Is it time to slow down on the saving and start spending a little more

enthusiasticsaver

Getting the balance right between spending and saving is tricky and depends very much on your plans for the future, your family circumstances, lifestyle and health.

If you already have a well funded pension which you do given your age and don’t intend retiring until over 60 I would say definitely yes you can afford to loosen the purse strings. You have a good income though so it does make sense to maximise pension contributions to avoid the HR tax. Watch out you don’t hit the LTA though. If you intend retiring prior to mid fifties you may need another income stream given pensions at the moment cannot be accessed earlier than 55 and this may well be raised. 

You have a lot of expenses coming up with your children though. Uni, cars, driving lessons etc and given you have 4 children and the youngest only 4 there are at least another 15-20 years of supporting them. I certainly would not want to miss out on memories of holidays with them so if you are saving to the detriment of family holidays I would rethink that. You won’t get that time back. 

We always did a balanced spending plan prior to early retirement. Three way split of disposable discretionary income between short term, medium term and long term saving. One third was overpaid into the pension, stocks and shares ISAs and mortgage overpayments , one third invested in term investments for car/kitchen/bathroom replacements, one third saved in internet savers or easy access accounts for holidays/short breaks/ home improvements/days out etc. We also saved for our children for university,cars, weddings and house deposits. We eventually retired at 58 when we were able to afford it and both our children were financially independent and the mortgage paid off. 

You don’t say how stressful your job is but given the salary I am going to say it probably does take a toll on your health and leisure time. As you get older you may find that time gets more precious and you may find your health may suffer. I would be prepared to change tack later on in your earning years to maybe go part time or choose a less stressful job. You don’t need to necessarily decide when you will retire now but maybe do five year plans. In the meantime I would not deprive myself of holidays with the children while they are still young. Holidays for 6 will be expensive though but it seems you can afford them so I would drop back to £25-£30k into the pension which will still keep you below £100k but give you an additional £10-£15k for lifestyle. 

jim8888

Given the picture you've painted, it's probably going to be difficult for you to become a spender more than a saver. You are who you are and you probably quite like being who you are, working your way toward being the millionaire next door. It's not a bad ambition and will give you choices in your fifties and sixties. Perhaps you should save more into ISAs now instead of pensions, which might give you a better tax picture further down the line? I'd also think about spending some money trying out new hobbies - you'll be able to retire early, so what will you do with your time? In my experience, this is the big challenge of early retirement, finding a way to fill the time in a fulfilling and enjoyable way.

plumb1_2

You can never buy back the lost time spent with your family. Happy memories will last far longer than any amount of money you have.
So my limited advice is spend more time making those memories while you’re children are still around, plus the children will also keep those memories spent with their parents longer than you.

Brenster

You are in a great position, your decision needs to balance out things such as lifetime allowance, tax efficiency, mortgage position etc.  With compound interest, and minimal additonal input, you will hit the lifetime allowance way before your retirement date, so i think you could afford to half your pension contributions, and still get to your lifetime allowance figure.  I would see if you are able to salary sacrifice for additional holidays to reduce your higher tax rate and increase quality time with family.  In addition to this, i would then look to make in roads on your £200k mortgage before your fixed rate ends (presumably favourable rate).  Well done on where you are at the age of 43, especially having 4 children !

Albermarle

plumb1_2 said:

You can never buy back the lost time spent with your family. Happy memories will last far longer than any amount of money you have.
So my limited advice is spend more time making those memories while you’re children are still around, plus the children will also keep those memories spent with their parents longer than you.

I think some people stay at work longer to avoid spending too much time with their family/other half. 
I know a couple of people who dread being at home with their other half all day 

Username03725

Once you've managed your income to around £100k (as above) I'd be looking at creating funds or trusts for the children to help them later on, esp wrt to them getting on the property ladder. Some kids do take after their parents and have a similar economic potential that in this case could allow them to achieve similar financial success to your own, but not all do. It's all family money in the end.

squirrelpie

As well as the excellent suggestions people have already made, I'd like to offer one more thought. It's generally regarded as a good idea for both partners to have reasonable pensions, rather than concentrating it mostly on one partner. That can reduce the overall tax bill and increase the amount that can be saved and can be more resilient to various changes of circumstances.

So while your partner is not working, it's worth paying £2880 into her SIPP (which will be grossed up to £3600), and when she starts working it will be worth paying whatever she earns into her SIPP (such that when grossed up by the government it matches her total earnings).

plumb1_2

Albermarle said:

plumb1_2 said:

You can never buy back the lost time spent with your family. Happy memories will last far longer than any amount of money you have.
So my limited advice is spend more time making those memories while you’re children are still around, plus the children will also keep those memories spent with their parents longer than you.

I think some people stay at work longer to avoid spending too much time with their family/other half. 
I know a couple of people who dread being at home with their other half all day 

That’s very true, I used to work with a guy who loved working min 12hrs a day, 7 days a week.
He couldn’t see what he’s was missing out on, more concerned about money. He used to say I pay for all the family holidays to the states. 

I used to say to him, instead of spending £10k for a 2 week holiday , why not have 4 holidays in the uk/Europe. Buy sadly as Albermarle says dreaded being at home with er in doors 😊
Each to their own. I’ve cut down to 2 days a week now,  so spending more time at home and we seem to be getting on ok? As long as o do as iam told 😊
But what I have put in place last year is a family break away every year, all 15 of us. I am more than happy to pay for it.

barnstar2077

Mistermeaner said:

Musings....

I am 43 and currently have £650K in DC pensions. My partner (age 38 currently non-working) has £120K in her SIPP. Additionally we have £43K in LISA's and another £35K in an S&S ISA. Current accounts we have around £15K so any urgent spending needs are covered.

I have always been a 'max the pension' kind of saver regularly putting in £40K per annum for the last 10 or so years - coupled with decent growth for most of that period I now feel we are in a pretty good pension position.

I'll never stop paying in but wondering if its maybe time to start chilling out on the saving, accept paying HR tax and put a few more quid in our pockets for fun in the here and now - holidays, meals.... whatever

We don't live a bad life by any stretch but we are generally very frugal - given the amount we have saved and how long we have until retirement it got me thinking about whether we should continue to be so frugal and 'tax efficient'. If we carry on saving as is going to smash the lifetime allowance 

Our circumstances:

Me, 43, sole earner in house, basic £95K, bonuses not guaranteed but typically £20K+ (so right in that horrible earning zone)
Partner, 38, stopped work to look after kids but wants to go back later this year
Kids: 4 of them - oldest 16, youngest 4
House: worth maybe £500K, £200K remaining on mortgage
No debts (other than mortgage)

Given our frugal saving I would say we live life as ~£50K household


What do folk think - is now the time to ease back on the pension savings and enjoy more hols with the kids before they leave / do up the house / pay off the mortgage etc. or should we carry on piling into the pensions and savings for a few more years?

Musing, thoughts and others experiences welcomed


Thanks

As someone who has developed quite a few ailments (plus a few injuries) in my forties, I highly recommend topping up a stocks and shares ISA so you have the option to retire earlier than your pension access would allow otherwise.  You have no idea what your health or job situation will be like ten years from now and having a healthy ISA available adds a great deal of flexibility to your plans!

Albermarle

plumb1_2 said:

Albermarle said:

plumb1_2 said:

You can never buy back the lost time spent with your family. Happy memories will last far longer than any amount of money you have.
So my limited advice is spend more time making those memories while you’re children are still around, plus the children will also keep those memories spent with their parents longer than you.

I think some people stay at work longer to avoid spending too much time with their family/other half. 
I know a couple of people who dread being at home with their other half all day 

That’s very true, I used to work with a guy who loved working min 12hrs a day, 7 days a week.
He couldn’t see what he’s was missing out on, more concerned about money. He used to say I pay for all the family holidays to the states. 

I used to say to him, instead of spending £10k for a 2 week holiday , why not have 4 holidays in the uk/Europe. Buy sadly as Albermarle says dreaded being at home with er in doors 😊
Each to their own. I’ve cut down to 2 days a week now,  so spending more time at home and we seem to be getting on ok? As long as o do as iam told 😊
But what I have put in place last year is a family break away every year, all 15 of us. I am more than happy to pay for it.

Now retired 18 months and being at home with 'She who must be obeyed' not too bad. However we both take opportunities during each day to go somewhere on our own/stay at home alone. For example one goes to the supermarket, and when they get back the other goes for a swim/gym.
You can too much of a good thing