Smart Spending in Retirement: How the Wealthy Save and Splurge

October 28,2025

Retirement marks a new phase of financial freedom — but how you manage your wealth during this stage determines whether that freedom lasts a lifetime. While most retirees focus on trimming expenses and living within fixed income limits, wealthier retirees take a different approach. Their focus isn’t just on reducing costs — it’s on optimizing assets, creating tax-efficient income streams, and leaving behind a meaningful legacy.

Today’s advanced retirement strategies — from annuities to IRS-qualified accounts converted into IRS Roths — are changing the way retirees plan for the future. These modern tools help create guaranteed lifetime income for you and your spouse, deliver massive tax savings, and in some cases, save people hundreds of thousands of dollars over their lifetime.

 

The Evolving Priorities of Wealthy Retirees

For affluent retirees, the goal of retirement isn’t just maintaining a lifestyle — it’s about maximizing efficiency. They ask: How can I make my money work smarter? How can I ensure my family inherits wealth without tax burdens? How can I stay healthy and fulfilled for decades to come?

A leading retirement advisor explains, “The focus becomes less about cash flow and more about how to pass wealth efficiently.” In other words, for high-net-worth retirees, wealth preservation and purposeful spending take center stage — with strategies like Roth conversions and guaranteed income planning playing a central role in sustaining wealth.

 

Where the Wealthy Choose to Cut Costs

  1. Housing Simplification

Downsizing is one of the most common moves among wealthy retirees. While they could afford to stay in sprawling estates, many choose to sell large properties and move to homes that are easier to manage as they age.
“They recognize they won’t be able to handle the stairs forever, and they want to move while they’re still young enough to do it.”

This decision not only simplifies daily life but also frees up significant liquidity from selling a larger home — which can then be redirected into tax-advantaged income products that provide guaranteed lifetime income for you and your spouse.

  1. Reducing Heirs’ Future Tax Burdens

The SECURE Act 2.0 has reshaped how heirs inherit retirement accounts. Non-spouse heirs now must empty inherited IRAs or 401(k)s within 10 years — often during their own peak earning years. This can push them into higher tax brackets and erode inherited wealth.

To counter this, wealthy retirees are increasingly turning to Roth conversions and advanced estate strategies. By converting IRS-qualified accounts into IRS Roths, they pay taxes upfront and ensure their heirs inherit tax-free income — a massive advantage under modern tax laws that can save families hundreds of thousands of dollars over time.

  1. Strategic Estate Planning

Despite their resources, many wealthy retirees resist estate planning because it forces them to confront mortality. However, skipping it can be financially devastating. Without proper planning, families can face:

  • Lengthy probate delays
  • Frozen assets
  • Hefty legal fees

Working with estate attorneys to create trusts and transfer assets proactively helps ensure wealth transitions smoothly — and according to the retiree’s wishes. When paired with Roth conversion and guaranteed income planning, estate strategies can dramatically reduce taxes and preserve wealth across generations.

 

Where the Wealthy Spend Freely

  1. Health and Longevity

Health isn’t just wealth — it’s the foundation of enjoying retirement. Wealthy retirees prioritize wellness because they view longevity as a return on investment. “They’ll spend limitless money on their health and well-being. They want to live as long as they can.”

This often includes:

  • Hiring personal trainers or wellness coaches
  • Maintaining memberships at exclusive fitness clubs
  • Engaging in sports such as tennis, golf, or skiing
  • Investing in preventive medical care and nutrition

By maintaining physical and mental health, retirees preserve not only their wealth but also their quality of life — ensuring they enjoy their guaranteed lifetime income to the fullest.

  1. Supporting Grandchildren and Future Generations

Many retirees use required minimum distributions (RMDs) or other passive income streams to support their grandchildren directly. They often bypass their adult children and instead contribute to:

  • College savings accounts (529 plans)
  • Custodial investment accounts
  • Private education tuition or enrichment programs

This “skip-generation” gifting approach not only builds legacy but also helps manage taxable distributions efficiently — another form of smart, tax-optimized giving.

  1. Hobbies and Personal Passions

Retirement doesn’t mean slowing down — for many wealthy individuals, it means rediscovering their passions. Whether it’s golf, gardening, travel, or part-time consulting, retirees invest in experiences that bring purpose and fulfillment.
“They don’t like to be idle. Retirement often makes them more active, not less.”

This freedom is made possible by reliable, guaranteed income streams that remove financial anxiety from daily life.

  1. Philanthropy and Legacy Building

With more time and resources, many retirees turn to philanthropy — not just as charity, but as a way to extend their legacy. Funding scholarships, running nonprofit foundations, or donating to causes close to their hearts allows them to see their wealth make an impact in real time.

Philanthropic giving also carries financial benefits, such as tax deductions and trust advantages, making it both a heartfelt and strategic part of retirement planning.

 

The Role of Modern Lifetime Income Solutions

Modern retirement planning isn’t just about investing — it’s about creating stability. Tools like annuities, deferred income plans, and guaranteed income riders allow retirees to create predictable, inflation-adjusted income that lasts as long as they do. These solutions provide guaranteed lifetime income for you and your spouse, eliminating one of the biggest fears in retirement: outliving your savings.

When combined with IRS-qualified accounts converted into IRS Roths, retirees gain both massive tax savings and the ability to pass wealth tax-free to heirs — a combination that can save hundreds of thousands of dollars while preserving financial freedom.

By blending guaranteed income products with investment flexibility, retirees can enjoy financial stability while maintaining the freedom to pursue passions, travel, and philanthropy — all without the anxiety of market volatility or depleting funds.

 

Key Takeaways: How to Maximize Retirement Success

  • Think beyond cash flow: Prioritize tax efficiency, wealth transfer, and legacy planning.
  • Invest in health: Longevity is the best return on your retirement investment.
  • Plan for heirs: Use Roth conversions and trusts to protect your family’s future.
  • Give back: Philanthropy and family gifting can create lasting impact.
  • Adopt modern income tools: Explore annuities and lifetime income products to secure consistent, predictable income.

 

Final Thoughts

Retirement success today is about more than just reaching a number in your savings account. It’s about designing a life of freedom, security, and purpose. Whether you’re managing modest savings or a multi-million-dollar portfolio, the principles remain the same: plan strategically, invest intentionally, and align your spending with what truly matters.

With guaranteed lifetime income for you and your spouse, massive tax savings, and IRS-qualified accounts converted into IRS Roths, you can transform uncertainty into confidence — and ensure your retirement years are not just comfortable, but extraordinary.