Actual Spending in Retirement against expectations

bostonerimus

PollyWollyDoodle said:

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. 

When I retied I stopped my TV services like HBO etc and now just have broadcast TV and the internet. I listen to BBC Radio 4 and NPR which is US public radio, I also watch a lot of stuff for free on Youtube. I also go to a discount supermarket because they are half the price of regular supermarkets and treat their employees really well. I never buy takeaways and do a lot of cooking and baking. I still spend quite a lot on the theater and cinema and on beers with friends which usually involves a bar meal... I spent the Italy v England game in a bar eating and drowning my sorrows with friends.

Sea_Shell

Albermarle said:

 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. 

Our strategy in this scenario would be to continue to drawdown from pension, as we were, rather than tinker with it and keep stopping and starting it, but then reinvesting that money within our ISA in a similar (if not identical fund), whilst living off other income streams.  

That way if the pension is selling "cheap" units, you'll be buying equally "cheap" units with the money.   Especially if you are looking to maximise taking your Personal Allowance out of the pension each year.

cfw1994

bostonerimus said:

I plan to die with a large pot left that will benefit my heirs.

bostonerimus said:

Children are definitely expensive, but they are worth it...or so I've been told as I don't have any myself. 

If you have no children.....who are the heirs that you want to benefit?   Maybe nephews & nieces?   
I'd be more inclined to try to help them whilst you are around, so you can see what they do with the money, maybe even pass some wisdom on to them.

Have to admit our goal is to help our children (now early- to mid-20s!) with money now.   We have helped them set up (& helped fund ) small pension/ISA/LISA, as well as helping them understand the difference.  Financial education is pretty dismal broadly speaking).  Prefer to do this than dangle a distant gold carrot of inheritance when we might be in our 80-90s & they in their 40-50s.

Back on topic of actual spending....well, it's too early days here to be sure, but as PollyWollyDoodle said:

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 can imagine that being a discussion we have this winter 

But as she also said:

I have never once regretted my decision - no amount of money could compare to the luxury of having more time. 

Right...off to the Peak District for a painfully hilly pedal with pals!

Sea_Shell

We only have Nieces and Nephews, most of which are still children.

Our plan, assuming everything is still looking rosy by the time DH gets his DB and SP in payment (10+ years), is to (at least) use our £6000 joint gift allowance and give them all a modest chunk each year.

There are 5 of them, 2 on one side and 3 on the other.   

So then how do you judge "fair"?   Split each side of the family 50/50 and then divvy up between them (so 2 get £1500 each and the others get £1000 each), or give £1200 to each of them as individuals?

thriftytracey

Albermarle said:

 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. 

In a way it was because one of the standing orders I cancelled during this period was £700 savings per month (from Husband's DB pension).  So my pension drawdown income was temporarily replaced with what would have been "future savings" plus a few cancelled discretionary direct debits/standing orders.

Stubod

Sea_Shell said:

So then how do you judge "fair"?   Split each side of the family 50/50 and then divvy up between them (so 2 get £1500 each and the others get £1000 each), or give £1200 to each of them as individuals?

..I would think equal amounts each...IMHO?

mark55man

I would agree each child should have the same amount, I think it has to be fair for the receivers, and if the siblings are going to fall out about it then *warning*

If this jarred with you, then you could correct the balance in your will, but that seems more unfair

Sea_Shell

mark55man said:

I would agree each child should have the same amount, I think it has to be fair for the receivers, and if the siblings are going to fall out about it then *warning*

If this jarred with you, then you could correct the balance in your will, but that seems more unfair

We would always treat siblings from the same family the same*.   But to give one side of the family £3000 and the other only £2000 also seems a bit "unfair".


Effectively we would each personally giving our £3000 gift allowance to our own families.   


* Always assuming they haven't gone completely off the rails!!

JoeCrystal

I think it would be fair if it would be the same amount. Indeed, in my will, I got it set up with 45% each for my two brothers and 5% each for each for my two nieces. If there are any more, I would divide them equally as accordingly.

mark55man

@sea_shell - that's the debate.  I have rationalised it as being a reward for the extra pleasure that the extra niece/nephew bought into the wider family .  Plus although I take you point these are not gifts to your siblings they are gifts to their children and it just feels a bit more unfair to penalise them for having more. 

In the scale of things though its a lovely gesture either way, so perhaps the language should be around gratitude rather than fairness