, or “money is something you can trust”. Saving well sounds great – until we think about the other side. If you are a small business owner, you will hesitate to spend to build your business, and may choke it. You may hesitate to invest in yourself as well, which could propel one’s career forward. All money beliefs have good and bad sides to them – it’s a matter of understanding what they are and how to manage them. Having an advisory board that thinks differently from you may help you on the business side. cheers, Carrie

David M
Sep 5, 2016 12:07 am

Nice article.. I am still saving but wonder how it will be to start spending down my savings. It is going to be different to say the least.

Sep 5, 2016 7:02 pm
Reply to  David M

Hi, David. Yes, it is weird to plan to spend down the investments. Old habits (saving) are hard to break!
Thanks for your visit and comment.

Marcel Rosa
Jul 11, 2016 1:49 pm

Thanks for sharing this article… Hope to hear more from you!

Sandra Mercier
Jul 11, 2016 5:01 am

Thanks for sharing this…Confession… Looking forward to hear more from you!

Jul 11, 2016 5:46 am
Reply to  Sandra Mercier

Thanks for stopping by, Sandra!

Financial Slacker
Jun 6, 2016 3:22 pm

I still have an income stream coming in that covers our expenses, so I haven’t had to deal with the change from accumulation to withdrawal yet.
But the day is coming.
We do have private school tuition payments which are paid in a lump sum once per year. I suspect that it does have a similar feel. And it’s painful.
Actually, I’m the type that gets ill whenever we spend money, not just dipping into our savings.
Maybe your income from consulting and the site will one day be enough to cover expenses so you won’t need to make the withdrawals.

Elle @ New Graduate Finance
May 30, 2016 9:39 pm

Oh man, I’m definitely going to have this same struggle.
I have a hard time getting myself to pay for necessities like food right now.
I have no idea how I’ll be able to deal with withdrawals in the future…

May 31, 2016 9:15 am

Thanks for stopping by and commenting, Elle. It’s been surprising hard to reverse the flow of dollars! But it is getting easier with time. Most of us are creatures of habit, so we just need to learn the new “normal”.