Why Cash Flow Anxiety Persists in Retirement—Even With a Multi-Million Dollar Nest Egg

In its 2025 Annual Retirement Study, Allianz Life found that nearly two in three Americans—64%—worry more about running out of money than about death. The Alliance for Lifetime Income’s 2025 Protected Retirement Income and Planning (PRIP) Study reported that nearly half of retirees feel anxiety about spending money in retirement, and 54% of pre‑retirees worry about outliving their savings.

Why It’s So Hard to Spend

Behavioral economists call one big driver of this “loss aversion”: seeing an account balance drop feels worse than the pleasure of spending, even when that spending is planned and sustainable. The Alliance for Lifetime Income’s Retirement Income Institute, which brings together researchers including Michael Finke of The American College of Financial Services and David Blanchett of PGIM DC Solutions has documented how this shows up in actual retiree behavior. In a 2025 analysis for the Institute, Blanchett and Finke found that retirees are much more comfortable spending money that arrives as a paycheck—Social Security, pensions, annuities—than assets they have to consciously withdraw from an IRA or brokerage account.

That preference shows up in the numbers. The Alliance’s “Guaranteed Income: A License to Spend” work found that retirees who hold a higher percentage in annuitized income spend more than retirees with an equal amount of non-annuitized wealth.

The broader picture points in the same direction. The American Psychological Association’s Stress in America report consistently finds that money remains a top source of stress across age groups, and older adults report worries about health expenses and fixed incomes as key pressure points. A 2025 paper on economic inequality and mental health in older adults, published in the World Journal of Psychiatry, found that subjective financial security and confidence about the future correlate more strongly with mental health than raw income levels. In other words, how “safe” retirement feels may matter more than how large the nest egg looks.

When the Math and the Feelings Don’t Match

Allianz’s 2025 study says that 54% of respondents named inflation as a top reason they fear outliving their savings, and many said they haven’t spoken with a professional about turning their savings into income.

On the strategy side, research firms like Morningstar have been updating the old “4% rule” for current conditions. In late 2025, Morningstar suggested a starting withdrawal rate just under 4% for a 30‑year retirement if you want a high probability of not running out of money. Michael Kitces, a planner and researcher known for his Nerd’s Eye View blog, has published work on “guardrails” strategies that allow higher initial withdrawals if retirees are willing to adjust spending up or down as markets move. Those approaches focus less on a single magic number and more on building rules so retirees don’t have to improvise from scratch every year.

Bottom Line

For retirees with seven‑figure portfolios, the real hurdle often isn’t market risk; it’s the emotional leap from saving to spending. Survey work from Allianz, APA, and the Alliance for Lifetime Income all point in the same direction: people relax when they see a clear, durable income plan, not just a big balance. Working with an advisor to turn part of a portfolio into a predictable monthly income—through annuities, structured withdrawal plans with guardrails, or both. That can give retirees the “license to spend” so they can actually enjoy the money they spent decades accumulating.