It's time to start digging up those Squirrelled Nuts!!!! 29 June 2019 at 2:14PM edited 31 December 2020 at 10:24AM in Pensions, Annuities & Retirement Planning 1.6K replies 226.2K views

BoxerfanUK

The best of luck to you both Sea Shell. Enjoy your retirement:j

Audaxer

bostonerimus wrote: »

One difficulty with drawdown planning is spending variability. It's easy enough to do a budget for regular items like food, utilities and taxes etc, but irregular large costs are often missed. You need to have a plan to replace your car, do major home renovations and the worst one of all, pay for long term care. So if your budget is 20k could it stand to be 30k or 40k for a couple of years when you need to buy a new car and replace your central heating?

That's a good point. I'm surprised in retirement planning that a specific annual spend amount is often quoted as if that amount, increased with inflation, is likely to be the spend each year. I'm interested to know how people on a tight drawdown, budget for large purchases like cars and large home improvements etc.

A total annual spend of £15k to £20k in retirement seems very low for a couple in my view, even not taking account of occasional very large purchases that may be needed.

Sea_Shell

At least you can all learn from our mistakes if it all goes spectacularly wrong!!!;);)

Sea_Shell

Audaxer wrote: »

A total annual spend of £15k to £20k in retirement seems very low for a couple in my view, even not taking account of occasional very large purchases that may be needed.

For some perspective, our year to date spend is currently a whopping £11,748.

So if we gave ourselves a £20k spend, that's almost doubling our current level of spending. Who gets to do that in retirement!!?? It's all relative.;);)

bostonerimus

Sea_Shell wrote: »

For some perspective, our year to date spend is currently a whopping £11,748.

So if we gave ourselves a £20k spend, that's almost doubling our current level of spending. Who gets to do that in retirement!!?? It's all relative.;);)

Well you seem to be on track to be around budget. But you need to plan for periodic significant over spends. As an example I get $36k/year in pension and rent and my spending budget is $30k/year, but this year I had to paint the house and that cost $14k so that came out of my "slush fund" that I build up with the $6k/year that I have left over from the pension and rent.

p00hsticks

Audaxer wrote: »

A total annual spend of £15k to £20k in retirement seems very low for a couple in my view, even not taking account of occasional very large purchases that may be needed.

Median household income in the UK is around £28k.

If you are a homeowner and have repaid your mortgage by the time you retire then for many households £15k to £20k will be comparable with what they were taking home when working and paying off a mortgage, particularly when you factor in that spread across two people there will be no NI or income tax to pay.


We're currently spending about £15k - £18k a year, although we have a separate savings pot put aside for any large spends such as a new car etc (although we may do away with the car altogether when the current one reaches the end of it's life)

Audaxer

p00hsticks wrote: »

Median household income in the UK is around £28k.

If you are a homeowner and have repaid your mortgage by the time you retire then for many households £15k to £20k will be comparable with what they were taking home when working and paying off a mortgage, particularly when you factor in that spread across two people there will be no NI or income tax to pay.

That's true. In my case I was lucky to be able to pay off my mortgage years ago, so our total annual spend hasn't reduced by much in retirement

We're currently spending about £15k - £18k a year, although we have a separate savings pot put aside for any large spends such as a new car etc (although we may do away with the car altogether when the current one reaches the end of it's life)

I'm amazed as our annual spend is much higher than that even although I do monitor our spending closely, and I do not consider us as big spenders.

JonBr

Good luck Sea Shell! Your situation is much like mine, only the Mrs has not retired yet as she is 5 years younger than me. Me, I'm FIRE at 54, as of this coming Friday....

Busy_Mee1

A great new thread. I will be really interested to see how you get on. My OH retires in 3 months and I retire in 12 months. We both have Civil Service Pensions with lump sums, so no drawdown dilemmas for us.

We intend living on our pensions but supplementing this from our capital in the early years to enable us to travel and for any big purchases. The hardest thing for us will be changing our mindset to start to spend capital rather than saving it.

frugal90

Moving to de-accumulation is quite hard.
We stopped 1 year ago and even though we have done everything in the year we wanted to We have spent less than we budgeted for.
Better that I suppose than the other way. You only get one chance so enjoy it while you can!