Looking for a good retirement budget planner

segovia1

Hi there

I'm in my late 40s and starting to think about retirement planning a bit more seriously.  I'm struggling a bit to put any sensible numbers on likely retirement spending.  I think there is an MSE budget planning tool, and I've seen other ones online, but would be interested in knowing what others do.  I find it so difficult to think about expenses in retirement given at the moment we have 2 school-aged children at home with all of the costs (seen and unseen!) that entails.

Thanks

NedS

As it can be so different for everyone, a good starting point is to have a very clear picture of your current expenditure. Try recording that to start with and then you may be able to give some thought as to how that current expenditure may change in retirement. For example, we anticipate we will reduce from 2 cars to one, and fuel costs for commuting will stop.

I have just assumed than child related costs will just continue. They don't stop needing your financial support the moment they turn 18.

Having a very clear picture of what our current expenditure is, year on year, and how it is broken down into essential and discretionary expenditure has given me more confidence in our predictions for what we may need in retirement. Covid (tax year 2020-21) proved particularly useful in this regard as that tax year we did nothing and went nowhere (worked from home and self isolated), so it gave us a great baseline picture of our bare minimum essential expenditure to just survive if we ever have to massively tighten our belts in an emergency, and to realise it was 30% less than our target 'comfortable' figure excluding large discretionary items (foreign holidays, new car etc).

Year on year increases have also given us a good indication of what our personal inflation rate is and how it compares to CPI.

Moonwolf

This is a long thread but has a lot of useful advice and you can see a lot of other people's budgets.
https://forums.moneysavingexpert.com/discussion/2146737/pensions-planning-the-numbe

For me, I've used our current outgoings, taken off commuting and work costs but added in things like National Trust membership and costs for days out.

Pat38493

I found it useful to categorise all my annual spend - personally I did this using a tool called Money Dashboard that you can sign up to and you can then link your bank accounts and credit cards or whatever to it - it will then attempt to categorise your spend for you as a first pass and you can then go through and adapt it.

Once you have enough data in there (it took me about 6 months before I had a full year as some of my accounts only allowed the initial download to go 6 months backward), you can then see how much you are spending on different categories.

You can also add or remove categories like “Mortgage” from the reports to see what you would have spend without that, and you can download all the data to analyse in finer detail in a spreadsheet pivot table.

Costs for supporting children is a tricky one as the kind of regular mandatory costs will stop at some point, but you may still want to support them with help which might be more one off large items.  Anyway using this approach you can tweak the numbers accordingly.

Linton

The easiest way and perhaps the most accurate is to simply assume your spending will carry on at the same level after retirement as before.  That if course does assume you know what you are spending now.

You have will have spent many years getting used to a particular standard of living, why would you want to change it?

eastcorkram

Linton said:

The easiest way and perhaps the most accurate is to simply assume your spending will carry on at the same level after retirement as before.  That if course does assume you know what you are spending now.

You have will have spent many years getting used to a particular standard of living, why would you want to change it?

I wonder what percentage of people don't change their standard of living once they retire. 

Pat38493

Linton said:

The easiest way and perhaps the most accurate is to simply assume your spending will carry on at the same level after retirement as before.  That if course does assume you know what you are spending now.

You have will have spent many years getting used to a particular standard of living, why would you want to change it?

This is a bit of a simplification - it may work for some, but for example if you have a mortgage that will be paid off at or around the same time as you retire, it's quite likely to be your biggest monthly spend.  Including that in your retirement spending plan might mean working longer than needed.  Same with major childcare costs related to education - if you are making big contributions to University costs, child maintenance costs in split families etc,

Also if your retirement coincides with not having to take holidays during school holiday times and being able to take them on flexible dates, you can also significantly cut your holiday spend without actually reducing the quality of life.

billy2shots

I always come back to this budget planner. You can add any extra subcategories that are not catered for. 

https://www.moneyhelper.org.uk/en/everyday-money/budgeting/budget-planner

Albermarle

Pat38493 said:

Linton said:

The easiest way and perhaps the most accurate is to simply assume your spending will carry on at the same level after retirement as before.  That if course does assume you know what you are spending now.

You have will have spent many years getting used to a particular standard of living, why would you want to change it?

This is a bit of a simplification - it may work for some, but for example if you have a mortgage that will be paid off at or around the same time as you retire, it's quite likely to be your biggest monthly spend.  Including that in your retirement spending plan might mean working longer than needed.  Same with major childcare costs related to education - if you are making big contributions to University costs, child maintenance costs in split families etc,

Also if your retirement coincides with not having to take holidays during school holiday times and being able to take them on flexible dates, you can also significantly cut your holiday spend without actually reducing the quality of life.

The above probably applies more if you retire relatively early. Hopefully once you have reached 60+, most of these costs ( like mortgage and Uni costs) are behind you ( assuming to some extent that being on this forum means that it is likely your finances are in good order) 
In this case I agree with Linton, as I have been retired two years and my expenditure/lifestyle has not changed much, apart from with the current inflationary pressures.
If anything it has gone up a bit due to giving up a company car and an expense account !

Linton

To return to the topic on a budget planner the problem with all budget planners is that you have to categorise all expenditures.  It is too easy to ignore or deliberately exclude something, especially the small pleasures that help make life worthwhile.  Also you can be over-ambitious with your plans to cut down on "unnecessary" expenditure - do you really want to be forced to spend your life going round supermarkets looking for the cheapest deal on everything or basing your diet on price rather than what you enjoy?  Much better just to keep to the level of expenditure you have previously been happy with.

The second advantage of planning to maintain a constant lifestyle is that it helps provide the right balance between pension contributions and current expenditure.  If your retirement plans show your income during retirement would not cover your current day to day expenditure you can cut down now and increase your pension contributions.  Conversely there is no point in minimising expenditure whilst working to generate an income you would not know how to usefully spend when you retire.

northwest1965

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