Why High Earners Struggle to Spend What They’ve Earned
As Principal and Senior Wealth Advisor at Compound, Dimitry Farberov has 18+ years of experience helping tech employees, founders, and retirees tackle major life transitions. He’s helped create custom solutions for clients looking to make informed decisions on estate planning, tax strategies, and portfolio planning.
No one feels like they have enough money.
I’ve seen this to be true no matter how much wealth they have.
People feel nervous to spend the money they’ve earned and enjoy their life leading up to and during retirement, despite having enough. This is where traditional financial advice that focuses only on savings fails.
Even high-net-worth individuals worry about having enough money to spend or retire comfortably. Part of the problem is a focus on portfolio performance instead of goal-based allocation, which will help you live the lifestyle you want.
Here’s how you can save money and protect your portfolio while enjoying what you’ve earned.
The Wealth Immunity Trap
There’s often a big disconnect between an individual’s portfolio size and their spending confidence. Actually, that disconnect gets bigger as their wealth grows.
Whether you have $2 million or $80 million, nearly everyone feels like they don’t have enough money. Over time, you can actually get immune to the number you see across your assets, and in your dashboard.
High-net-worth individuals who are thinking about retirement need to transition from the “accumulation” mindset to the “deceleration” mindset and live off their earnings.
You don’t want to waste years building wealth you never end up spending. That often leads to missing out on life experiences, family time, and more — the things you wanted to build wealth for in the first place.
When you’re laser-focused on performance metrics, it’s important to face the mental barriers that prevent you from enjoying your money. You can still protect your savings and build generational wealth for loved ones, all while living the life you want.
How to Measure Success by Your Lifestyle, Not the Market
First, you need to reframe how you think about your money. Put the performance metrics away, and think about your goals instead.
Don’t lead with “I want to compete with the S&P 500.” Instead, ask yourself, “What are my goals?"
For example: If you know that taking three vacations a year makes you and your family happy, then you should build a plan for that. You can allocate a specific percentage of your income toward that target goal. Doing so means you’re building a portfolio around a specific outcome instead of against what somebody else has, or target number in your mind.
A target number in your head isn’t a plan. Three vacations a year is.
Any discussion with an advisor should cover what your goals are and ways to allocate your money to reach them. That way, you’re not thinking on a macro level — you're thinking on a micro level.
The three-bucket implementation approach can help you categorize your wealth and decide your allocations (learn more about this approach in our manual):
- Lifestyle bucket (current spending and enjoyment)
- Security bucket (principal protection and peace of mind)
- Growth bucket (long-term wealth building)
By viewing your portfolio through these three buckets and tracking each using Compound's financial dashboard and modeling tools, you can visualize how your wealth could lead to the lifestyle you want. Goals-based financial planning will help you bring abstract portfolio numbers into context so that you can put them to work for you.
And, when the markets are down, you won’t need to worry or call your advisor asking to shift your strategy. You’ve already planned for market shifts and portfolio resilience.
The Mental Shift from Building Wealth to Spending It
The skills you built to accumulate your wealth — discipline, delayed gratification, always thinking about ‘what if’ — don’t just switch off when you retire. For most high earners, those same habits become the thing standing between them and actually enjoying what they’ve saved.
Think about what your friends are doing, or other people in your social circles: safaris, cruises, traveling the world. If it helps, let yourself get a little jealous. It can be the push you need to get through the “I can’t spend anything” hurdle.
That’s where your advisor can start helping. They can tell you what a particular experience generally costs — e.g. a $25K safari, or a cruise — and show you exactly how that fits into your plan. Once you can see it on paper, and understand that it won’t deplete your retirement savings, the decision to spend starts becoming easier.
With that clarity, you’ll know what your discretionary spending looks like and what your cash flow actually supports in retirement. The numbers are no longer abstract, which is where most of the spending worry also comes from.
Once you’ve done the work with your advisor, the answer is usually simpler than people expect: you’ve saved enough. That’s the whole point of goals-based planning.
How to Live the Life You Want Before and During Retirement
Once you’ve worked through the mental side of this with your advisor, the actual planning isn’t as complicated as it feels.
These are the principles that tend to make the biggest difference.
- Redefine Success Metrics
Your “best” outcome shouldn't be tied to a certain performance metric. Measure success based on your lifestyle satisfaction and goal achievement, tracking portfolio performance against your long-term goals rather than market benchmarks. - Convert Abstract Numbers to Concrete Experiences
Looking at your portfolio, remind yourself: That number is what you've earned. That number is what can produce income and generate a certain lifestyle. Take the cruise. Go on the safari. Discuss your dreams with your advisor, and live the life you want with the confidence that you have enough money for the long term. - Plan for Wealth Transitions Before They Happen
Most people know in advance that they will be coming into wealth — they just don't know the timing. As a result, they're afraid of having these discussions. But you should begin preparing 1-2 years before any major event to make the money work the hardest it can for you.
In the case of exercising and selling stock options, work with your advisor to create a game plan so you know exactly which numbers and financial decisions you're comfortable with. Planning ahead will also help you avoid surprise tax bills and diversify your investment strategy for your best potential outcomes.
- Separate Accumulation From Enjoyment
Enjoy the next chapter of your life! It takes a deliberate mindset shift to go from building wealth to using what you’ve earned — sometimes, professional guidance too.
Don’t measure financial success by portfolio performance or beating market benchmarks. Financial success means you can confidently fund your lifestyle and the experiences you've worked to save for. The transition from wealth accumulation to wealth enjoyment requires both strategic planning and a fundamental shift in mindset — something many high earners struggle to navigate alone.
If you want to build a financial plan that serves your retirement goals, a Compound advisor can help you explore goal-based planning.