Changes in your retirement expenditure

michaels

WE are spending a fair bit more in retirement as we have time to do all those bits and pieces in the house that we never had time to, more holidays (even if they are cheaper due to no time restrictions) and more activities.

We did think there might be a 'kids moving out' dividend but that has yet to materialise. Luckily we lived very frugally before retirement so although our spend is up by about 30%, it is still lower than the 50% increase in disposable income we had organised.

tigerspill

Our expenditure rocketed when we retired. This was expected due to planned travelling while we can.

As it turns out, because our investments have done so well, we can spend even more. I have now locked in our new much higher income by derisking 15 years to ILGs plus short term cash to guarantee our ongoing income.

maxaxe

Thanks for the comments. It seems that my desire to spend more than I currently do is not totally unreasonable (I haven't seen guides that suggest this). I always assumed that I would have more hours in a day to fill with expensiver hobbies and holidays.

It seems like this forum is filled with very prudent finance planners. I hope to learn from you!

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82158068#Comment_82158068

There is an IFA who regularly posts on these forums. Apparently one of the most common advice recommendations he dispenses to his older clients is - you have enough, go and spend it !

maxaxe

https://forums.moneysavingexpert.com/discussion/comment/82158133#Comment_82158133

I suspect that I would not be amongst his older clients (I'm 33). I wonder how his advice for a younger client would change/differ?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82158655#Comment_82158655

IFA’s are heavily regulated and tend to be cautious. So in terms of say someone retiring very early, they would probably recommend you do not, as in worse case scenario you might run out of money at some point ( and then blame them for bad advice).

leosayer

In simple terms, we looked at our expenditure when working and then excluded any expenses that we wouldn't have in retirement such as commuting costs and saving.

In practice, this proved quite hard to do because our expenditure is spread across a number of different credit cards.

Firstly, we had to identify which transactions can safely be ignored such as transfers between accounts, savings (eg. into SIPP/ISA) and one-offs such as buying a car.

Then we had to to categorise everything into essentials (eg. groceries, utilities, council tax etc.) and discretionary (eg. holidays, meals out etc.).

Then you have to identify a suitable period for your analysis. Monthly doesn't work because many of our expenses don't happen monthly eg. car and house insurance (annually), water (six-monthly) and then you get other anomalies like our gas/electric bill where we pay in arrears so bills vary enormously depending on the time of the year.

Maybe there's an easier way of doing all this but I found the exercise of putting all this into a spreadsheet and categorising everything gives us better insight into what's actually going on.

katejo

I started tracking all my expenses and budgeting to specific categories 12 years before my retirement earlier this year. That has helped me massively. So far my expenditure since retirement hasn't changed very much. Travel to work expenses have gone but they were already reduced due to hybrid working. I haven't yet spent any of my retirement lump sum. Most of my spending is from my DB pension and previous savings.

Linus2864

I keep track of my spending and income using MS Money, but also reconcile expenditure every month using a spreadsheet to confirm I am not overspending.

Obviously there are larger outgoings like holidays and golf (yes, another retiree golfer!) but these aren't unexpected and are planned for.

Really it all comes down to planning; if you get organised long before retiring, then it will make it a lot easier.

Hope this helps

L

barnstar2077

I haven't retired yet, but I found that when I dropped down to a four day I week I didn't factor in the extra money I would spend on that day off, I just looked at how much would be removed from my salary (so it felt like a double pay cut!)

To counter this affect in early retirement (early fifties), I think I will try to maintain the weekend and Wednesday as the days where I spend money as usual, and then concentrate on gardening, walking, reading etc on the other days. I will at least start out that way and then adjust my spending according to my assets as time goes by.