Early-retirement wannabe

Linton

OldMusicGuy wrote: »

This has been my biggest challenge, adjusting from getting a big salary to having nothing coming in (apart from my wife's small DB pension). I still find it challenging, especially when big unexpected bills come up (like they just did for an unexpected problem on our car). I have done all the numbers, I know we have plenty of money but the risk averse person in me still frets about it. It is a big shift.

Over 13 years of retirement I have found managing depletion of ones assets to be in principle no different to managing the accretion. Worry and indecision can largely be removed by planning.


We have a spreadsheet plan for all years until extreme old age showing assets at the start of each year, external income and total expenditure during the year, and assets at the end of the year after returns at an assumed ROI and reduction by the planned expenditure not covered by income. The expenditure which covers normal living expenses including routine maintenance and short holdiays etc increases each year by the assumed inflation as does the income where appropriate.



At the end of each year the plan is compared with reality and predicted values replaced by actuals as necessary. The viability of the plan is judged by the need for a reassuringly large amount of assets remaining at the end of the plan balanced by a desire not to leave a fortune behind when we go.


Major expenditure (eg significant holidays, replacement cars) is treated as a one-off reduction in capital to be explicitly assessed with reference to the overall plan.


During the year the budgetted expenditure becomes a target. If the actuals are too high then frugality or replanning may be necessary. This has only happened once for us when moving house led to a large increase in council tax and shopping at the local Waitrose increased food costs significantly. More of a "problem" is insufficent expenditure. A simple way of achieving target here is to make gifts to family or contributions to charity safe in the knowledge that it is not going to cause you problems later on.

coyrls

justme111 wrote: »

Not even that - my partner has not managed the finances , he just collected his salary . Now that it is not coming in he freezes with worry.
Mgdavid,, that is what I would do or hoped he would. He has not set things up though and when I said it would make sense to have one withdrawal monthly on a particular day he responded he is fine with doing it in dribs and drabs!

That's what I do. I don't have any pension income yet, I am running down other sources first but I "pay" myself on the first Tuesday of every month but my pay consists of a top up of my current account to a set value (and therefore my "pay" is variable). So long as my current account stays in credit I am in budget and I am also making "savings" by only topping up to a set value. Unexpected expenditure comes out of savings, as it did when I was working.

Filo25

bugslet wrote: »

When I was attached, we never knew about each other's financial affairs beyond the basics. We didn't have a joint account, he bought what he wanted, I bought what I wanted. We sort of fell into paying different household bills

We were different in so far as if I'd died before him, he would have had my pension, insurances, a business, a house. When he died, he had the smallest insurance (£5100.00), to cover the funeral and whatever was in his bank account, which was more than I expected but certainly not much.

But it was his money to my way of thinking and neither of us were of the mindset to direct the others money management. Not an arrangement that would suit many, but it did us.

Pretty similar to me and my wife in all honesty, our finances are relatively independent, we divide the mortgage up between us, I pay a little more than half as I earn a little more and I pay most but not all bills, but apart from that we spend our own cash as we choose, the only difference I suppose is that I do pay for life insurance cover for both of us.

I am the more interested in finances of the 2 of us, so can help her out if required, but it is very much my wife's money to do with as she pleases.

It works for us anyway

JoeEngland

Linton wrote: »

Over 13 years of retirement I have found managing depletion of ones assets to be in principle no different to managing the accretion. Worry and indecision can largely be removed by planning.


We have a spreadsheet plan for all years until extreme old age showing assets at the start of each year, external income and total expenditure during the year, and assets at the end of the year after returns at an assumed ROI and reduction by the planned expenditure not covered by income. The expenditure which covers normal living expenses including routine maintenance and short holdiays etc increases each year by the assumed inflation as does the income where appropriate.



At the end of each year the plan is compared with reality and predicted values replaced by actuals as necessary. The viability of the plan is judged by the need for a reassuringly large amount of assets remaining at the end of the plan balanced by a desire not to leave a fortune behind when we go.


Major expenditure (eg significant holidays, replacement cars) is treated as a one-off reduction in capital to be explicitly assessed with reference to the overall plan.


During the year the budgetted expenditure becomes a target. If the actuals are too high then frugality or replanning may be necessary. This has only happened once for us when moving house led to a large increase in council tax and shopping at the local Waitrose increased food costs significantly. More of a "problem" is insufficent expenditure. A simple way of achieving target here is to make gifts to family or contributions to charity safe in the knowledge that it is not going to cause you problems later on.

Let me tell you about my charity

Marine_life

Finally back to blogging:

http://earlyretirefree.com/could-you-retire-early-part-1-of-2/

michaels

Marine_life wrote: »

Finally back to blogging:

http://earlyretirefree.com/could-you-retire-early-part-1-of-2/

Second bullet 3 needs tidying?

Starting investment £7,600 per annum (which we assume increases by inflation i.e. year 2 is £7,750 and so on) which is assumed to increase with inflation.

michaels

Filo25 wrote: »

Pretty similar to me and my wife in all honesty, our finances are relatively independent, we divide the mortgage up between us, I pay a little more than half as I earn a little more and I pay most but not all bills, but apart from that we spend our own cash as we choose, the only difference I suppose is that I do pay for life insurance cover for both of us.

I am the more interested in finances of the 2 of us, so can help her out if required, but it is very much my wife's money to do with as she pleases.

It works for us anyway

We have 3 kids and my wife has a fairly low earning potential so it doesn't make sense for her to work as it won't cover the childcare costs so we end up having to pool all our money. The problem then is that whilst I prioritise early retirement (mine) for her it is not so much of an issue if we spend more now so I have to work a few more years

Skibunny40

We're in quite an unusual position in that my husband earns all the money (I look after my elderly father) but I control it, as my husband has no interest. He would like to retire early, but he also likes spending money. I showed him all the spreadsheets as to how we could easily achieve early retirement, but he decided he liked spending money more than he wanted to be retired!

Therefore, I still keep an eye on our finances but he gets all his gadgets (within reason). As I also benefit from the nice "couple" things my husband is keen on like fancy holidays and meals out, I feel I keep my side of the deal by keeping the household essential costs low as well as driving a very old car and charity shop shopping for clothes - neither of which bother me in the slightest!(Husband is constantly suggesting I buy new stuff, I say no!)

Filo25

michaels wrote: »

We have 3 kids and my wife has a fairly low earning potential so it doesn't make sense for her to work as it won't cover the childcare costs so we end up having to pool all our money. The problem then is that whilst I prioritise early retirement (mine) for her it is not so much of an issue if we spend more now so I have to work a few more years

My wife does earn less than me, but still a decent wage.

As I am older we have a bit of flexibility on retirement, realistically there will come a time when the company will pull the plug on my job on age grounds if nothing else, so if we haven't got quite enough tucked away at that point there is the chance she may need to work a few more years after I retire, ideally obviously we would both like to go at the same time though.

Unfortunately my pension contributions are proving to be very much backended over my owrking career, so am pretty desperate not to see any changes to tax relief, or annual allowances in the near future, but I suspect my luck will run out on that at some stage

marlot

When we married (29 years ago), we set up three accounts at the bank - a joint account and an individual one for each of us. The plan had been to have some pooled money and some individual.

After a year the bank wrote to us to point out that we'd never used the two individual accounts, so had closed them. Everything has been pooled since.

Some savings in my name, some in my spouse's. But we both know what's where. It helps that we have similar attitudes to money and savings!