Actual Spending in Retirement against expectations

Ibrahim5

barnstar2077 said:

Albermarle said:

(As an aside, I'm struck by how many MSE'rs who are talking of FIRE in their 40s are childless; I've got two Experiments and am quite pleased to be aiming for retirement in my late 50s!)

I have often thought that a disproportionate number of posters ( including new , non regular ones ) on this board seem to be single ( often never married ) and/or have no children. I do not have any statistics to show the % is any different to the general population, but it just seems like that . Almost everybody I know at work or in personal life, seems to be married, or at least divorced , and have offspring.

In my defence I am not single by choice.  It's not my fault I hit every branch of the ugly tree on the way down :  )

You look well groomed in your photo.

Albermarle

my debate is I could afford a frugal no-inheritance kind of retirement pretty much now, but I'm not quite 60 and at the peak of my earning, + I still have a bit of mortgage left, so doing 2 more years seems a good call just to give everything a bit more slack and comfort - not funding 2 years out the pot, 2 years more contributions and possibly growth.

I did this and I am retiring this week at 62, and feeling more comfortable financially than I would have done a couple of years ago. Also helped by investment growth ( hopefully will not disappear again too quick ) and a modest inheritance .

It means I can relax more and not worry about counting the pennies too much ( although old habits die hard !) 

cfw1994

Great reply, c'est toi 
I've only been 'gone' a couple of months, but your line "What I do have is lots and lots of lovely time for myself" really resonates.

Saw a couple of pals Monday evening - they are off in their campervan for a few days, & tomorrow I'll join them for a nice 40-55mile bike ride in the Peak District - a decision I was able to make at the drop of a hat!
Out now for another hour in the "garden gym" before another cuppa.   It's a tough life...

mat1964

Albermarle said:

my debate is I could afford a frugal no-inheritance kind of retirement pretty much now, but I'm not quite 60 and at the peak of my earning, + I still have a bit of mortgage left, so doing 2 more years seems a good call just to give everything a bit more slack and comfort - not funding 2 years out the pot, 2 years more contributions and possibly growth.

I did this and I am retiring this week at 62, and feeling more comfortable financially than I would have done a couple of years ago. Also helped by investment growth ( hopefully will not disappear again too quick ) and a modest inheritance .

It means I can relax more and not worry about counting the pennies too much ( although old habits die hard !) 

I'm in the same position - ideally I would like to do another 2-3 years (I'm 57 now) but a combination of health matters and more importantly work matters is making this impossible.  If I retired at 60, I'd be more confident - it looks like it will be just before I turn 58.  

thriftytracey

After we paid off the mortgage (aged 50) I increased salary sacrifice, doubled pension contributions and paid odd lump sums into my work pension.  I benefited from a healthy stock market during those years so I was able to retire at 59 in 2019 after consolidating my works pension and two other pensions I had contributed to in the past.  The two years before I retired I lived on a much lower income (as I had increased salary sacrifice significantly).  I was able to do this and make the decision to retire in 2019 aged 59.  My pension pot was £285k. I did not take my TFLS and am using that to draw down with a small amount from non TFLS.  I don't pay tax.  My income is £13500 pa.  My husband gets a final salary pension which covers the bills and he also draws an amount from a private pension.  

All sounds hunkey dory BUT along came Covid and the bottom dropped out the Financial Market in March 2020.  I had to stop drawdown from my pension for six months to give it time to recover.  It recovered somewhat so I restarted for three months and then stopped it again January - March 2021.  We managed.  I cut out all unnecessary direct debits and standing orders and the pandemic meant we did not really miss discretionary fund as nothing was open.  No holidays, no meals out, no concerts, theatre etc.  It wasn't easy though.  I did worry and I wouldn't want to go through that again.  At least we did not need to dip into savings during that period.

I probably didn't need to stop drawdown for so long but now my fund is £305k. I will never take if for granted again though.

I also dispensed with the IFA as that was £1500 pa taken from the drawdown fund and our drawdowns are off the shelf products with the provider determining the fund choice and proportions.  I check performance on a monthly basis.

Inflation is a factor with pensions and everything is going up in price quite significantly.  Luckily my husband recently reached state pension age so we have a bulwark if there is another crash.

We paid additional contributions to his state pension to make it up and I am really glad we did - it is a no brainer.  I shall do the same for mine but at least have a few years to do that before I reach state pension age.

So, as it stands financially we are comfortable and I save a decent sum each month into a holiday/discretionary spend fund.

Like others on here we don't have children!  

Albermarle

 At least we did not need to dip into savings during that period.

In fact it is part of a drawdown strategy to hold some significant cash savings , so you do not have to take money from the pension whilst its value is depressed, but still live a similar lifestyle.

Not sure your alternative extreme belt tightening strategy would be the correct solution for most people, although some expenditure reduction would  probably be advisable in those circumstances. 

bostonerimus

Marvinman said:

Hello all,

I have looked through previous posts which have given a lot of helpful information around planning, inflation, spending, monitoring etc....  I will keep reviewing this helpful resource. 

However one thing I would be interested in hearing about is real life experience from those who have retired on how expectations around expenditure pre retirement compares to reality post retirement.  My own research throws up different methods of calculation of how you could estimate this (from a percentage of salary or holding a pension pot which is "x" times planned expenditure).  Obviously these are generic.  I fully accept that a lot is personal choice based on a desired standard of living, plans in retirement, whether you wish to work part time/have alternate income, unplanned life events etc...  I also agree that it is something one can work out with thoughts on expenses compared to income.  I have already done this and formed my own view of what I think would be required.

Having said that I would like to think some on this forum who are lucky enough to have retired have real experience of how they planned their own expectations pre retirement.  You will also now have a point of reference against which to compare whether what you "thought" you would need is comparable to what you "actually" need/expend.  It would be interesting to understand some of these experiences.   

By way of background I am age 43 and looking to finalise my plan for a retirement timeline.  I have circa £500K in a mix of a SIPP (£290K), ISA's (£100K) and the remainder in various stock/shares funds.  I also have part business ownership valued at circa £70K.  Current pension contributions are £40K/annum but likely to reduce down in coming 18 months to 2 years.  The wife has around £130K in a mix of SIPP and cash.  We have no children nor are any planned.  We are mortgage free with a property worth £350K and no need to pass down wealth to family members after we are gone.  Jokingly the aim is to pass away with £1 in the bank !!  

Any experiences or contributions would be most welcome.

Before I retired I calculated how much I'd need in annual income by tracking my spending for a year and then subtracting costs like commuting that were work related. That annual income number was $25k. As I had more than that coming in from a defined benefit pension and rental income I was all set. But if I was using withdrawals from DC pensions and other stocks and shares investments I would use a number like an index linked 4%, or maybe 3% in the UK, for the annual withdrawal and keep at least a year's spending in the bank for emergencies and just to manage cash flows - this assumes at least 50% equities and returns in line with historical statistics. 

I have found that my spending estimate has been good and I am still saving money each year. As all dividends and capital gains in my DC pensions and general investment accounts are also reinvested I have seen the pot grow substantially since I retired in 2014. I plan to die with a large pot left that will benefit my heirs.

bostonerimus

Albermarle said:

(As an aside, I'm struck by how many MSE'rs who are talking of FIRE in their 40s are childless; I've got two Experiments and am quite pleased to be aiming for retirement in my late 50s!)

I have often thought that a disproportionate number of posters ( including new , non regular ones ) on this board seem to be single ( often never married ) and/or have no children. I do not have any statistics to show the % is any different to the general population, but it just seems like that . Almost everybody I know at work or in personal life, seems to be married, or at least divorced , and have offspring.

Children are definitely expensive, but they are worth it...or so I've been told as I don't have any myself. I was married just after college and divorced in my early 40s and that is definitely expensive, both emotionally and financially. But my divorce was as amicable as it could have been from a money standpoint as we simple split everything 50/50 and came up with a list of items we both wanted like paintings, cars, furniture etc and just tossed a coin to see who got to choose first. We were quite good savers before the divorce, but it was still hard to see my individual accounts at half the value of the joint ones and I think that spurred me to save even more aggressively to get back to where I thought I should be and also to insulate myself from hardship.

marycanary

Albermarle said:

(As an aside, I'm struck by how many MSE'rs who are talking of FIRE in their 40s are childless; I've got two Experiments and am quite pleased to be aiming for retirement in my late 50s!)

I have often thought that a disproportionate number of posters ( including new , non regular ones ) on this board seem to be single ( often never married ) and/or have no children. I do not have any statistics to show the % is any different to the general population, but it just seems like that . Almost everybody I know at work or in personal life, seems to be married, or at least divorced , and have offspring.

Funny you should say that as my impression has always been that everyone on the board was coupled up with either a husband, wife, DH, partner or OH, as appropriate. I'm single following divorce but do have a large family by modern standards.  I raised them on my salary alone for many years after my ex-husband abandoned us and disappeared. I would certainly have a larger retirement pot if things had been different.

PollyWollyDoodle

I’m not really retired, but six years ago I gave up a well paid professional career to work part time and be self employed, cutting my income to less than 1/3 of what I used to earn. There were some obvious savings like commuting, coffees and lunches out etc, although in preparation for leaving my job I’d pretty much cut those out. 

Because I now have time to shop around I’ve saved hundreds on things like insurance, mobile phone and broadband.  Boring, but it pays off.  I cook everything from scratch, and I’ve learned to bake bread, I use the discount supermarkets whereas before I would have just gone to Waitrose because it’s nearer. I got rid of the cleaner and started doing it myself. And I buy almost all my clothes second-hand because I have time to browse the charity shops regularly (this is a deliberate choice for ethical reasons, not just because I’m a skinflint!). 

The surprise to me was how often/how much I spend going out. If you had asked me I would have said that I didn’t go out much, but theatre tickets, meals out, takeaways with friends… it adds up to quite a bit and I had to adjust my budget for those items. As others have said, more leisure time often leads to more spending whether it’s gym membership, trips to town to see exhibitions or just fuel to visit friends more often. I use YNAB to track my spending and budget for annual expenses. I have never once regretted my decision - no amount of money could compare to the luxury of having more time.