Managing different views of retirement

squashtraveller

My OH and I have different views on retirement income/expenditure. We have calculated our future income/expenses (DB pension plus state in 5 years, no mortgate or debt) and (I) expect a 'comfortable' retirement. However, my OH now says its a big drop from our pre-retirement income so how will we manage. I since found OH looking at new houses more expensive than our current! What have others done to cope with different expectations in retirement between you and OH?

MEM62

Meet halfway?  

Fortunately, my wife and I are on the same page with this.  

green_man

Most people don’t move to more expensive houses in retirement!  Often the reverse is true.   Retirement usually corresponds to paying off the mortgage, kids leaving home etc, these should result in lower outgoings so the reduction in income being somewhat offset. Obviously every case is different so only you can work this out.  …..but you do need to be on similar pages at least.  It’s no good if one of you is expecting doing 3 cruises a year and new cars if you’ve only just met your more basic income needs.   If you’ve agreed money wise previously you wouldn’t expect a huge disconnect here.

LHW99

You could look at living on your projected pension income (plus any work-related expenses) now and see what it feels like.

If you save the excess / put into pensions you would also be boosting your future income if you find the current amount too tight.

dunstonh

squashtraveller said:

My OH and I have different views on retirement income/expenditure. We have calculated our future income/expenses (DB pension plus state in 5 years, no mortgate or debt) and (I) expect a 'comfortable' retirement. However, my OH now says its a big drop from our pre-retirement income so how will we manage. I since found OH looking at new houses more expensive than our current! What have others done to cope with different expectations in retirement between you and OH?

I don't find it happens often but usually when it does it is where one spouse has a disconnect from the money situation and needs "educating".     Nearly always resolved through discussion.  

westv

green_man said:

Most people don’t move to more expensive houses in retirement!  Often the reverse is true.   Retirement usually corresponds to paying off the mortgage, kids leaving home etc, these should result in lower outgoings so the reduction in income being somewhat offset. Obviously every case is different so only you can work this out.  …..but you do need to be on similar pages at least.  It’s no good if one of you is expecting doing 3 cruises a year and new cars if you’ve only just met your more basic income needs.   If you’ve agreed money wise previously you wouldn’t expect a huge disconnect here.

You mean people don't often move to a more expensive house.
It's somthing we are planning. A better area not a larger house.

squirrelpie

I'd think a lot depends on your personal circumstances. To what extent do you share finances, for example? Joint accounts? Pay regular bills together? etc. Are your earnings comparable or does one earn noticeably more than the other? And what do you each want to do in retirement, and how much of it is shared? Have you done budgets and talked about them?

FWIW, just before retirement we built a more expensive house, but it has much lower running costs than our old one.

Somebody

Ask her if she realises how much stamp duty there is to pay on the new property. 

Linton

squashtraveller said:

My OH and I have different views on retirement income/expenditure. We have calculated our future income/expenses (DB pension plus state in 5 years, no mortgate or debt) and (I) expect a 'comfortable' retirement. However, my OH now says its a big drop from our pre-retirement income so how will we manage. I since found OH looking at new houses more expensive than our current! What have others done to cope with different expectations in retirement between you and OH?

From our experience of nearly 20 years in retirement.....

You must get an agreement that satisfies both people.  For example in the quote above do you mean "we"?  Have you made the assumptions and worked through the calculations together?   If your OH is not happy with the results work through them again, together,

On what basis was future expenditure calculated? Are  you planning on keeping expenditure unchanged after disregarding costs that wont apply after retirement or have you made a budget based on a list of categories and  their cost?  The former is likely to be far more realistic measure of how much you will actually need to spend to remain contented with your life-style.   It is difficult to argue with keeping to the same standard of living you have become used to over the previous perhaps 30-40 years.

If your plans are based on a budget, being forced to keep to what you consider a tight restriction on expenditure, with no ability to change your situation, would not be a good start to what could be the final third of your life.

Apart from finances it is important to have decided how you want to spend your time in retirement together (eg travel, time consuming hobbies) and have included the costs in your planning.  We did and it has worked out well.

Buying a new house need not be expensive.  We moved into a house double the price of our previous one with the help of a 50% lifetime ER mortgage.  So no need to seriously deplete retirement savings.  However, we  have no wish to leave anyone a life-changing inheritance. Your situation may differ.

One thing that may be a concern in you case is relying on your DB pension with no mention of significant savings, investments or DC pension to provide backup or flexibility.  For example, if the DB pension is capped it will probably fall in value over time as income lost when inflation exceeds the cap is never recovered.