From accumulation to de-accumulation?

Apollo22

I am seeking advice. I recently, well 2 months ago have begun semi-retirement. However I m still struggle to spend more money after being really frugal post a divorce. I am 60 and realais I have mostly enough as long as I don’t go too overboard.

However I still don’t treat myself to small things - coffees, lunches out and worse of all, I don’t spend the money on stuff like enjoy like riding my motorcycle. I have the bike, but feel irritated at filling petrol. I guess part of me needs to reframe it as the cost of an experience like a holiday. How did any you of get through this, if you are all like me lol?

QrizB

If you want to see how others have handled this, there's a thread on the Over 50s part of the forum all about it.

https://forums.moneysavingexpert.com/discussion/6663819/how-to-let-go-of-the-purse-strings

Veloflyer

https://forums.moneysavingexpert.com/discussion/6684653/from-accumulation-to-de-accumulation

I'm not surprised you are irritated about filling your bike with petrol given the current price of the stuff and how much of that is tax…..However, I am in a very similar position to you. Very very simplistically, what I do is look at the total value of my investments, multiply by 3.5% and consider that as a very rough guide for spend/drawdown withdrawal for the year - until state pension age. If I keep below that, then happy days.

I also have to keep remembering that the whole point of saving for retirement is that the accumulated pot is now there to be spent and enjoyed however which way I desire, but on the other hand, and for me anyways, it forms the basis of what I have to live on for the rest of my life so I have to be a little more financially astute than when I was working. I now know far more about investing/pensions/drawdown etc - partly thanks to this forum - than I did when I was earning ,and I'd encourage you to do similar. It can help with your mindset, soothe a fettered brow, and provide direction and clarity about what you need to do to meet your future needs and desires - assuming you have a rough idea of what those are.

Interestingly perhaps, I too baulk at coffees and eating out, but I do enjoy my (classic) bikes. A ride or a tinker about beats British cafe coffees every time…

NoMore

It's a very common problem retirees have, they struggle to switch from saving to spending.

Having guaranteed sources of regular income (DB pension, Annuity, State pension) instead of a large pot can help with this, as it feels much more like when you were working, receiving a regular wage. Have you considered buying an annuity with some of your investments to help?

itsthelittlethings

Work out a level of spending you are theoretically happy with and aim for that. The difference between you and most people is, you're trying to get spending up to the level while others are trying to keep it down!

Linton

Anguish in retirement from continually cashing-in one’s hard-earned investments is real but can be avoided by appropriate pre-retirement planning…

In the decades leading up to retirement one gets used to a particular standard of living which one would want to maintain. A simple way of doing this is for normal ongoing expenditure to be well covered by automatically generated ongoing income, eg SP, annuities and DB pensions. Gilt ladders and income funds could be included as part of the mix.

This leaves the financing of one-offs. Some money can come from reserving excess income as cash or low risk investments. In addition the reserves can be increased by occasional rebalancing against long term investments. This has the psychological advantage that one is never selling to spend but merely reallocating resources.

Triumph13

What helps for me is the concept of a daily 'budget'. I take my annual income* and divide by 365. I then try and use that as a reference point to help realise how much the small thing in question is not worth agonising over. Eg. if I know I'm only spending 20% of the daily number on other things, and I'm looking at a purchase that would only be another 5%, then I try and give myself a metaphorical kick up the backside and just do it. It's not perfect, but it definitely helps me.

*You could deduct fixed bills first, but I know from experience that I will always have more than enough under-budget days to cover them, and all the big one-off spends

julicorn

Do you have a budget or have you just generally been trying to spend as little as possible over the last few years?

You might to well with a detailed budget, where you specifically allocate money towards coffees, holidays and so on. If the money is there for that specific purpose, I find it easier to spend.

Bluebell1000

Although I'm not retired yet, I also struggled to spend stuff on me. I've made a budget that includes an allocation for fun spending, and anything left over at the end of the month goes into a pot in my savings, so it's reserved for when I want to buy something more expensive another month

mrklaw

not retired yet but we have a solid envelope based budget. All the bills are separately accoutned for and we have specific ‘envelopes’ for guilt free spending. I split mine across the month - half sits for larger stuff, the rest is split into weekly ‘pocket money’ for things like coffee or a bacon sandwich if the urge arises.

that gives me two things - confidence to spend that as we’ve budgeted for it, and confidence that spending it doesn’t even touch the rest of the budget, that’ll just keep ticking along

assuming that in decumulation you’re paying a ‘salary’ to yourself you should be able to budge and carve out guilt free.

maybe also think of that as overall % of spend. maybe its 10% of your overall budget per month? barely nudging the needle right?

Albermarle

https://forums.moneysavingexpert.com/discussion/6684653/from-accumulation-to-de-accumulation

There are regular threads on this same topic. It is a common issue, probably exaggerated on this forum as so many of us were savers and not spenders by nature.

Personally I have been more relaxed about it since I retired than I thought I would be. Probably because I have more than enough money, so that removes the general worry about money that I had when I was younger. Despite more expenditure on larger items, I still know the prices in the local supermarkets and fuel stations, so old habits die hard of course.

Being in IHT territory , I find it helps to think of every discretionary spend as coming with a 40% discount.