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Learning to spend

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  • Zero_SumZero_Sum Forumite
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    Sea_Shell wrote: »
    Holidays are a strange one IMO.

    It depends on WHY you want to travel?

    When we're working, holidays can be just about getting away, de-stressing & chilling out. The classic, sun, sea, sand.

    Retirement fulfills THAT need, so no need for those types of holidays. You're able to make the most of the nice days here!

    Obviously, if you want to travel to actually see the world, not just lie on a sunlounger, then you'll now have the time to pursue this...and hopefully the money.

    Exactly that. The classic resort in the Med bore me a bit anyway, & prefer a more sight seeing holiday. That said its still nice to get away for the weather.
  • shinytopshinytop Forumite
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    Sea_Shell wrote: »
    Holidays are a strange one IMO.

    It depends on WHY you want to travel?

    When we're working, holidays can be just about getting away, de-stressing & chilling out. The classic, sun, sea, sand.

    Retirement fulfills THAT need, so no need for those types of holidays. You're able to make the most of the nice days here!

    Obviously, if you want to travel to actually see the world, not just lie on a sunlounger, then you'll now have the time to pursue this...and hopefully the money.
    This is what we're doing. First big bucket list trip next month, definitely no sunloungers although there will be plenty sun :). And the money goes a lot further when you can travel when you want - on another trip planned around New Year, we can stay an extra week with the money saved by not having to catch an expensive, back-to-work flight.
  • jimi_manjimi_man Forumite
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    I think a lot depends on the how you’ve funded your retirement. If you’ve funded it by means of a DC fund for example, then retiring will generally involve a process of decumulation. This is a major mind shift to get used to and will have an effect on how you spend, since there is a finite amount and there will always be the fear of running out. If you’ve funded it by way of DB pensions then (depending on the amount) there is little difference between retiring and working (apart from not having to work obviously!) since you will continue getting paid monthly and there is no reason not to continue existing habits and continuing to save every month.

    It’s one of the reasons for not taking a DB transfer in my opinion. I do understand why people are seduced by the large sums of money on offer, especially if they’ve never had that sort of money, and I know there are knowledgeable posters on here who come out with amazing figures using some financial model that means you could have much more money, but people do ignore the psychological factor and the security blanket of having a confirmed income to fall back on. Sometimes greed is not good.
  • Mick70Mick70 Forumite
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    the_cat wrote: »
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?

    good luck to you both, that must be an ideal age to retire IMO
  • edited 21 October 2019 at 10:27AM
    RheumatoidRheumatoid Forumite
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    edited 21 October 2019 at 10:27AM
    the_cat wrote: »
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?

    Useful thread. I'm finished in 10 days at age 57. A good DB pension but a fair stash of cash/investments that I am not sure how or whether to start spending now. Without accumulating any more, the DB pension alone will mean we are 1k a month better off to start with.
    16 Panel (250W JASolar) 4kWp, facing 170 degrees, 40 degree slope, Solis Inverter, Geo Solo II Monitor. Installed 29/9/2015 - £4700 (Norfolk Solar Together Scheme)
    Year target (PVGIS-CMSAF) = 3880kWh - Installer estimate 3452 kWh:
    Year 1 = 4152kWh; Year 2 =4169; Year 3 = 4389; Year 4 = 4510; Year 5 = 4365 :j
  • chucknorrischucknorris Forumite
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    the_cat wrote: »
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?

    I'm really struggling to stop acquiring (hard habit to break) and start spending too. We easily have enough for our retirement, but we have not started spending it yet, to the extent that we need to do so, to spend it all. I still work 2 days a week too, although I do quite like my job. I'm 61 now and plan to retire when I am 66, I will just have to force myself to change in 4.5 years time.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • cfw1994cfw1994 Forumite
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    jimi_man wrote: »
    I think a lot depends on the how you’ve funded your retirement. If you’ve funded it by means of a DC fund for example, then retiring will generally involve a process of decumulation. This is a major mind shift to get used to and will have an effect on how you spend, since there is a finite amount and there will always be the fear of running out. If you’ve funded it by way of DB pensions then (depending on the amount) there is little difference between retiring and working (apart from not having to work obviously!) since you will continue getting paid monthly and there is no reason not to continue existing habits and continuing to save every month.

    It’s one of the reasons for not taking a DB transfer in my opinion. I do understand why people are seduced by the large sums of money on offer, especially if they’ve never had that sort of money, and I know there are knowledgeable posters on here who come out with amazing figures using some financial model that means you could have much more money, but people do ignore the psychological factor and the security blanket of having a confirmed income to fall back on. Sometimes greed is not good.

    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    Plan for tomorrow, enjoy today!
  • the_catthe_cat Forumite
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    cfw1994 wrote: »
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!

    That helps a lot actually, thanks. Looking at it logically written out, I can see better how daft my thinking is!

    In fact, it's almost the position we are in. After the first couple of years when DB pension number 2 kicks in, our DB pensions will cover all the essentials. Then once state pensions kick in all our luxuries would also fit the monthly income with some leftover to 'save'. So if things ever got tougher, there is plenty of room to cut back.

    SIPP/savings pot is for the first few years as a top up, then for big purchases/events. We have always enjoyed the simple things in life and whilst we might travel a bit or spend some money on the house,replace cars eventually etc, I frankly can't imagine burning through anywhere near the £380K available:eek::eek:

    That's the irony again! Just as soon as you have some money available to spend, you can't think of anything you want badly enough to part with it for:rotfl:
  • Triumph13Triumph13 Forumite
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    cfw1994 wrote: »
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    We will be in exactly that wonderful position by the time our SPs are in payment. A bit trickier for the intervening 15 years!
  • Mutton_GeoffMutton_Geoff Forumite
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    My IFA also pressed the mental switch from accumulation to disposal phase to try to switch off the guilt about spending your own money.

    I’m not yet fully retired but work half time and already starting the spend by filling with bucket list wishes (yacht charter in the Caribbean for New Year etc). Things I wouldn’t have dared to spend on before.

    The spreadsheet is a good idea. I would break it down a little more as well. If you’re still working, make 4 columns.

    The first shows all your monthly expenditure now. Columns 2/3/4 are for retirement. The first essentials (rent/mortgage/council tax/utils/food etc), next column the nice to haves, meals out, cars, clothes, holidays, and the last column luxuries, Aston Martin, yachts, helicopter lessons etc.

    Now the totals at the bottom will show what sort of pension you need to draw to move across the columns and what your standard of living will look like. If you’re retiring before SRA, then don’t forget the uplift from no NI on pension income and then the £8k plus state pension when that kicks in.

    My plan is to draw my pension (combined DB and DC at a rate plus £8k then drop by £8k at SRA so net income remains the same but hit on drawdown pot decreases). Will monitor to alter drawdown so tax is minimised and the day the doctor tells me I have a week left and my IFA tells me I’ve run out of money.
    Compensation/Refunds - £4,655 | Stooz Profits - £7,636 | Quidco - £4,365 | Tax Avoidance - £107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
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