Live now or save for then?

JoeCrystal

Ohhh. Japan is amazing! However it is not worth going this year since tourists facing a lot of restrictions. Even a solo traveller must have a guide with them at all time. Which is why I am looking at going to South Korea instead.

It is worth looking into JR pass which can be a very good bargain.

Adamc

Bravepants said:

GhibliFan said:

dunstonh 

 
Time gets increasingly faster as you get older.  That is how it feels.       You will get to an age where you will regret not having put more money aside.

I agree with this mostly (time definitely goes faster), but you can scrimp and save all your life to build a nest egg for retirement and then get Dementia and have to spend the lot on care home fees.  In that case, the reverse is true and you'll wish you'd spent more money and had more fun!  Or rather, your partner will - you probably won't be aware of money by that point.

And then again might live into your nineties. Life's a lottery. Take the middle road.

The other barrier is not fully understanding the implications of different saving types such as ERRBO for the NHS scheme and how the goal posts may be moved on LISAs etc. 

I regularly sit in the sauna at the gym and there's a retired steel engineer who constantly moans about how much he is being taxed on his private pension. He laments the fact that he didn't spend the money on dating in his youth since his first marriage didn't work out. 

There's pros and cons to every type of saving but hindsight is for the bitter. 

Adamc

JoeCrystal said:

Ohhh. Japan is amazing! However it is not worth going this year since tourists facing a lot of restrictions. Even a solo traveller must have a guide with them at all time. Which is why I am looking at going to South Korea instead.

It is worth looking into JR pass which can be a very good bargain.

Cheers - that is very good to know. 

Keep_pedalling

GhibliFan said:

dunstonh 

 
Time gets increasingly faster as you get older.  That is how it feels.       You will get to an age where you will regret not having put more money aside.

I agree with this mostly (time definitely goes faster), but you can scrimp and save all your life to build a nest egg for retirement and then get Dementia and have to spend the lot on care home fees.  In that case, the reverse is true and you'll wish you'd spent more money and had more fun!  Or rather, your partner will - you probably won't be aware of money by that point.

Most of us won’t get dementia and only a tiny number of us will get early onset dementia which would impact our entire retirement, so it is a poor argument for not saving for retirement. For those who do get hit with it, you are far better off being able to self fund your care than rely on cash strapped LAs. You will be able to choose when you get the help needed, who provides that help and where. 

If you can’t self fund then the LA will delay any provision for residential care for as long as possible, they will be able to offer limited choice of homes, and they will not offer live in carers at all. Getting dementia is scary but having dementia with little financial control over your care is terrifying. Most forms of dementia come on slowly so you are going to be fully aware of what is coming in the early years. 

dunstonh

I regularly sit in the sauna at the gym and there's a retired steel engineer who constantly moans about how much he is being taxed on his private pension. He laments the fact that he didn't spend the money on dating in his youth since his first marriage didn't work out. 

Pensions are taxed at the same rate as earned income except you don't pay NI on the taxable part.   

You can draw 25% out tax free and 75% taxable.  That means the actual taxation rate for a basic rate taxpayer equates to 15%.     
He is probably venting without actually knowing what he is talking about or he is a higher or additional rate taxpayer and very wealthy and the comfort that goes with that means he has little else to vent about.      Just think about what he would be moaning about if he didn't have the money.

[Deleted User]

My view would be to live a full family life. With two NHS pensions and two state pensions things will be fine. You do not need some of the eye watering amounts that some on here consider essential for a happy lifestyle.

Personally I have  been semi-retired since I 58. I choose to work very part-time as I enjoy working in education. However, I do not need the money to live. Without it I could cope very well on my pension of about 20000 a year and that includes holidays and running a car. I am now 64 and get my SP in two years and things will be fine. I have maybe 35000 in savings and investments and that is fine for me.  I also my own my home. I have no intention of being a wealthy corpse.

Most people will not need full time care so don’t become obsessed about it. Myself I would have the house to sell and index linked pensions should I need more help in later life. Fortunately I also do not have the other obsession about leaving wealth to the next generation. They know and are perfectly  in agreement with the knowledge that anything they receive will be a bonus and not a given.

My mother is now 82 and lives a full and happy retirement on about 14500 a year. She has at least 3 holidays a year. My grandmother reached 102 and lived on a little more very happily.

Of course you need to plan and budget but,providing you own you property and avoid unnecessary debt, you do not simply need huge amounts to enjoy retired life.

I fully appreciate the point of this part of the forum is to help people maximise income and wealth but that should not the be the total consideration. A healthy life is so important too. You also need to realise that many of the posters here are not typical of the population. This is not a criticism but a fact.Too often on here I read read about people putting off retirement when they already have more than enough. I only hope they don’t have fewer tomorrows than they planned!

I apologise for waffling on but needed to make these comments. Yes have a balanced approach, but don’t avoid living life for a future level of income that you may or not need. I know more people who have died wishing they had done this or that than those who die saying ,’ Yes I have  a great bank balance!’

For the record I regret far more the things I did not do in my younger life (was far too risk averse) than having an adequate income now.

Best wishes.

Pollycat

Adamc said:

I'm generally known for being a saver and cautious about the future. A lot of what I do is with one eye on the future. 

My wife on the other hand has opposing values she believes we should live for now, that our NHS pensions are all we need to save for retirement and that we should do what ever we want within our financial means. 

I do agree to an extent. We have several holidays this year which are preventing us from saving (we have rainy day funds). We are currently weighing up another trip to Japan which is likely to be very expensive. 

Do you live by a financial philosophy when it comes to such things? It's always difficult carrying out a cost benefit analysis. As we plan on having kids within the next few years the chance may disappear for a decade or two. 

I have a colleague who is ruthlessly frugal with money and owns multiple properties. He thinks we are frivolous. However he has a partner who he says he will never marry or have a family with as he doesn't want anyone to have a claim to his assets. His name is not Ebeneezer. Obviously I wouldn't want to be like that. 

Just musing about finding a happy medium between living for today and saving for tomorrow. 

We did both.
We enjoyed our time off when we were working but always lived within our means.
Whilst work colleagues were driving Porsche, BMW, Mercedes etc, we had a cheaper car. New and top of the range but far cheaper to buy and run.
Whilst work colleagues were holidaying in 5 star AI spa hotels, we were happy with self catering places in Greek and Turkey.
We probably got more out of our holidays that they did. And had more holidays per year.
We invested our money (mostly) wisely and I retired with a final salary pension and lump sum aged 50.
OH finished work a couple of years later after a reorganisation meant that travelling 50+ miles each way per day was no longer viable. We spread-sheeted our finances to death to be sure we could afford it as his occupational pension would not be payable for another 8 years.
Even during that period we had 4 holidays a year.
Some people remain convinced we won the lottery and kept it a secret. 
Since then, our state pensions have become payable and we are financially ok.

We are different to our contemporaries as we are the only couple who don't have children.
If you do want a family, perhaps your wife should reconsider her stance on spending.

Albermarle

My view would be to live a full family life. With two NHS pensions and two state pensions things will be fine. You do not need some of the eye watering amounts that some on here consider essential for a happy lifestyle.Personally I have  been semi-retired since I 58. I choose to work very part-time as I enjoy working in education. However, I do not need the money to live. Without it I could cope very well on my pension of about 20000 a year 

If you do not have a DB/final salary pension, then to generate a pension of £20K pa with inflation linking, would mean a DC pension pot of between £500K and  £600K would be needed ( less than it was a year ago) . So quite an eye watering sum.........

Linton

One aspect that I think has not been mentioned is early retirement.  The more money saved now the greater the time available to do things you enjoy.  You should bear in mind that even if you enjoy work now after 30 years coping with the stress of deadlines, office politics, and bizarre management decisions you may be desperate to stop.  The worst possible situation I believe is being in that situation but not having the means to do other than wait until you are 68.  There is a real danger that such ongoing pressure  reduces your life expectancy.

So I suggest that in your planning you should nominate a retirement date and make assumptions on inflation, income etc then calculate what expenditure you should reasonably be able to sustain thoughout your life.  Updating your plan each year with current dfata will ensure that it represents reality.

Regularly spending more than the sustainable amount in the early years could lead to that becoming the norm thus removing any options you may have otherwise had and eventually dropping to a standard of living that you find difficult to accept.
 

Parking_Trouble

It is all about finding the right balance. But you already know that.

Get used to regular saving. Even a small amount will build up over the years.

Are you really both going to be in the NHS in 30+ years time? 

Having a family will dramatically change your amount of disposable income.
My wife didn't go back to her well paid job after the first child.

Go to Japan. It's amazing.
As well as the Japan Rail Pass, look at the ANA Discover Japan Fares - cheap domestic flights for foreigners.