Getting All of the Benefits of Retirement Spending
Professor Meir Statman says retirees need to figure out the utilitarian, emotional, and expressive benefits to their spending in retirement.
Christine Benz: This transition from saving all of your working years to actually spending from your portfolio. That's another thing, apart from this dividend versus capital question--people simply have trouble spending from their portfolios, some people, if they've been in the mode of being heavy savers their whole lives. What behavioral forces are at work there?
Statman: Well, people derive utilitarian, expressive and emotional benefits from spending and they also suffer costs. And so, if an advisor, say, advises a client, says, you have plenty of money; why don't you take a cruise around the world? Well, if it were me, I would jump midway because …