Retirement - Live Life or Penny Pinch

Spivo46

With a Medium sized pension (300 to 400k) at retirement that you know won't last till you are 100. Do you enjoy retirement for 20 years or live a very modest life knowing you will have some pension left when you are very old and unlikely to enjoy it?? Isn't retirement for living?

Bravepants

Depends on your definition of "enjoyment" and "living".

Different people find joy in wide and varied activities and one person's retirement pot, being enough for that person's preferred lifestyle, is not necessarily the same as someone else's desired lifestyle.

This is why it's important to not just think about retirement FROM something, but thinking about what one would be retiring TO is probably more important.

Spivo46

Bravepants said:

Depends on your definition of "enjoyment" and "living".

Different people find joy in wide and varied activities and one person's retirement pot, being enough for that person's preferred lifestyle, is not necessarily the same as someone else's desired lifestyle.

This is why it's important to not just think about retirement FROM something, but thinking about what one would be retiring TO is probably more important.

Agreed, but didn't really answer my question, which was - Spend or run out of money at 85 ish? I would want to travel a bit. A couple of holidays each year, eating out once or twice each week, not worried about energy bills etc and a reliable car. As you can see, I am not expecting too much. If someone is happy walking or cycling the local area most days and sitting in with hobbies, then great, you have no financial challenges

trevjl

Everyone to their own, but I know what I am going to do. Fortunately I am in a decent position as have a DB in 5 years so wont "run out" but my DC will be well and truly used to enjoy myself before then.
For example, I had a "discussion" with 'er indoors last evening, running past her my plan (since I was 12 years old) to buy a leg in a horse.
Her answer - "my dad died at 59 without ever fulfilling his plans for his retirement, just do it if thats your dream"
I'm on the case !!! 

[Deleted User]

Live life!

Stubod

..there is probably a "happy medium" in there somewhere..? I always recommend setting up a basic spreasheet, 1 line for each year, with expected income v expenditure. You can then play around with various scenarios and do whatever you feel comfortable with..?

Linton

I would neither cut back to really enjoy life later nor spend it all now as I may die tomorrow..  Better to balance your savings and expenditure so that you can continue the same standard of living in retirement as you enjoyed previously.

By the time you retire you will be used to a particular standard of living,  Have more disposable income in retirement and you may have difficulty spending it on things you really want.  Have less disposable income in retirement and you may feel you are always scrimping and unable to enjoy life as much as you used to.

JOHNBOY42

I am nearing retirement and have a pot of 450k..... worked out me and the other half will have a income of £35k a year  10k each state pension and 15k off dc pension will be ok with us............ mortgage paid up,kids gone so we are in a position to have a decent life with about 3k a month.......not being a tight wad or being a spendthrift and we can still have holidays.. if inflation keeps on going up we can take more out the pot if required

Miiade

As someone who visits about 100 pensioners a week in their own homes, here is my take on life expectancy for men.

Out of these visits I regularly see short men 5ft 7 or under well into their 80 or 90s. All of these men are of average weight. Seldom do I see any males above this height in this age bracket.

Clearly there will be some tall males out there who live a long life, but I am not seeing them.

Based on my observations if you are a tall male spend your DC pot early, if you are a short male make sure you have got some left for later…

Spivo46

Miiade said:

As someone who visits about 100 pensioners a week in their own homes, here is my take on life expectancy for men.

Out of these visits I regularly see short men 5ft 7 or under well into their 80 or 90s. All of these men are of average weight. Seldom do I see any males above this height in this age bracket.

Clearly there will be some tall males out there who live a long life, but I am not seeing them.

Based on my observations if you are a tall male spend your DC pot early, if you are a short male make sure you have got some left for later…

  Didn't see that in the annuity assessment! 

Linton

Deleted_User said:

Spivo46 said:

With a Medium sized pension (300 to 400k) at retirement that you know won't last till you are 100. Do you enjoy retirement for 20 years or live a very modest life knowing you will have some pension left when you are very old and unlikely to enjoy it?? Isn't retirement for living?

We're retired early in our 50's. 

Based upon family genetics it's unlikely that we'll bet beyond low eighties. Predictions about increased life expectancy are misleading as reduction in EARLY deaths is what's bumping up life expectancy figures. So if your dad was a miner and died at 68 you'll probably live longer than him. But if your dad was a civil servant that died at 78 chances are that's what you can expect.

So we figure we are unlikely to be healthy enough to live life to the full after mid 70's - looking around....that's when the problems start with one partner or other.

Therefore, we aim to draw down on savings and pension until early 70's then sell our home and take it from there. I don't want to be saving money for when I'm not healthy enough to enjoy it.

Sorry but that is simply untrue.  You can look up the Office of National Statistics 2020 statistics for the median age at death for males who reached 65 in the specified year (2010 and 2020 are estimated):

1960 - 77
1970 - 77
1980 - 79 
1990 - 81
2000 - 84
2010 - 85
2020 - 86

Or to use your dead by 78 example, the % of males not reaching 79 years old when 65 in the specified year (2010 and 2020 estimated) was:

1960 - 62%
1970 - 60%
1980 - 49%
1990 - 45%
2000 - 34%
2010 - 30%
2020 - 27%



Females on average live about 3 years longer than males

There is of course a 50% chance that you will live longer than the median age.  It's a very high risk to assume you will live substantially fewer years.

One reason for the increase is greatly improved medical treatment - many fatal conditions can now be cured or ameliorated.  Also I guess the great reduction in smoking will have had a significant effect.

As someone at your "sell our home" date (where will you live?) I see no reason whatsoever to cut back on our planned expenditure.  It has remained pretty constant in real terms for 20 years.   Fortunately I planned on the basis of living into my 90's with pessimistic assumptions on inflation and investment return.
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