Changes in your retirement expenditure

Stubod

I had 20+ years of monthly accounts to show what are expenditure was likely to be. I set up a "budget" spreadsheet and fed this information into it along with known incomes. Currently underspending by a massive margin, (..need to have more holidays :) ).

Problem is that when you have been a saver all your working life its difficult to change your mindset!

katejo

https://forums.moneysavingexpert.com/discussion/comment/82159522#Comment_82159522

Yes I find that hard too. Hence why I haven't touched my lump sum.

cfw1994

https://forums.moneysavingexpert.com/discussion/comment/82157466#Comment_82157466

That is all very true.
For many years I always tracked expenditure to a daft degree (Quicken before many people used it…kind of a hobby, I guess), so we had a pretty good idea of what we needed to have for income.

I do think that is perhaps the most important to being "relaxed" about managing once retired, unless you perhaps have an annuity/DB covering everything: it is a big shift, from saver to spender, as Stubod says above.

The first year saw one chunk of my pot fall to the point it felt like the "Sequencing Risk of Returns" could be a real issue, so we stalled drawdowns (only months after starting them!) & lived off cash assets (PBs & savings). That lasted well over a year before we felt safe to restart the draw, but we had spoken about what we would do.
Since then, as mentioned above, investments the past couple of years have been crazy, so many here will have benefitted from this.

For that reason, we have increased our drawdown (although we still save - old habits die hard). I guess one way we have taken advantage of this is to spend more on 'treats' with our offspring (& their partners). A weekend visiting them might include a show and a couple of nice meals, without worrying too much about the bill. Give with warm hands rather than cold.

michaels

If we are on to the psychology, before retirement, every penny had a purpose - every penny not spent would buy a bit longer retirement. Now I am retired and know I have considerably more than I used to spend, it is very easy to stop thinking about getting the best value from every pound spent and with that small change in mindset it is very easy to spend an awful lot more.

Triumph13

https://forums.moneysavingexpert.com/discussion/comment/82159729#Comment_82159729

We are all different. The key thing is to understand your own psychological makeup and to adjust your budgeting strategy accordingly.

What works best for me is deliberately setting an aggressively high spending budget, because I know I'm a natural saver and will therefore feel happiest if I consistently come in under budget. If I get it right, then I end up spending what logical me thought was the right number in the first place, whilst also feeling good about being under budget :)

TLDR: Brains are weird.

Cobbler_tone

Going to a three day week I have discovered that I haven't had an issue with spending. A new car, new TV, very expensive coffee machine. As I said, spending is not an issue. When I was working full time, hammering the pension and saving, I wouldn't have.

KintsugiWhippet

Such an interesting discussion and timely for me as I’m retiring just short of 67 at the end of this month. I was in the office yesterday and felt so free knowing that all the carnage that was going on around me had no direct impact on my future. I have tracked my spending for many years using pen and paper and the MSE spreadsheet. I divorced the ex in 2020 (not what I wanted but necessary) and the tracking of expenditure was crucial during a very rocky financial period. I’m taking 66% of my pension pot as tax free lump sum (for a garden project and a big holiday) and annuity to cover the basics with state pension. Savings will make up the difference plus I have the security of the remaining pension pot invested. I’m also mortgage free because I downsized after the divorce and worked 4 jobs for a few years. I’m quite frugal in some areas of life and not in others. My plan is to use Mondays, when I currently go into the office, as my fun day. I can travel off peak into London (I live 30 miles outside the city) and take advantage of all the freebies/reduced cost offers applying on a Monday. I’ll continue to pay my dog walker as usual because that’s important to her and to me. I will spend more on projects in retirement during the early years, and, like others, I am a bit anxious about spending from savings. But this is what I’ve slogged myself to burn out for during over 4.5 decades and for which I’ve sacrificed quite a bit as a 1981 graduate into a very male dominated workforce where, at times, it was a brutal struggle to survive. I have no children and although my godchildren and niece will benefit from an inheritance, I don’t feel any particular obligation to preserve assets for them. Overall, I plan to spend more but still to spend wisely.

mrklaw

we’ve tracked spending and run a quite tight budget. We include guilt free spending but it’s allocated so we know how much we can then put away for savings

that real or stability means we can track personal inflation and have confidence in a draft retirement version

it was knocked somewhat by reading today my council may have to raise council tax by 42% by 2028 which would be at least another £1000 a year just !!!!!! like that! Those are the kinds of things hard to plan for. That’s a 2.5% increase on our entire annual budget. Or 3.5% increase on our essentials budget

QrizB

it was knocked somewhat by reading today my council may have to raise council tax by 42% by 2028

Is that even possible? I thought there was a 5% annual cap which could only be exceeded with central government permission?

Linton

https://forums.moneysavingexpert.com/discussion/comment/82159989#Comment_82159989

If £1000/year is 42% your council tax must be much lower than mine! You dont live in Westminster do you? Apparently It has one of the lowest council taxes in the country thanks, I think, to high income from business rates. The government was suggesting that central givernment payments to local councils should be focussed towards poorer areas which currently (perversely) have some of the highest council tax levels.