Podcast Summary: "You’ve Spent Your Life Saving. Now Learn How to Spend"
Merryn Talks Money | Host: Merryn Somerset Webb (Bloomberg)
Date: January 14, 2026
Guests: John Stepek (Bloomberg senior reporter, author of "Money Distilled"), George (Chartered Financial Planner, Flying Colors Advice)
Episode Overview
This episode tackles a unique financial dilemma: after decades of diligent saving and prudent habits, how do you actually start spending your money in retirement? Inspired by a listener’s email, the discussion explores the psychology behind difficulty spending, the planning needed for “decumulation,” changing inheritance tax rules, and the importance of finding purpose post-retirement. The conversation is candid, practical, and often humorous, providing both psychological insights and actionable strategies.
Key Discussion Points & Insights
1. Listener’s Dilemma: The Struggle to Spend
[02:09 - 06:42]
- Craig’s Situation: Longtime saver, mortgage-free, kids are settled—yet, struggles to “splash out” on himself and finds little he truly wants.
- Psychological Barrier: Lifetime habits of frugality are hard to reverse, even when money is no longer a concern.
- Balancing Act: Ongoing tension between “today you” and “tomorrow you” and the fear that “tomorrow you” may never arrive.
- Goal-Oriented Mindset: Many people define themselves by accumulation targets—reaching the goal means confronting both spending down savings and mortality.
- Merryn: "You're moving away from something you spent 40 years heading towards. That's a kind of psychological hell..." [04:30]
2. The Retirement Mindset and Purpose
[06:42 - 11:26]
- Post-Goal Void: Especially for goal-driven people, the next ‘goal’ can feel uncomfortably like death itself.
- Jon Stepek: "Your next big goal becomes…death. And if you're not careful, then you sort of spend your retirement with that sort of lumina…" [05:59]
- Need for a New Target: The importance of finding meaning and purpose after a career is over.
3. Expert Advice: Facing Decumulation
[08:06 - 13:53]
- Psychological & Financial Challenge:
- George: “We're creatures of habit. The same habits that make you financially successful make it hard to spend if you are financially successful.” [08:17]
- The process of turning savings into income is, quoting Nobel laureate William Sharpe, "the nastiest, hardest problem in finance."
- Celebrate Achievements: First, acknowledge your security and options rather than dwell on missed opportunities.
4. Legacy, Inheritance, and New Tax Rules
[12:30 - 16:44]
- Changing Legacies:
- Not everyone in their 60s feels their kids are fully settled; falling house values and high living costs complicate generational transfers.
- Pensions and Inheritance Tax:
- From 2027, pensions will be included in the estate for inheritance tax purposes. Post-75, inherited pensions may be taxed at beneficiaries’ marginal rates—possibly up to 64% total tax.
- George: “The tax rate for them would actually be 64% when you work it out… So what does that mean? We do need to reframe it…” [15:07]
- Implication: Consider spending or gifting pensions during your lifetime rather than leaving them as a legacy.
5. Finding Joy in Spending: The Utility of Money Over Time
[16:44 - 18:09]
- Intentional Spending:
- George encourages clients to pinpoint what would bring happiness or fulfillments—use money purposefully before advanced age limits opportunities.
- “A pound when you are 60…has a different utility than a pound when you are 85, 90.” [16:57]
- If you want to climb Kilimanjaro, don't wait! [17:31]
6. Easing Into Retirement
[18:14 - 21:46]
- Preparing in Advance: The transition should be gradual and planned before retirement arrives.
- Maintain a calendar of meaningful activities—volunteering, part-time work, new hobbies, family involvement.
- “Retirement is not a one-off thing… It’s a phase of life. It’s the third act.” [21:25]
- Caution: Those whose identities center on busy careers may especially need proactive planning.
7. The Practicalities: Building a Cash Flow Plan
[24:27 - 28:39]
- How to Figure Out 'What to Spend’:
- Check all income sources: state pension (verify forecast), defined benefit schemes, private pensions, ISAs, etc.
- Plan drawdown and consider sequence risk (the timing/order of returns in early retirement is critical).
- Factor in inflation and tax.
- Use planning templates (or a financial planner) to model possible futures.
- Begin planning pre-retirement—if you realize you have “enough” early, you could live more intentionally now.
- “There’s a point you can be looking at a cash flow plan for yourself too early.” [27:43]
8. The “Moral Imperative” to Spend
[28:39 - 31:11]
- Economic and Social Good:
- Merryn: “Is there a moral imperative for people who have the money at this age to get out there and spend it? His children's jobs depend on somebody creating activity in the economy.” [29:04]
- John: “If it helps you feel better about going out and spending your money, then that is quite a nice way to reframe it… I think that makes a lot of sense.” [29:38]
- George: “It’s better to give with a warm hand than a cold…” [30:22]
- Gifting to family now—contributing to school fees, pensions for grandchildren, or simply supporting communities—can be more impactful than hoarding for later bequests.
Notable Quotes & Memorable Moments
-
On accumulation and letting go:
“You're moving away from something you spent 40 years heading towards. That's a kind of psychological hell and at the same time, you're confronting your own mortality.”
— Merryn Somerset Webb [04:30] -
On the hardest problem in finance:
“William Sharp…called turning your lifetime savings into sustainable income the, the nastiest, hardest problem in finance.”
— George [08:50] -
On the shifting purpose:
“Part of our identity is we become accumulators…But then the problem is, what happens when the figures are supposed to go down?”
— George [08:25] -
On legacy and taxes:
“If your pension is inheritance tax eligible, that means they will lose 40% inheritance tax...the tax rate for them would actually be 64% when you work it out.”
— George [15:00] -
On intentional spending:
“A pound when you are 60 or 55, it has a different utility to a pound when you are 85, 90.”
— George [16:57] -
On morality and spending:
“Maybe this is a self-help podcast…is there a moral imperative for older people with money to get out there and have lunch?”
— Merryn Somerset Webb [29:51] -
On life’s ultimate reality:
“No one is getting out of this alive.”
— George [31:11]
Timestamps for Key Segments
- Listener Craig’s Dilemma & Frugality: 02:09 – 06:42
- Post-Retirement Purpose Crisis: 06:42 – 11:26
- Psychological Challenges of Decumulation: 08:06 – 13:53
- Inheritance, Pensions, and Tax Rule Changes: 12:30 – 16:44
- Intentional Spending & Encouragement: 16:44 – 18:09
- Planning a Fulfilling Retirement: 18:14 – 21:46
- Practical Financial Planning / Cash Flow: 24:27 – 28:39
- The Social & Moral Side of Spending: 28:39 – 31:11
Final Thoughts
This episode offers a nuanced look at retirement spending, blending financial logic with psychological reality. The take-home: Plan intentionally, celebrate what you’ve achieved, spend with purpose (before you’re too old to enjoy it), and don’t be afraid to use your wealth to support loved ones or the wider economy. Above all, retirement is an act to be performed with clear-eyed awareness, not just drifted into on autopilot.
Key Phrase of the Episode:
"No one is getting out of this alive."