Age related spending reduction

System

People generally spend their income. It's silly to try to plan life on any other basis.

Triumph13

Clifford_Pope wrote: »

People generally spend their income. It's silly to try to plan life on any other basis.

If I'd spent my income I wouldn't be retiring at 52.

Spreadsheetman

Clifford_Pope wrote: »

People generally spend their income. It's silly to try to plan life on any other basis.

If I were spending my income I'd never be able to retire...or own a house...or have any savings. I'd be dreading the coming changes in my workplace which will make me redundant in a year's time instead of looking forward to them.

Linton

pensionpawn wrote: »

Indeed, I intend to keep the same level of drawdown until I'm approx 75, where I will reduce it to two thirds and then reduce it again to one third the original level (approx the basic allowance) around 80. My Dad used to say that tomorrow isn't promised and I intend to whittle my pot down to close to zero by mid 80's (where my parents checked out), if I make it that far. Enjoy life whilst you can. Of course you don't have to spend every penny of your draw down and fully intend to save some / help the kids along the way .

Not a strategy I would advocate. One is possibly sentancing oneself to penury and dependence on a cash-strapped state in old age when it is impossible to do anything about it. Also it is risky in that managing drawdown so that ones pot approaches zero is very difficult to time accurately - you could be forced to cut expenditure too early.

My policy is to plan and budget on the basis that current expenditure should be sustainable in the long term. If the plans show that current expenditure is not sustainable then expenditure should be decreased now and savings increased. If the plans show real long term wealth rising ahead of that needed in the future one can spend more now without worry.

This policy hopefully solves the care problem. Once care is required it is a reasonable assumption that ones days are limited and so the capital previously held to provide long term income should be more than adequate to pay for it.

System

Triumph13 wrote: »

If I'd spent my income I wouldn't be retiring at 52.

You spent it partly on pension contributions I presume?

kidmugsy

LHW99 wrote: »

Interesting that they say “even for the 80+ age group, only a minority (6.4% of households) are putting money towards meeting long-term care needs.”
This is almost exactly what you would expect if you consider anyone having a 1 in 4 chance of needing care, and most households having two older members (I make that 6.25%).

Probability of one member of couple not needing care = 0.75

Therefore, pretending that the probabilities are independent, probability of both not needing care = 0.75^2 = 0.56.

Therefore chance that at least one will need care = 0.44.

0.44 > 0.0625.

kidmugsy

Nebulous2 wrote: »

Insurance was available in the 1990s at least, but very few people bought it.

I suspect most people assume that other people's children will pay up i.e. the taxpayer.

Triumph13

Clifford_Pope wrote: »

You spent it partly on pension contributions I presume?

No, we invested most of it in pension schemes.

crv1963

Linton wrote: »

Not a strategy I would advocate. One is possibly sentancing oneself to penury and dependence on a cash-strapped state in old age when it is impossible to do anything about it. Also it is risky in that managing drawdown so that ones pot approaches zero is very difficult to time accurately - you could be forced to cut expenditure too early.

My policy is to plan and budget on the basis that current expenditure should be sustainable in the long term. If the plans show that current expenditure is not sustainable then expenditure should be decreased now and savings increased. If the plans show real long term wealth rising ahead of that needed in the future one can spend more now without worry.

This policy hopefully solves the care problem. Once care is required it is a reasonable assumption that ones days are limited and so the capital previously held to provide long term income should be more than adequate to pay for it.

This is our approach too. Reckoning that if we have sufficient income when we retire we can manage to use some capital from savings if one of needs care, without seriously compromising the others lifestyle.


With regards to leaving money after we die, I'd rather we did that than spend it all and then run out of money in our older old age. Whilst few including us can afford to save for every possibility sensible planning can go some way to mitigating for care needs.


If there's money left when we die job done as far as I see, but no great shakes if the house needs to be sold to pay for the survivors care home fees either.

coyrls

Clifford_Pope wrote: »

You spent it partly on pension contributions I presume?

That is stretching the definition of spending. So would spending also include spending on investments and spending on savings?