This is money, how much you need in retirement

Silvertabby

We both retired at 60, and our outgoings certainly haven't decreased (had already paid off our mortgage some years earlier).  Neither of us had daft commuting costs, so our only real savings have been from not having to buy new work clothes (mainly me) as we both used to take home made lunches.

If anything, we are now spending more on our hobbies due to our increased leisure time - and expect to have to pay for at least a cleaner and a gardener in later years. 

Albermarle

We both retired at 60, and our outgoings certainly haven't decreased (had already paid off our mortgage some years earlier).
Mine are going up as I had a company car , free telephone landline, free broadband, free mobile phone , supplied laptop etc 

Now I will have to pay for all that myself 

pensionpawn

We all have differing attitudes to our retirement planning and that's what makes this forum so addictive. I've learnt so much from all the discussions. However I'm perfectly happy to run the risk of eking out a living after 85 on just the state pension (x 2 hopefully) as opposed to working to your mid 60's only to find that you run out of life well before money. Mortgaging all those potential early retirement years, with your nose to the grindstone, to provide for your 80's and 90's only to check out shortly after retiring would be such a waste. I just read that Paul Mariner, Ipswich and England forward, has just died at 68, way too young. No one knows when they are going to draw their last card so I intend to retire as soon as I can just in case it's not too far down the pack (apologies for the sombre tone..) My father retired at 65 and I remember him saying that he came into the good money too late (to really enjoy it). He made it to 85 and didn't really rip through the cash. Food for thought...

Albermarle

Mortgaging all those potential early retirement years, with your nose to the grindstone, to provide for your 80's and 90's only to check out shortly after retiring would be such a waste.

Sensible statement but I do not think it is such a black and white situation for a lot of people.

For example not everybody sees work as a 'nose to the grindstone'  experience.

Also the comfort of sitting on sufficient assets that you do not need to worry about running out , or monitor expenditure too closely, can itself enhance your Golden Years  . Especially if you were the worrying type .

Thrugelmir

Albermarle said:

Sea_Shell said:

Deleted_User said:

There is some research showing that people do tend to spend more during the early years of retirement.  Quite likely its because they are capable of travelling and spending on  costly hobbies which become impossible as retirement progresses. However, we don’t know for sure. It’s possible people spend less later on, on average, because many start running out of money. After all, there are good but costly options for housing and care later on, and many can’t afford them. What happens to our longevity and health is a key unknown. 

I'm sure I've read somewhere about the "U" shaped spending curve in retirement.

You start off with high spending needs (wants) whilst "young" and then it starts to tail off, but then can start to increase again, quite dramatically, in later life. 

I do not know the statistics , but it is clear that most people will have more money spent on their health needs in the last few years of life than the rest of their life put together . If you lived in a country ( US ) where you have to pay then I can see why there would be a U curve. Maybe not for UK though due to free NHS treatment.

In the UK if you've the money. Then at least you've a choice. Private treatment while expensive does guarantee quicker treatment for hip/knee replacements etc. 

Nebulous2

Deleted_User said:

There is some research showing that people do tend to spend more during the early years of retirement.  Quite likely its because they are capable of travelling and spending on  costly hobbies which become impossible as retirement progresses. However, we don’t know for sure. It’s possible people spend less later on, on average, because many start running out of money. After all, there are good but costly options for housing and care later on, and many can’t afford them. What happens to our longevity and health is a key unknown. 

I've been surprised at how some people I know have narrowed down their horizons as they got older. Long day trips and outings become trips to the local garden centre for coffee. Instead of actually losing cognitive function they seem to worry about losing cognitive function and self-limit accordingly. 

I've posted before about caravanning / motorhoming on the continent. After 3 weeks I would be heading home, and talking to people who had been away 6 weeks already, with another 8 or 10 to go. I always had conversations about where they went, what worked, what didn't and how long they had been doing it. It suddenly struck me one day - it was very rare to find anyone who led that type of lifestyle who had been doing it for more than 10 years. Lots of people at 6,7 or 8 years - still very enthusiastic, but few at 10 or more. That was one of the factors that led to me stopping this year. 

I've also done a long crossing to Bilbao, which was full of people who lived part-time in Spain and part-time in the UK. The boat was full of people moaning that it was getting too much and they would like to stop if they could sell their Spanish property. 

I suppose we all gravitate to the fireside with our slippers eventually........

jamesd

Deleted_User said:

Bravepants said:

, he seems to suggest that annuities pay better than 4% (when comparing with the "safe withdrawal rate"), but it gives a good perspective.

Annuities do pay more than 4%. Standard level annuity in Britain pays 5% for a 65 year old.  Even a 60 year old gets more than 4%.  

That US safe withdrawal rate is with uncapped inflation increases for a 30 year plan with 98% of cases having more nominal value after 30 years than at the start. UK equivalent is 3.7%. Both before costs, which reduce the rate by about a third of costs.Takes substantially lower life expectancy to match the inflation part of the requirement with a UK annuity.

jamesd

Sea_Shell said:

I'm sure I've read somewhere about the "U" shaped spending curve in retirement.

You start off with high spending needs (wants) whilst "young" and then it starts to tail off, but then can start to increase again, quite dramatically, in later life. 

You will have. In US research where medical bills are the reason for the increase, a situation that is rare in the UK with most covered by the NHS. The UK picture is decrease throughout retirement except for the moderately low percentage who have a couple of years on average in care before death.

Research links near the end of https://forums.moneysavingexpert.com/discussion/comment/70696742/#Comment_70696742 .

OldScientist

jamesd said:

Sea_Shell said:

I'm sure I've read somewhere about the "U" shaped spending curve in retirement.

You start off with high spending needs (wants) whilst "young" and then it starts to tail off, but then can start to increase again, quite dramatically, in later life. 

You will have. In US research where medical bills are the reason for the increase, a situation that is rare in the UK with most covered by the NHS. The UK picture is decrease throughout retirement except for the moderately low percentage who have a couple of years on average in care before death.

Research links near the end of https://forums.moneysavingexpert.com/discussion/comment/70696742/#Comment_70696742 .

I had a look through the link above but couldn't find the following document (if I missed it, I apologise - edit: sorry it was linked through one of the other links)

https://ilcuk.org.uk/wp-content/uploads/2018/10/Understanding-Retirement-Journeys.pdf

which shows the decrease in spending in the UK you describe. I think many people are worried about long-term care costs contributing to the 'U' shape in spending, but stays are generally short (e.g. https://eprints.lse.ac.uk/33895/1/dp2769.pdf )

In the Bupa sample, the average length of stay was 801 days, but with a considerable tail of long-stayers. Half of residents had died by 462 days. Around 27% of people lived for more than three years, with the longest stayer living for over 20 years.

I'd definitely run out of money well before 20 years were up...

Sea_Shell

I think the "U" will be more pronounced for a surviving spouse, as they won't have any support anymore. 

It's amazing how some old couples manage whilst there's the two of them.