How low to take accessible cash after retirement?

enthusiasticsaver

We will be starting on our third (for me) and fourth (for DH) year of retirement from January. We retired at 58. We were debt free and mortgage free and have a six figure portfolio of stocks and shares isas and SIPPs and invested half DHs lump sum and put the rest into accessible savings along with other savings we had and my lump sum which was much smaller also went into this.

Our needs in retirement are more volatile than when working in that our basic essential outgoings are probably only around £12k per year but we have been doing home improvements for the last two years (expensive replacement of kitchen and two bathrooms) and have booked two expensive holidays for next year and bought 2 e bikes. We also spend more on entertainment and short breaks now we have the time and cash to do them so our outgoings are a lot more than when working at the moment.

Consequently around 30-40% of our accessible savings have been spent over a period of 3-4 years which makes me quite uncomfortable as we have never spent that much money in so short a time frame purely because the holidays are more frequent, further away and longer than when working. We still have 5-6 years before state pensions kick in.

Our DB income is around £37k though and when we get state pensions that is a further £17k and after paying for the 2 holidays (both long haul) we will still have around £65-£70k in accessible savings and our portfolio still untouched. Our IFA told us we would be fine drawing up to £20k a year from our portfolio until we are 99 before it is gone but it is a struggle watching that money disappear after it took so long to save it but we figured long haul holidays and disruptive home improvements are best done in early retirement and we would get best use of e bikes by getting them now.

I know there have been a few threads recently about the change in mindset of going from saving to spending and I am trying to stay relaxed about it but it is difficult. The holidays though are on our bucket list (we did two or three large holidays when working) so I am justifying it by saying life is short and we never know what is round the corner. Does anyone else feel the same way?

redmalc

Your comments ring true with me and the good lady, we are due to retire in the next twelve months and have a nice pot of savings but i can see me having the same problems as yourself seeing it diminish.
The IFA tells me we will be ok and money should not be an issue for the rest of our lives, lets wait and see

Albermarle

It is clear from other posters that the change from accumulation to decumulation. can be quite stressful . Old habits die hard, especially for us careful MSE types.;)
Maybe even part of the reason I haven't retired yet ( although not the only one ) , even though by all rational measures I probably could easily afford to

cfw1994

So far, I am our FA :eek:
Hope to jack it in next year...& yes, lumpy sums are a moderate concern!
Has your IFA run through scenarios with you to show you how “safe” things are?

redmalc

CFW i have had numerous meetings with the IFA and i keep being told to carry on investing because i have a number of cash Isa,s which i can call on first if required and dip into the S&S Isa,s and Pension later

Thrugelmir

Do (did) you have a plan? Large items of expenditure should be budgeted for.

Our IFA told us we would be fine drawing up to £20k a year from our portfolio

Portfolio should still be reviewed regularly to see it's meeting expectations/objectives. There's no certainty as to what the future holds. Were the assumptions used pessimistic or optimistic?

Andrew31

Yes is the answer to your question, people do struggle with the aspect of spending their savings.

[Deleted User]

Personally, I wouldn’t be comfortable with someone (anyone) saying “you can draw 20k a year”. What if he/she is wrong? Will he/she struggle in the old age? No. It would be you. Costs them nothing to say s-t.

Nor would I like to spend on big items early on without a budget. You may well be doing the right thing, but how do you know?

What you need is a spreadsheet which tells you the maximum amount you can spend annually from now on. Here is one I like. https://www.bogleheads.org/wiki/Variable_percentage_withdrawal. Check it out.

waveydavey48

enthusiasticsaver wrote: »

I am justifying it by saying

Who are you justifying it to? It's money you have worked hard for. Enjoy it.

enthusiasticsaver

cfw1994 wrote: »

So far, I am our FA :eek:
Hope to jack it in next year...& yes, lumpy sums are a moderate concern!
Has your IFA run through scenarios with you to show you how “safe” things are?

Yes I have a cash flow forecast for the next 40 years assuming we draw on the portfolio every year which so far we have not needed to. Someone on here mgdavid I think said the earliest years of retirement are the most expensive and that rings true. We are in low to cautious and are incredibly lucky that we have good DB income so not dependent on market.

Logic tells me we will be fine but the cushion of easily accessible savings is going down at a rapid rate and I think I will have to overcome our reluctance to draw on the portfolio next year. It actually makes sense tax wise to draw on the SIPPs for the next five years to avoid paying tax for me on them and avoid DH paying HR tax as once our SPs pay out I will be a basic rate tax payer and DH will be getting near to the HR threshold.

We also will not be doing Long Haul holidays every year but Canada and Caribbean has been on our bucket list for a long time so they are now booked for next year and we have done Australia and USA some years ago so once next year is over I think we will be happy to do European holidays for a few years.

mgdavid

With DB pensions of £37k and base outgoings of £12k I'm surprised you felt the need to ask! If you want some help in switching to a spend spend mindset, you're welcome to come and stay with us for a week or two, that should sort it