According to novelist John Steinbeck, squirrels save about 10 times as many hickory nuts as they need to get them through a winter. In financial-speak, they are, apparently, over-saving.

Now I know about as much about the psychology of squirrels as I know of Egyptian hieroglyphs (i.e. nothing) but it would seem to me that squirrels are too concerned with exceptionally severe and unusually long-lasting winters and, therefore, spend a much greater part of summer than they need squirreling away nuts. That seems a shame – these little animals could be having more fun in the sun instead of assiduously (over) preparing for winter.

This is interesting. Aside from both being mammals, I don’t think squirrels are terribly close to humans. However, one thing we do have in common is that people also sometimes over-save and quite often under-spend. And, as we showed with toilet rolls during covid lockdowns, we can be hoarders (just like squirrels).

You see this often in retirement: I don’t know much about how squirrels retire every winter, but I have studied human behaviour in retirement. Studies show that people will delay their retirement so that they can have more than they need when they retire but, even more interestingly, that we often do not spend as much as we could.

Retirees often hoard their money, worried that if they spend it, the money will run out before they do. We tend to spend less than we could – especially at the beginning of retirement.

This means that, like squirrels, our summers are not as good as they could be and, also like squirrels, we leave a lot more behind than we might’ve planned to.

When I look at rich lists, I often wonder what Elon Musk or Jeff Bezos want with all those billions. I suspect that they continue to build businesses because they love what they do, they want esteem, and money is just the way they score the elaborate game they play. It has nothing to do with whether they have enough for a decent retirement; of course they have. They are driven by other things. Perhaps the over-saving squirrels are, too (maybe he who has the most hickory nuts gets the girl!).

Putting aside the billionaires and other people who continue to work even when they have enough, it is interesting to consider spending patterns in retirement.

There is a financial planning benchmark that says that in retirement people spend about 75% of what they spent before they retired. That might be true on average; however, most people are retired for a long time (around 25 years) and it’s a mistake to assume that spending is constant over the whole retirement period. In fact, retirement is often broken down into three stages, each with its own spending patterns:

Stage one is all go

This is a busy, and probably expensive, time. Whether it is travel, more eating out or spoiling the grandchildren, this is when you’re likely to be living your best life and when you will spend the most money.

Stage two is slow go

After perhaps 10 – 20 years in retirement things will start to slow and you will do less. Expenditure is most likely to fall as a result. This period ought to make up for your relatively high spending during stage one.

Stage three is no go

This stage usually comes about as you near your nineties. It will mostly be a low-spend period, except for potentially higher care and health costs for some people.

The point of these three stages is to recognise that you ought to live well in the early years of retirement. It may feel uncomfortable to watch the balance of your savings and investments decline, but it is almost inevitable that your spending will gradually fall later in your retirement.

If you spend too little, it suggests that you spent too long working to build wealth that you don’t really need and/or you’ll leave behind more money than you’d planned. Either case is similar to the squirrel (although, hopefully not as extreme).

This change in spending patterns throughout retirement is why Lifetime Income sets significantly higher spending levels from ages 70 to 85 for those customers who want to live well early in their retirement. Most 70-year-olds are much more active than they will be 15 years later. So, don’t forget to have a ball and eat the nuts while the sun is shining!

For more insights on how much income you could receive at certain stages in your retirement, check out Lifetime’s income projection calculator, which lets you tailor important factors like lifespan, tax rate, and inflation to suit your personal situation.