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A casual conversation with a group of friends elicited this comment from one woman: “It’s time to start using your miles.”

It was an eye-opener. As baby boomers reach age 80, in better health and more wealth than any previous generation, we are confronted with a new financial planning challenge: Spending that money responsibly.

It’s time to change the focus from reaching a target for retirement security to enjoying the rewards of your lifetime of discipline — without living in worry that you’ll run out of money before you run out of time. Whether you’re talking about your retirement savings or just the miles or points you accumulated in your credit card or airline bonus programs, you’re faced with the challenge of using those assets you accumulated so carefully.

While I recognize that millions of Americans who are just scraping by on Social Security and in part-time jobs would consider this challenge a concern for the well off, it is very real to millions of boomers. This was the first generation to be made responsible for their own retirement savings, instead of being guaranteed a pension after a long career.

When 401(k) plans were created in the early 1980s, they shifted the responsibility for retirement income onto the decision-making and self-discipline of younger workers who had little preparation for making investment decisions. In 1983, the Dow Jones Industrial Average started the year at 1,046. A simple, regular payroll deduction into a stock fund over the ups and downs of the succeeding years, resulted in huge gains.

Now, more than 40 years — and a huge bull market — later, those accounts have swelled into significant dollars. As they retire, Boomers are faced with the responsibility of rolling their retirement plans into Individual Retirement Accounts, where they have a wider choice of more conservative investments. The entire financial planning industry is designed to capture those assets.

Then, quickly, the second — more important — financial planning decision looms: How to make those assets last for a Boomer’s remaining lifetime. This involves not only investment decisions, but withdrawal and spending choices. And that’s where it really gets tough — which is why you’ll want to work with a fee-only fiduciary adviser who is not trying to sell you products.

Coming to grips with this changing reality is both financial and emotional. Lifetime habits of saving and cautious spending are hard to break. Here are some of the realities you face:

Income vs. capital: Carefully planned, your nest egg can generate income to fund your lifestyle in retirement. After age 73, required minimum distributions force you to take withdrawals (and pay taxes on) your tax-deferred savings. Those annual amounts will diminish as you age, and your savings dwindle. After-tax savings will also generate income, whether invested in CDs, T-bills or dividend-paying stocks.

But it’s scary to dig into capital to fund your lifestyle. It goes against every instinct — and it diminishes your income stream. Carefully planned income generates confidence to enjoy the money you’re spending. And your need for spending may also dwindle as you age.

Lifestyle: The biggest planning challenge is your lifestyle, and more specifically where you will live. It may be time to jettison the responsibility of the family home, demanding that your adult children remove their stored possessions and memorabilia from your basement. Remember, if you file jointly, you can exclude $500,000 of capital gains on the sale. Whether you move to a smaller place in a warmer climate, or to a senior residence nearby, you’ll want to carefully examine those differing financial costs and liabilities.

Unexpected medical costs: Fidelity Investments annually estimates the amount that a retiree will spend on medical costs over retirement. Its latest report says that a 65-year-old, retiring in 2025, can expect to spend $172,500 out-of-pocket throughout retirement. That presumes enrollment in Original Medicare (Parts A and B) and Medicare Part D, which includes premiums, co-payments, and other out-of-pocket costs for medical care and prescription drugs. It does not include long-term care expenses.

The one thing that can destroy your retirement income and spending plan is the unprotected need for “custodial care” — a cost that is not covered by Medicare or supplements. That’s why I have long advocated long-term care insurance. And it’s not too late to convert some retirement savings into a combo life/long-term care insurance policy without taking a current tax hit.

Your children: Many retirees have written to me over the years, asking whether they should give money to their adult children now — while they are alive. I generally warn them against this, whether it be for a down payment on a first home or to get their adult child out of debt. There’s a reason the airlines tell you to put your mask on first. Your kids have a lifetime to solve their financial problems — and likely they won’t be able to care for you if you run out of money because you gifted their inheritance in advance.

This is YOUR retirement. Go ahead and buy that new car. Take that vacation and use your miles or points. At this stage, time — healthy time — is more valuable than money. Your kids will get their own chance. And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2026 Terry Savage. Distributed by Tribune Content Agency, LLC.