How much do you spend in retirement ?

michaels

hugheskevi said:

MrSaver96 said:

hugheskevi - great read. Care to share the secret to getting to such a positive financial position at a young age? Was it just a case that you have always maximised savings or is it the result of a very well paid job - or both?!

Roughly in order of significance...No children, a couple both in full time work,  Defined Benefit pensions with Normal Pension age of 60, house price growth and a helpful period of strong investment gains after fortunately missing 2008 falls as my investment started after that.

A certain level of income is necessary, but I could have earned a lot more if I wished. Back in about 2014 I decided not to seek any more career progression, as the extra responsibility and stress would not be worth the extra cash - I worked out back then that a promotion would reduce my time left in work from about 10 years to 9.5 years and it just wasn't worth it and settled with a salary of about £65K which I knew wouldn't go up much. My wife back then earned something like £55K and that increased faster than me, so we both earn around £70K now. I did set up my own company as an additional sideline, but that was more for the challenge than the financial gain although it did roughly give me what I would have got had I been promoted another one or two times.

As well as a clear long-term plan, it has always been helpful to have smaller goals - at first those were to put all income subject to higher rate tax into a pension for both my wife and myself. Later it became make maximum ISA contributions each year for us. That was very good both for discipline and never having much cash lying around to fritter away - once it went into pension or ISA it wouldn't be coming out again except in a dire emergency. I generally made maximum mortgage overpayments too, although mortgage was never a priority so took 10 years to repay. It has been fun playing around with 0% credit cards to get liquidity to meet these challenges, and those debts are the last debts we have after paying off mortgage recently.

So I think rather than maximising savings, there was a lot of efficiency in the plan too. A huge help was deciding it was about a 10 year plan, probably slightly longer, and just settling down into a house for that period. We never felt inclined to move, refurb house significantly, get an expensive car, etc, because there has always been a finite horizon.

Oddly, living in London has rather counter-intuitively helped a lot. Although house prices were high, house price growth has helped a lot as we will be moving to a cheaper house for retirement. The other costs of living in London don't affect us too much as we cycle to work and make our own food and prefer to go running and play musical instruments rather than spend lots in restaurants and pubs. Meanwhile we benefit from higher London salaries.

So just really a case of taking advantage of what is provided rather than anything particularly insightful

Hmm - you have one extra income and three fewer dependents than me so I guess I am not doing too badly in comparison after all.  For example our 'downsizing fund' is earmarked as house deposits for the DKs rather than being part of the pot.

crv1963

michaels said:

hugheskevi said:

MrSaver96 said:

hugheskevi - great read. Care to share the secret to getting to such a positive financial position at a young age? Was it just a case that you have always maximised savings or is it the result of a very well paid job - or both?!

Roughly in order of significance...No children, a couple both in full time work,  Defined Benefit pensions with Normal Pension age of 60, house price growth and a helpful period of strong investment gains after fortunately missing 2008 falls as my investment started after that.

A certain level of income is necessary, but I could have earned a lot more if I wished. Back in about 2014 I decided not to seek any more career progression, as the extra responsibility and stress would not be worth the extra cash - I worked out back then that a promotion would reduce my time left in work from about 10 years to 9.5 years and it just wasn't worth it and settled with a salary of about £65K which I knew wouldn't go up much. My wife back then earned something like £55K and that increased faster than me, so we both earn around £70K now. I did set up my own company as an additional sideline, but that was more for the challenge than the financial gain although it did roughly give me what I would have got had I been promoted another one or two times.

As well as a clear long-term plan, it has always been helpful to have smaller goals - at first those were to put all income subject to higher rate tax into a pension for both my wife and myself. Later it became make maximum ISA contributions each year for us. That was very good both for discipline and never having much cash lying around to fritter away - once it went into pension or ISA it wouldn't be coming out again except in a dire emergency. I generally made maximum mortgage overpayments too, although mortgage was never a priority so took 10 years to repay. It has been fun playing around with 0% credit cards to get liquidity to meet these challenges, and those debts are the last debts we have after paying off mortgage recently.

So I think rather than maximising savings, there was a lot of efficiency in the plan too. A huge help was deciding it was about a 10 year plan, probably slightly longer, and just settling down into a house for that period. We never felt inclined to move, refurb house significantly, get an expensive car, etc, because there has always been a finite horizon.

Oddly, living in London has rather counter-intuitively helped a lot. Although house prices were high, house price growth has helped a lot as we will be moving to a cheaper house for retirement. The other costs of living in London don't affect us too much as we cycle to work and make our own food and prefer to go running and play musical instruments rather than spend lots in restaurants and pubs. Meanwhile we benefit from higher London salaries.

So just really a case of taking advantage of what is provided rather than anything particularly insightful

Hmm - you have one extra income and three fewer dependents than me so I guess I am not doing too badly in comparison after all.  For example our 'downsizing fund' is earmarked as house deposits for the DKs rather than being part of the pot.

Michaels- You may have a surprise in the future- my youngest accepts £100 pm while furloughed towards his living costs but has declined a major contribution towards a house deposit. Oldest declines any help towards house deposit too. So you may be prepared to help but it may be declined in the nicest possible way as I was told- "No thank you Dad, it is your money, you worked for it not me. If I really need your help I'll ask, probably when neither of us expect it".

ratechaser

michaels said:

hugheskevi said:

MrSaver96 said:

hugheskevi - great read. Care to share the secret to getting to such a positive financial position at a young age? Was it just a case that you have always maximised savings or is it the result of a very well paid job - or both?!

Roughly in order of significance...No children, a couple both in full time work,  Defined Benefit pensions with Normal Pension age of 60, house price growth and a helpful period of strong investment gains after fortunately missing 2008 falls as my investment started after that.

A certain level of income is necessary, but I could have earned a lot more if I wished. Back in about 2014 I decided not to seek any more career progression, as the extra responsibility and stress would not be worth the extra cash - I worked out back then that a promotion would reduce my time left in work from about 10 years to 9.5 years and it just wasn't worth it and settled with a salary of about £65K which I knew wouldn't go up much. My wife back then earned something like £55K and that increased faster than me, so we both earn around £70K now. I did set up my own company as an additional sideline, but that was more for the challenge than the financial gain although it did roughly give me what I would have got had I been promoted another one or two times.

As well as a clear long-term plan, it has always been helpful to have smaller goals - at first those were to put all income subject to higher rate tax into a pension for both my wife and myself. Later it became make maximum ISA contributions each year for us. That was very good both for discipline and never having much cash lying around to fritter away - once it went into pension or ISA it wouldn't be coming out again except in a dire emergency. I generally made maximum mortgage overpayments too, although mortgage was never a priority so took 10 years to repay. It has been fun playing around with 0% credit cards to get liquidity to meet these challenges, and those debts are the last debts we have after paying off mortgage recently.

So I think rather than maximising savings, there was a lot of efficiency in the plan too. A huge help was deciding it was about a 10 year plan, probably slightly longer, and just settling down into a house for that period. We never felt inclined to move, refurb house significantly, get an expensive car, etc, because there has always been a finite horizon.

Oddly, living in London has rather counter-intuitively helped a lot. Although house prices were high, house price growth has helped a lot as we will be moving to a cheaper house for retirement. The other costs of living in London don't affect us too much as we cycle to work and make our own food and prefer to go running and play musical instruments rather than spend lots in restaurants and pubs. Meanwhile we benefit from higher London salaries.

So just really a case of taking advantage of what is provided rather than anything particularly insightful

Hmm - you have one extra income and three fewer dependents than me so I guess I am not doing too badly in comparison after all.  For example our 'downsizing fund' is earmarked as house deposits for the DKs rather than being part of the pot.

Yes, I would already have got away with it  (retirement) if it hadn't been for those pesky kids...

To be fair, both of my cherubs will have a very substantial savings/inheritance pot to use for studies, house deposit etc by the time they are 18. But you never stop worrying about them (or rather, I don't) - which is ironic given that when I was 18, all the money I had was from my weekend jobs, certainly not from my parents!

I'm conscious that my generation has had a relatively easy ride in terms of property ownership, career options etc. Whereas I can imagine that the next 10-20 years could be a very tough environment - not just the immediate recession that's coming, long term high unemployment, high inflation etc... but also hard to see taxes not going up to pay back the many billions being spent right now to prop things up. 

So while I'm in a position to continue to work and build up more of a 'family safety buffer' pot for the future, I'm very happy to do so...

Anonymous101

ratechaser said:

Yes, I would already have got away with it  (retirement) if it hadn't been for those pesky kids...

To be fair, both of my cherubs will have a very substantial savings/inheritance pot to use for studies, house deposit etc by the time they are 18. But you never stop worrying about them (or rather, I don't) - which is ironic given that when I was 18, all the money I had was from my weekend jobs, certainly not from my parents!

I'm conscious that my generation has had a relatively easy ride in terms of property ownership, career options etc. Whereas I can imagine that the next 10-20 years could be a very tough environment - not just the immediate recession that's coming, long term high unemployment, high inflation etc... but also hard to see taxes not going up to pay back the many billions being spent right now to prop things up. 

So while I'm in a position to continue to work and build up more of a 'family safety buffer' pot for the future, I'm very happy to do so...

Interesting that you think of it this way. 
I think the best thing you can do for your children is try to give them a good financial education. There is then the balance between helping them out and propping them up which I'm sure most on here fall on the right side of.
Since I've had children my thinking on retirement dates has altered slightly. Initially I was a retire as early as possible way of thinking but increasingly I'm leaning towards setting my kids up with an additional couple of years work on my part. I'm aware that due to me being at the peak earning years and having decent investments I could essentially box off their pensions, set them well on the way to home ownership and make a good start on them having an early retirement if they wish, all with pretty minimal effort on my part and the benefit of compound interest.

ratechaser

Completely agree re financial education. I was a disaster with money in my youth (still am in some ways), and I'm frankly amazed that I never ended up bankrupt and am in the very comfortable position I am now. Marriage definitely helped 

Right now I'm about half way there, as one of my cherubs treats spending money as something to be avoided where possible. The other is rather more spendthrift...

cfw1994

Another vote on financial education - we are WOEFUL in this country at equipping kids with basic understandings of money.   
Actually, games like Animal Crossing can help with that - earning things to expand their virtual houses etc - quite entertaining!
I try my best with ours, but humans are all different - one of ours is essentially a very frugal individual: the other is more of a spender (but still understands the value of money.  They both understand the importance of savings, and we have helped set them up with some long-term savings things.
Not sure if anyone has looked into the MSE Academy of Money as a teaching resource?   I pointed ours at it but don't think they have tried it yet.

Oh yeah - also agree that if it wasn't for those pesky kids, I'd have achieved financial independence a couple of decades ago       Wouldn't swap them for the world though!

crv1963

ratechaser said:

Completely agree re financial education. I was a disaster with money in my youth (still am in some ways), and I'm frankly amazed that I never ended up bankrupt and am in the very comfortable position I am now. Marriage definitely helped 

Right now I'm about half way there, as one of my cherubs treats spending money as something to be avoided where possible. The other is rather more spendthrift...

RC that could be me talking! Marriage and two people having the same aim helps immensely- even if the goals joint but the plan is left one partner alone, Mrs CRV has the aim and doesn't mind paying her share but it does come down to "how much now, how much retired income and when does retired income start?". If I was not married I'd probably still be just bumbling along!

My cherubs sound just like yours!

Edit- Anonymous101 I completely agree with you on the finance education, mine both can save well (and do as far as I know), when we started out seriously planning our retirement the then 18 year old youngest took an interest and sorted himself out as far as possible, got the max contribution from his employer (so a total of his and their contributions of 22%) and now living independently- flat share with a mate, is working towards his house deposit.

Jaco70

crv1963 said:

michaels said:

hugheskevi said:

MrSaver96 said:

hugheskevi - great read. Care to share the secret to getting to such a positive financial position at a young age? Was it just a case that you have always maximised savings or is it the result of a very well paid job - or both?!

Roughly in order of significance...No children, a couple both in full time work,  Defined Benefit pensions with Normal Pension age of 60, house price growth and a helpful period of strong investment gains after fortunately missing 2008 falls as my investment started after that.

A certain level of income is necessary, but I could have earned a lot more if I wished. Back in about 2014 I decided not to seek any more career progression, as the extra responsibility and stress would not be worth the extra cash - I worked out back then that a promotion would reduce my time left in work from about 10 years to 9.5 years and it just wasn't worth it and settled with a salary of about £65K which I knew wouldn't go up much. My wife back then earned something like £55K and that increased faster than me, so we both earn around £70K now. I did set up my own company as an additional sideline, but that was more for the challenge than the financial gain although it did roughly give me what I would have got had I been promoted another one or two times.

As well as a clear long-term plan, it has always been helpful to have smaller goals - at first those were to put all income subject to higher rate tax into a pension for both my wife and myself. Later it became make maximum ISA contributions each year for us. That was very good both for discipline and never having much cash lying around to fritter away - once it went into pension or ISA it wouldn't be coming out again except in a dire emergency. I generally made maximum mortgage overpayments too, although mortgage was never a priority so took 10 years to repay. It has been fun playing around with 0% credit cards to get liquidity to meet these challenges, and those debts are the last debts we have after paying off mortgage recently.

So I think rather than maximising savings, there was a lot of efficiency in the plan too. A huge help was deciding it was about a 10 year plan, probably slightly longer, and just settling down into a house for that period. We never felt inclined to move, refurb house significantly, get an expensive car, etc, because there has always been a finite horizon.

Oddly, living in London has rather counter-intuitively helped a lot. Although house prices were high, house price growth has helped a lot as we will be moving to a cheaper house for retirement. The other costs of living in London don't affect us too much as we cycle to work and make our own food and prefer to go running and play musical instruments rather than spend lots in restaurants and pubs. Meanwhile we benefit from higher London salaries.

So just really a case of taking advantage of what is provided rather than anything particularly insightful

Hmm - you have one extra income and three fewer dependents than me so I guess I am not doing too badly in comparison after all.  For example our 'downsizing fund' is earmarked as house deposits for the DKs rather than being part of the pot.

Michaels- You may have a surprise in the future- my youngest accepts £100 pm while furloughed towards his living costs but has declined a major contribution towards a house deposit. Oldest declines any help towards house deposit too. So you may be prepared to help but it may be declined in the nicest possible way as I was told- "No thank you Dad, it is your money, you worked for it not me. If I really need your help I'll ask, probably when neither of us expect it".

This is nice to hear. I do think that I sometimes think that my kids will always be that, i.e. kids, but the truth is that I can already see that my 16yo will have a good work ethic and probably a decent job. Much less confident about my 13yo, but that could well change. My parents have helped my sister and I plenty of times, but we've never asked, and we both see our commitments as something for us to sort out. My mum regularly mentions leaving us an inheritance (she worries that if they go into care it'll all be gone) but neither of us factor this possible windfall into our future planning.
I also think that we worry a little too much about youngsters futures. I'm 49 and can clearly remember getting on the property ladder. Yes deposits were lower but nobody was saying then that "its so easy to buy a house, you don't know how lucky you are". And people older than me, say 70 plus, get a lot of stick because pensions have worked well and house prices have gone up. Remember that most of them had to save for what they needed (unthinkable now that a young couple wouldn't completely furnish their house on credit before they move in, or that they'd accept second hand items), and were often the first generation in their families to buy property. I hate the carping I hear about this age group, many of whom have never claimed anything from the government and who's wealth has been established over a very long period. And if its over a certain level the exchequer will want his share of that too.

ratechaser

Jaco70 said:

crv1963 said:

michaels said:

hugheskevi said:

MrSaver96 said:

hugheskevi - great read. Care to share the secret to getting to such a positive financial position at a young age? Was it just a case that you have always maximised savings or is it the result of a very well paid job - or both?!

Roughly in order of significance...No children, a couple both in full time work,  Defined Benefit pensions with Normal Pension age of 60, house price growth and a helpful period of strong investment gains after fortunately missing 2008 falls as my investment started after that.

A certain level of income is necessary, but I could have earned a lot more if I wished. Back in about 2014 I decided not to seek any more career progression, as the extra responsibility and stress would not be worth the extra cash - I worked out back then that a promotion would reduce my time left in work from about 10 years to 9.5 years and it just wasn't worth it and settled with a salary of about £65K which I knew wouldn't go up much. My wife back then earned something like £55K and that increased faster than me, so we both earn around £70K now. I did set up my own company as an additional sideline, but that was more for the challenge than the financial gain although it did roughly give me what I would have got had I been promoted another one or two times.

As well as a clear long-term plan, it has always been helpful to have smaller goals - at first those were to put all income subject to higher rate tax into a pension for both my wife and myself. Later it became make maximum ISA contributions each year for us. That was very good both for discipline and never having much cash lying around to fritter away - once it went into pension or ISA it wouldn't be coming out again except in a dire emergency. I generally made maximum mortgage overpayments too, although mortgage was never a priority so took 10 years to repay. It has been fun playing around with 0% credit cards to get liquidity to meet these challenges, and those debts are the last debts we have after paying off mortgage recently.

So I think rather than maximising savings, there was a lot of efficiency in the plan too. A huge help was deciding it was about a 10 year plan, probably slightly longer, and just settling down into a house for that period. We never felt inclined to move, refurb house significantly, get an expensive car, etc, because there has always been a finite horizon.

Oddly, living in London has rather counter-intuitively helped a lot. Although house prices were high, house price growth has helped a lot as we will be moving to a cheaper house for retirement. The other costs of living in London don't affect us too much as we cycle to work and make our own food and prefer to go running and play musical instruments rather than spend lots in restaurants and pubs. Meanwhile we benefit from higher London salaries.

So just really a case of taking advantage of what is provided rather than anything particularly insightful

Hmm - you have one extra income and three fewer dependents than me so I guess I am not doing too badly in comparison after all.  For example our 'downsizing fund' is earmarked as house deposits for the DKs rather than being part of the pot.

Michaels- You may have a surprise in the future- my youngest accepts £100 pm while furloughed towards his living costs but has declined a major contribution towards a house deposit. Oldest declines any help towards house deposit too. So you may be prepared to help but it may be declined in the nicest possible way as I was told- "No thank you Dad, it is your money, you worked for it not me. If I really need your help I'll ask, probably when neither of us expect it".

This is nice to hear. I do think that I sometimes think that my kids will always be that, i.e. kids, but the truth is that I can already see that my 16yo will have a good work ethic and probably a decent job. Much less confident about my 13yo, but that could well change. My parents have helped my sister and I plenty of times, but we've never asked, and we both see our commitments as something for us to sort out. My mum regularly mentions leaving us an inheritance (she worries that if they go into care it'll all be gone) but neither of us factor this possible windfall into our future planning.
I also think that we worry a little too much about youngsters futures. I'm 49 and can clearly remember getting on the property ladder. Yes deposits were lower but nobody was saying then that "its so easy to buy a house, you don't know how lucky you are". And people older than me, say 70 plus, get a lot of stick because pensions have worked well and house prices have gone up. Remember that most of them had to save for what they needed (unthinkable now that a young couple wouldn't completely furnish their house on credit before they move in, or that they'd accept second hand items), and were often the first generation in their families to buy property. I hate the carping I hear about this age group, many of whom have never claimed anything from the government and who's wealth has been established over a very long period. And if its over a certain level the exchequer will want his share of that too.

I'm 47 and clearly remember that as well. It was a 3 bed property in London and cost 1.333x my first ever 'proper job' salary. Lucky timing and a decent job admittedly, but I really don't see that ever happening for my children - so one reason I do want to give them more help than I had (or needed) myself

MallyGirl

That was good timing. My first property was a flat in Didcot where I borrowed exactly 3 x my £14k salary which was the max possible back then (1991). I had to put down a 5% deposit and the interest rate was 14% on the mortgage. I sold it several years later for £36k