Learning to spend

DairyQueen

This thread so resonates with me.

OH and I have always been squirrels. We married late and so had previously planned our respective pensions as supporting us each in our divorced states. When 'I' became 'we' I eventually reviewed the retirement plans, expenses, assets and income. Gulp - "that can't be right". I spent months checking and rechecking. Whichever way I stress tested we were on course for a much more comfortable retirement than we previously dreamed. Two can live much cheaper than 2 x 1 and we will not deliberately ring-fence for inheritance.

The difficult part has been trying to adjust to this new reality. Our cash has taken a hit over the last few years (various reasons) so we have been very careful on discretionary spends. We also currently maintain two homes from necessity. As a result we are not inclined toward conspicuous consumption. OH's biggest vices are his expensive taste in wine and food.

When OH retires in around 18 months the amount available for discretionary spends will significantly increase and we will be able to maintain that level of spending if we choose. So, OH and I decided to 'train to spend' as we too have the psychological barrier against spending/decumulation to overcome.

Training 101:
This year OH has replaced his 10-year-old car and we are planning the very few costly trips on our bucket list. The irony is that both OH and I are 'travelled out' and our appetite for long-haul in particular is no longer sharp. We have therefore decided that when the current properties are sold we will 'up value' and purchase our dream property. Home is a priority for us both.

These are the first steps toward decumulation and we are hopeful that they will help us to adjust without that slight feeling of panic about running out of money.

OH is now looking forward to retiring whereas, until recently, he was a OMY kinda guy. I suspect partly fuelled by insecurity about income in retirement.

Terron

I lost my job when I was 54, reviwed my savings and found I had enough to live moderately for the rest of my life, with some left over for emergencies, and with the state pension coming on top of that.

But living off my capital just felt wrong.


I invested in BTL and after a couple of years was living moderately off the income.
This year I have taken my DB pensions. Next year a couple of annuities (with 10.6% GARs) will start paying out. That is on top of the BTL income.
So now I have no excuse not to spend, but it is still hard.


I have made a little progress.

I replaced by 12 year old car with a 2 year old one (with less than 2k on the clock), mostly using a PCLF.

I have booked to go watch a couple of test matches in South Africa in January. I even upgraded the main flights to premium economy.

shinytop

Good thread and also relevant to me, having just retired. I lurch between "OMG what if I don't have enough money!!?" and "How much!!? We can't spent all that!" The truth is somewhere in the middle and we are fortunate to have a good mix of enough DB/SP to maintain our pre-retirement living standards and some DC/savings for extras.

We don't have expensive tastes though and never have. Looking at my peers I "should" have a large, new German or Swedish SuV but I've just bought a 3 year old Japanese family hatchback. We should go on expensive cruises and all-inclusive holidays but we get cheap economy flights and use Airbnb and public transport when we get there. We like eating out every now and again but are happy with a pub meal (and I don't drink either so no expensive wine). I spend a bit on motorcycling and gym membership but it's not that much. We are quite generous with gifts though and we've helped our son out with house deposit, etc.

I think, like DairyQueen, we'll spend some money on our home; we're moving (if our house ever sells) and may well up-size, in price if not dimensions. It's going to be an intersting time for us.
It's a nice problem to have and one thing is for sure is that it's better than working. :j

Parking_Trouble

There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

I feel very, very lucky to have been born in my generation.

Sea_Shell

Parking_Trouble wrote: »

There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

I feel very, very lucky to have been born in my generation.

I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

Parents have paid for house, good pensions and can retire early.
Their 2 adult children are currently renting or have large mortgages.
Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
They use this money towards a house of their own.
They have a home, but no cash savings or investments or pensions.
They can't retire early.

This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!

cfw1994

Parking_Trouble wrote: »

There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

I feel very, very lucky to have been born in my generation.

I doubt the “disasters” look on a “learning to spend” thread....I’m sure there are a good number out there.

I broadly agree that many here (50’s upwards) have perhaps been very lucky, and the nextgen will have more challenges....although I do feel many I know have worked pretty hard along the way!!

We only have limited DB funds due in the years ahead....so there is some DC modelling here to figure things out.

We have a couple of young people coming to the end of Uni lie and starting to find their way....which has it's own challenges, of course!
Whilst I still have a decent income, we’ve tried to “educate and kick start” them into savnigfor the future with small payments to LISA, ISA & a pension fund.
I do feel we (as a country) generally do a pretty woeful job in teaching children to handle money, spend/save/give etc.....

Zero_Sum

Sea_Shell wrote: »

I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

Parents have paid for house, good pensions and can retire early.
Their 2 adult children are currently renting or have large mortgages.
Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
They use this money towards a house of their own.
They have a home, but no cash savings or investments or pensions.
They can't retire early.

This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!

£200k each is somewhat optamistic (unless living in SE). Average will be closer to half that. Then when they actually do inherit, the kids will be around retirement age themselves.

Anonymous101

I have a slightly different take on this to most of the comments on here so far. I'll put it out there and it may or may not strike a cord with some.


I'm more of a spender by nature. As my salary has increased over the last 5-6 years I have also been learning a lot about Financial Independence and investing. I found myself in the fortunate position of having a surplus each month and rather than spending money increasing my "standard of living" as most people choose to do, I opted to spend money buying my financial independence through investing. Reflecting on this I think I still have the same mind set of spending my salary each money. I use zero sum accounting to budget how much I can spend and save each month and I used other strategies such as paying myself first etc. However it still boils down to "spending" all my wage every month.


Others have mentioned the shift in mind-set when one moves from the accumulation to de-accumulation phase. I think this will be particularly challenging for people like me and I'm not yet sure how best to approach this. I've got several years to a decade of the accumulation phase left so plenty of time to work on it but I'd be very interested to hear other peoples thoughts on this.

Triumph13

Parking_Trouble wrote: »

There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

I feel very, very lucky to have been born in my generation.

The DB pensions are the big change. When they were the standard you automatically ended up with a decent pension without having to think about it. The next generation will have to consciously take the decisions to cut back on current spending to fund their retirement. Many will struggle with this.

Triumph13

Sea_Shell wrote: »

I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

Parents have paid for house, good pensions and can retire early.
Their 2 adult children are currently renting or have large mortgages.
Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
They use this money towards a house of their own.
They have a home, but no cash savings or investments or pensions.
They can't retire early.

This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!

If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.