Budgeting in retirement

shinytop

I don't maintain a highly detailed budget and if I wrote it down there would be plenty space left on my metaphorical fag packet. What we do, and always have done, is live well within our means. That way it's more a case of spending what we want/need and seeing how much is left. I do have a good idea of what we need and use though and I know exacly how much we have and where it is. I'm not sure if keeping a detailed budget would be an advantage for us but I do understand some folks like/need to.

melanzana

When I took early (55) retirement on an exit package I continued my savings regime out of habit for nearly five years.

Now I don't save a penny, just spend the excess on enjoyment. Have a hefty cushion thankfully, and a generous pension. I am very fortunate. I know that.

I got a !!!!!! moment and said hey, I've been saving all my life, paid off my mortgage, etc. and so forth and decided to just live in the moment now. I have never had a spreadsheet in my life either for budgeting, was all in my head! Worked though.

blue.peter

shinytop wrote: »

I don't maintain a highly detailed budget and if I wrote it down there would be plenty space left on my metaphorical fag packet. What we do, and always have done, is live well within our means. That way it's more a case of spending what we want/need and seeing how much is left. I do have a good idea of what we need and use though and I know exacly how much we have and where it is. I'm not sure if keeping a detailed budget would be an advantage for us but I do understand some folks like/need to.

That sounds like a much more succinct way of describing what I do!

cfw1994

"Is budgeting a dying skill ?"
Well, I reckon that the people who frequent this forum (& MSE finance ones generally) are not a good sample of the general public: much more money-savvy than most!

Like a few here, I am still a little time from my escape (at least 6 months), so looking at budgets pretty keenly.
Most of the early years will be DC-funded, with a few DB schemes trickling in - by SP age, the basics will be fully covered (& a bit more) by those, but the DC money will need fairly careful management.

Especially as I can be a little frivolous in purchases....once I'm "under new management", I reckon that will be wound in a bit :rotfl:

bigfer

If you have elected to take early retirement, i would assume most people would have a pretty good handle on their I/E over their last couple of years. Having punched out last year and my wife this year we are now 5 months in to our retirement plan. So far it appears to be on track, but we have yet to navigate the living hell that is Christmas.
So for what it is worth: I have an income spreadsheet (what a surprise), however it is very crude and makes the very basic assumption that investment growth and inflation are equal. I have a outgoing spreadsheet (what a surprise) this is more refined as it based upon historical data from the past 2 years and predictions of future spend. The monthly interrogation then tells me if its beef, turkey mince or lentils for the following Sunday lunches.
However, this approach is fairly nebulous as I chuck around +/- X% corrections at will and the wife is forever down Sainsburys, however, it is a budget, we do have a plan and unless you do, you are as they say, planning for failure.
My advice is homebrew, airbnbs and Lidl veggie boxes for £1.50.

Marine_life

If your expenditure is running at a level where you need a detailed budget then you're probably not yet ready to retire.

bostonerimus

In the run up to retirement and for the first year after I left work I kept a detailed budget to make sure my plans were on course. I've stopped doing that now as my spending is pretty routine. I put DB pensions and rental income into the bank and pay all my expenses from that account. I don't spend all of the DB and rent so the bank account slowly grows and at some point I take the excess and invest it. I also keep a couple of year's cash in a savings account for emergencies.

Spreadsheetman

I am tracking spending tightly in the run up to retirement and will track closely through the first few years. Once my DW's DB pension starts at 65 and our SPs at kick in at 67 then the pressure is off investments and I'll probably only check every few months after that as all our living expenses will be covered.

I disagree with Marine_life's comment about not being ready to retire if you have to track expenses. If I could predict a future return on my investments (or had DB pensions) then I could take a much more casual view, but sans crystal ball I have to know what I am spending in-case we enter a sustained period of poor returns and need to make economies.

Dorian1958

I knew what my expenditure was in the last 2 years leading to retirement but 18 months in I am not sure how helpful that has been. The issue for me was during pre retirement I had one child in last year at uni and another in last stages of high school. Projecting spending going forward was a little tricky. So, I had to take reasonable guesstimates as to what my expenditure will be in the short, medium and longer terms. During the first 18 months of retirement I have also built up a fund to pay for daughters uni accommodation for 4 years, so that does not have to come out of future income. With 2 DB pensions and rental income from 2 unmortaged rental properties we at least know what our income is with confidence (having budgeted for potential voids). When daughter is fully "off the books" (does that ever happen?) and when full new state pensions and Mrs Dorian's NHS pension are in payment we should be in a good position to really start releasing the moths from my wallet.

jimi_man

Marine_life wrote: »

If your expenditure is running at a level where you need a detailed budget then you're probably not yet ready to retire.

Yes, I agree with this. Retirement shoud be stress free and not having to worry about every last penny in a spreadsheet. Financially I want to be the same or (preferably) better than when I was working, which means being able to afford all the holidays and luxuries currently as well as saving money every month. If I'm forced to scrimp and save or shop in Lidl, then I'd rather work for a bit longer.


(I should add that this is not a dig at Lidl. Some of their stuff is actually OK, but the point I am making is that I don't want to be forced to shop there all the time through budget constraints.)