How low to take accessible cash after retirement?

ffacoffipawb

cfw1994 wrote: »

You can always check https://www.death-clock.org !!

It's the wedge of death that scares me :eek:

Going from Neutral to Optimistic adds 7 years to my life. Hard to believe that statistic really.

JoeCrystal

cfw1994 wrote: »

You can always check https://www.death-clock.org !!

It's the wedge of death that scares me :eek:

That is depressing death clock. If I stop smoking, that would add seven years to my life; if I lose weight, it would add another four years on top. Hmm... something to think about at least!

Parking_Trouble

I suggest you change your Forum moniker to EnthusiasticSpender, at least for 2-3 years and hopefully that will help convince you it's fine to spend a few quid.

Sounds like you are financially very secure and as they say, 'you can't take it with you'

Parking_Trouble

cfw1994 wrote: »

You can always check https://www.death-clock.org !!

It's the wedge of death that scares me :eek:

I need to change to spending as quickly as possible. I don't have long left.

Triumph13

I feel your pain enthusiaticsaver, but f I'm understanding your numbers you really need to just change the budget you are measuring your spending against. Most especially, forget about that silly £12k a year number as comparing your spending to that will cause nothing by mental anguish. We are all different but, based on what worked for me, I would strongly suggest:

Your first priority should be to get enough out of your SIPPs to use up your PA and, if necessary to avoid 40% tax later, the whole of OH's basic rate band. If OH doesn't have LTA issues though and you want to leave much of his SIPP for inheritance then you could leave much of it alone. Moving money between SIPPS and ISAs should be TOTALLY tax driven.

Now to the important bit. Based on the numbers you have given, during this crazy spending early period you have spent not much more than £10k pa more than you have had coming in. That is LESS than you will have when the SPs are on line!!!! And that's without factoring in any sustainable drawdown from the SIPP and S&S ISA money.

Rewrite your spreadsheets (always fun). The accessible cash should be split on that spreadsheet between an emergency fund (you've said will get scared if it's below £20k so it has to be at least that) and a bridging fund. Allocate enough of the SIPP/ ISA money to that bridging fund so that it fully replaces the SP for the rest of the 5 to 6 year gap. I would probably hold the bridging fund in cash ISAs myself given the amounts and timescale.

On whatever spreadsheet you track your spending, add two pairs of columns, each pair being a monthly budget and an actual to budget variance. The first pair should be based on what your post tax income is going to be AFTER both SPs are in payment. That is your guaranteed and bomb proof future income. Your second column should add in the post tax income from a sustainable drawdown level. I leave it to you what the drawdown rate should be, but it needs to be something you absolutely believe in or you will never be comfortable spending any of it.

Now track your average spending on a rolling basis against those budgets. The aim is to be somewhere between the two numbers and it sounds like you are currently below the bottom one. Play games with the numbers until you find a way to trick your mind into being happy spending money - eg what's your cumulative underspend against the mid point of the two budgets? Do your planned extravagances pale into insignificance compared to it? Do you feel silly about worrying now?

The only rider I would add is to make sure you are both okay with the level of income you would have after the first of you dies, but as long as that's okay get out there and have some fun!

bigfer

Been retired (or as I like to call it voluntarily withdrawn from the employment market) for nearly 18 months now. A DB pension taken early (i am 57) of £12k looks after the day-to-day running costs and we are about to start eating into our savings pretty soon.
We managed to retire early by adopting a low cost /don't spend what you don't have and consequently that mindset has been unconsciously (and unintentionally) taken into retirement. However the best bit about early retirement is having time and the opportunity to travel. I often read these posts and see people writing about expensive long haul trips to far flung places and i am sure (hope) that they enjoy them. Me, i am a ryanair/airbnb tart....can't get enough of them. We (& I mean the wife or "cash cow" as she has a nice DB pension for later) have spent 10weeks abroad this year round Spain and Portugal and it has cost us buttons. We've seen some wonderful cities, enjoyed great food and drink and stayed in some fabulous apartments. My brother has just returned back from 6 weeks in the far east and said the beer was cheaper in London and he was sick of airport lounges.
So my rule of thumb is check the finances every other saturday morning, but check skyscanner every saturday......it doesn't need to cost the earth to see the world.....
.....oh and lentils and pigs liver......dead cheap. Anyone for Bratislava in Dec?

enthusiasticsaver

Parking_Trouble wrote: »

I suggest you change your Forum moniker to EnthusiasticSpender, at least for 2-3 years and hopefully that will help convince you it's fine to spend a few quid.

Sounds like you are financially very secure and as they say, 'you can't take it with you'

:rotfl::rotfl: Lol. Good idea but on a MSE site I don't think that would go down well. I have been thinking about this over the last few days and think that as others have said not knowing how long it has to last is the troubling issue given I am not 60 until next year. I went over the cash flow forecast the IFA did and he has actually used 4.5% growth assumption but I think that is high and 2% inflation and assumed that £20k per year withdrawal will take the portfolio to 0 by the time my DH is 100 if he reaches that. Now I think that is a bit of a pie in the sky figure given 4.5% is I think a high estimation (I worked with 4%) and I am not sure I would want to take the pot down to nil.

However I have made my peace with the big chunk we have taken out over the last 2 years. We have to do many of these things while we are fit. We have good guaranteed income which will more than stretch to a decent holiday every year and allow us still to live as we wish to. As you say the £12k basic lifestyle figure is not going to happen. We are not going to do long haul holidays every year or buy a car, a new kitchen/bathroom or e bikes so the spending will slow to what I consider a sustainable rate.

Thrugelmir

enthusiasticsaver wrote: »

I went over the cash flow forecast the IFA did and he has actually used 4.5% growth assumption but I think that is high and 2% inflation and assumed that £20k per year withdrawal will take the portfolio to 0 by the time my DH is 100 if he reaches that. Now I think that is a bit of a pie in the sky figure given 4.5% is I think a high estimation (I worked with 4%) and I am not sure I would want to take the pot down to nil.

Is your portfolio positioned to achieve an annual 4% - 5% average compound return. Would need to be a high equity %. As very much in line with long term historical returns for equities.

enthusiasticsaver

Thrugelmir wrote: »

Is your portfolio positioned to achieve an annual 4% - 5% average compound return. Would need to be a high equity %. As very much in line with long term historical returns for equities.

About 60% equities. The funds were achieving an average of at least 5% over the last 5 years so not too far off the mark. Not achieving that at the moment though.

[Deleted User]

enthusiasticsaver wrote: »

About 60% equities. The funds were achieving an average of at least 5% over the last 5 years so not too far off the mark. Not achieving that at the moment though.

Really? 2019 has been a really strong year so far. Both, equity and bond markets are well into double digits