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  • FIRST POST
    • the_cat
    • By the_cat 20th Oct 19, 1:01 PM
    • 2,097Posts
    • 11,345Thanks
    the_cat
    Learning to spend
    • #1
    • 20th Oct 19, 1:01 PM
    Learning to spend 20th Oct 19 at 1:01 PM
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?
Page 2
    • Sea Shell
    • By Sea Shell 21st Oct 19, 7:14 AM
    • 2,798 Posts
    • 5,031 Thanks
    Sea Shell
    Holidays are a strange one IMO.

    It depends on WHY you want to travel?

    When we're working, holidays can be just about getting away, de-stressing & chilling out. The classic, sun, sea, sand.

    Retirement fulfills THAT need, so no need for those types of holidays. You're able to make the most of the nice days here!

    Obviously, if you want to travel to actually see the world, not just lie on a sunlounger, then you'll now have the time to pursue this...and hopefully the money.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow " JOB DONE!!
    This should now read "It's time to start digging up those Squirrelled Nuts"!!!
    • Zero Sum
    • By Zero Sum 21st Oct 19, 7:20 AM
    • 1,366 Posts
    • 1,073 Thanks
    Zero Sum
    Holidays are a strange one IMO.

    It depends on WHY you want to travel?

    When we're working, holidays can be just about getting away, de-stressing & chilling out. The classic, sun, sea, sand.

    Retirement fulfills THAT need, so no need for those types of holidays. You're able to make the most of the nice days here!

    Obviously, if you want to travel to actually see the world, not just lie on a sunlounger, then you'll now have the time to pursue this...and hopefully the money.
    Originally posted by Sea Shell
    Exactly that. The classic resort in the Med bore me a bit anyway, & prefer a more sight seeing holiday. That said its still nice to get away for the weather.
    • shinytop
    • By shinytop 21st Oct 19, 8:16 AM
    • 567 Posts
    • 650 Thanks
    shinytop
    Holidays are a strange one IMO.

    It depends on WHY you want to travel?

    When we're working, holidays can be just about getting away, de-stressing & chilling out. The classic, sun, sea, sand.

    Retirement fulfills THAT need, so no need for those types of holidays. You're able to make the most of the nice days here!

    Obviously, if you want to travel to actually see the world, not just lie on a sunlounger, then you'll now have the time to pursue this...and hopefully the money.
    Originally posted by Sea Shell
    This is what we're doing. First big bucket list trip next month, definitely no sunloungers although there will be plenty sun . And the money goes a lot further when you can travel when you want - on another trip planned around New Year, we can stay an extra week with the money saved by not having to catch an expensive, back-to-work flight.
    • jimi_man
    • By jimi_man 21st Oct 19, 8:49 AM
    • 201 Posts
    • 229 Thanks
    jimi_man
    I think a lot depends on the how you’ve funded your retirement. If you’ve funded it by means of a DC fund for example, then retiring will generally involve a process of decumulation. This is a major mind shift to get used to and will have an effect on how you spend, since there is a finite amount and there will always be the fear of running out. If you’ve funded it by way of DB pensions then (depending on the amount) there is little difference between retiring and working (apart from not having to work obviously!) since you will continue getting paid monthly and there is no reason not to continue existing habits and continuing to save every month.

    It’s one of the reasons for not taking a DB transfer in my opinion. I do understand why people are seduced by the large sums of money on offer, especially if they’ve never had that sort of money, and I know there are knowledgeable posters on here who come out with amazing figures using some financial model that means you could have much more money, but people do ignore the psychological factor and the security blanket of having a confirmed income to fall back on. Sometimes greed is not good.
    • Mick70
    • By Mick70 21st Oct 19, 9:04 AM
    • 145 Posts
    • 11 Thanks
    Mick70
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?
    Originally posted by the_cat
    good luck to you both, that must be an ideal age to retire IMO
    • Rheumatoid
    • By Rheumatoid 21st Oct 19, 10:13 AM
    • 557 Posts
    • 1,327 Thanks
    Rheumatoid
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?
    Originally posted by the_cat
    Useful thread. I'm finished in 10 days at age 57. A good DB pension but a fair stash of cash/investments that I am not sure how or whether to start spending now. Without accumulating any more, the DB pension alone will mean we are 1k a month better off to start with.
    Last edited by Rheumatoid; 21-10-2019 at 10:27 AM.
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    • chucknorris
    • By chucknorris 21st Oct 19, 10:36 AM
    • 10,227 Posts
    • 15,101 Thanks
    chucknorris
    After years of saving and planning, OH retires in two weeksat the age of 57
    The figures stack up nicely but irrational thoughts of 'not being able to afford' it still linger. I think this is stemming from the need to change our mindset to it being 'OK' to use savings to live on after a lifetime of accumulation.
    Any tips from those who have already taken the plunge?
    Originally posted by the_cat
    I'm really struggling to stop acquiring (hard habit to break) and start spending too. We easily have enough for our retirement, but we have not started spending it yet, to the extent that we need to do so, to spend it all. I still work 2 days a week too, although I do quite like my job. I'm 61 now and plan to retire when I am 66, I will just have to force myself to change in 4.5 years time.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
    • cfw1994
    • By cfw1994 21st Oct 19, 12:51 PM
    • 475 Posts
    • 421 Thanks
    cfw1994
    I think a lot depends on the how you’ve funded your retirement. If you’ve funded it by means of a DC fund for example, then retiring will generally involve a process of decumulation. This is a major mind shift to get used to and will have an effect on how you spend, since there is a finite amount and there will always be the fear of running out. If you’ve funded it by way of DB pensions then (depending on the amount) there is little difference between retiring and working (apart from not having to work obviously!) since you will continue getting paid monthly and there is no reason not to continue existing habits and continuing to save every month.

    It’s one of the reasons for not taking a DB transfer in my opinion. I do understand why people are seduced by the large sums of money on offer, especially if they’ve never had that sort of money, and I know there are knowledgeable posters on here who come out with amazing figures using some financial model that means you could have much more money, but people do ignore the psychological factor and the security blanket of having a confirmed income to fall back on. Sometimes greed is not good.
    Originally posted by jimi_man
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    • the_cat
    • By the_cat 21st Oct 19, 1:09 PM
    • 2,097 Posts
    • 11,345 Thanks
    the_cat
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    Originally posted by cfw1994
    That helps a lot actually, thanks. Looking at it logically written out, I can see better how daft my thinking is!

    In fact, it's almost the position we are in. After the first couple of years when DB pension number 2 kicks in, our DB pensions will cover all the essentials. Then once state pensions kick in all our luxuries would also fit the monthly income with some leftover to 'save'. So if things ever got tougher, there is plenty of room to cut back.

    SIPP/savings pot is for the first few years as a top up, then for big purchases/events. We have always enjoyed the simple things in life and whilst we might travel a bit or spend some money on the house,replace cars eventually etc, I frankly can't imagine burning through anywhere near the £380K available

    That's the irony again! Just as soon as you have some money available to spend, you can't think of anything you want badly enough to part with it for
    • Triumph13
    • By Triumph13 21st Oct 19, 1:09 PM
    • 1,577 Posts
    • 2,230 Thanks
    Triumph13
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    Originally posted by cfw1994
    We will be in exactly that wonderful position by the time our SPs are in payment. A bit trickier for the intervening 15 years!
    • Mutton Geoff
    • By Mutton Geoff 21st Oct 19, 1:21 PM
    • 1,744 Posts
    • 2,007 Thanks
    Mutton Geoff
    My IFA also pressed the mental switch from accumulation to disposal phase to try to switch off the guilt about spending your own money.

    I’m not yet fully retired but work half time and already starting the spend by filling with bucket list wishes (yacht charter in the Caribbean for New Year etc). Things I wouldn’t have dared to spend on before.

    The spreadsheet is a good idea. I would break it down a little more as well. If you’re still working, make 4 columns.

    The first shows all your monthly expenditure now. Columns 2/3/4 are for retirement. The first essentials (rent/mortgage/council tax/utils/food etc), next column the nice to haves, meals out, cars, clothes, holidays, and the last column luxuries, Aston Martin, yachts, helicopter lessons etc.

    Now the totals at the bottom will show what sort of pension you need to draw to move across the columns and what your standard of living will look like. If you’re retiring before SRA, then don’t forget the uplift from no NI on pension income and then the £8k plus state pension when that kicks in.

    My plan is to draw my pension (combined DB and DC at a rate plus £8k then drop by £8k at SRA so net income remains the same but hit on drawdown pot decreases). Will monitor to alter drawdown so tax is minimised and the day the doctor tells me I have a week left and my IFA tells me I’ve run out of money.
    Compensation/Refunds - £4,655 | Stooz Profits - £7,636 | Quidco - £4,365 | Tax Avoidance - £107,000
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    • swindiff
    • By swindiff 21st Oct 19, 3:50 PM
    • 582 Posts
    • 318 Thanks
    swindiff
    I think having DB income to cover "the basics" and a DC pot for "the luxuries" is perhaps the ideal scenario.
    Sadly my DB pots are teeny tiny, & annuity rates not really appealing enough to sway my view, but nonetheless, having some kind of split and control would be a GoodThing™, IMHO!!
    Originally posted by cfw1994
    My model is to have our DB pots as our baseline pension (we work in academia and NHS so still both currently DB). We are building DC pots to bridge the gap between when we want to retire at 60 and when state pension kicks in at 67.
    • Brilley
    • By Brilley 21st Oct 19, 4:13 PM
    • 125 Posts
    • 105 Thanks
    Brilley
    I suppose the biggest fear is always "running out of money". However (excluding potential long term care costs), my spouses pension which is index linked would pay for all our basic "essentials". When my state pension kicks in we will have a combined income of roughly what we had been spending prior to retiring. On top of that there will be spouses SP, + some old deferred private pensions (not index linked), + any income from savings and investments.

    I have now modified our spreadsheet that we do monthly (recording income + expenditure), to include a column that also shows "underspend against budget"! I am hoping this will encourage us to spend more! We did buy a newer car but apart from that we are still struggling to spend what we should be and I just can't get my head around spending "for the sake of it"?
    • coyrls
    • By coyrls 21st Oct 19, 4:50 PM
    • 1,274 Posts
    • 1,393 Thanks
    coyrls
    It’s hard to draw the line between being realistically conservative about spending in retirement and being over cautious. I think I have a tendency to be over cautious but I am now facing a series of “one off” expenses, mainly house repairs and maintenance, that make me think that perhaps I was being realistically conservative after all.
    • DT2001
    • By DT2001 21st Oct 19, 7:04 PM
    • 144 Posts
    • 137 Thanks
    DT2001
    We will be in exactly that wonderful position by the time our SPs are in payment. A bit trickier for the intervening 15 years!
    Originally posted by Triumph13
    If, as friends of ours, expect expenditure to reduce post 74 then maybe you can be more aggressive with your withdrawals in the 1st 15 years in the knowledge that you’re basics will be covered come what may from SPA. Does any 4%SWR or Guyton Klinger sc!nario deplete funds in 15 years?

    Make your bucket list and try to do it without stressing yourselves about money left thereafter.
    My thoughts having had 3 friends/relatives fighting cancer recently and all in their 50’s or younger (fit, healthy diets and no family history).
    • enthusiasticsaver
    • By enthusiasticsaver 21st Oct 19, 7:18 PM
    • 9,396 Posts
    • 21,780 Thanks
    enthusiasticsaver
    If, as friends of ours, expect expenditure to reduce post 74 then maybe you can be more aggressive with your withdrawals in the 1st 15 years in the knowledge that you’re basics will be covered come what may from SPA. Does any 4%SWR or Guyton Klinger sc!nario deplete funds in 15 years?

    Make your bucket list and try to do it without stressing yourselves about money left thereafter.
    My thoughts having had 3 friends/relatives fighting cancer recently and all in their 50’s or younger (fit, healthy diets and no family history).
    Originally posted by DT2001
    That is the mentality we are using in that we want to do long haul holidays on our bucket list in the early years of our retirement while we are both fit and healthy. We were lucky in that DHs company pension offered a "smoothing pension" with an extra £3k per annum approx which will disappear on state pension age to give us more money in the early stages between age 58 and 66.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • TheShape
    • By TheShape 21st Oct 19, 10:09 PM
    • 1,524 Posts
    • 1,386 Thanks
    TheShape
    When I worked for Nationwide Building Society I met a number of elderly people (mostly widows) who would tell me how they were forced to live a grim existence surviving on beans on toast, heating just one room of their house due to rising costs and their meagre pensions. They'd present you with a savings book they'd like updating and almost invariably there would be a six, and not uncommonly high six-figure balance in these accounts. Note: The branch was in an affluent area.

    I don't know whether they felt they couldn't spend the money, perhaps they felt it wasn't theirs to spend (it was earned by their husband or it was to be left as an inheritance) but it was depressing to see people who could have been living comfortably feel they could barely scrape by.
    • Triumph13
    • By Triumph13 21st Oct 19, 10:16 PM
    • 1,577 Posts
    • 2,230 Thanks
    Triumph13
    If, as friends of ours, expect expenditure to reduce post 74 then maybe you can be more aggressive with your withdrawals in the 1st 15 years in the knowledge that you’re basics will be covered come what may from SPA. Does any 4%SWR or Guyton Klinger sc!nario deplete funds in 15 years?

    Make your bucket list and try to do it without stressing yourselves about money left thereafter.
    My thoughts having had 3 friends/relatives fighting cancer recently and all in their 50’s or younger (fit, healthy diets and no family history).
    Originally posted by DT2001
    With our current spending the only scenario that depletes all our funds over that timescale is asteroid strike ;-)
    • Audaxer
    • By Audaxer 21st Oct 19, 11:28 PM
    • 1,899 Posts
    • 1,185 Thanks
    Audaxer
    If, as friends of ours, expect expenditure to reduce post 74 then maybe you can be more aggressive with your withdrawals in the 1st 15 years in the knowledge that you’re basics will be covered come what may from SPA. Does any 4%SWR or Guyton Klinger sc!nario deplete funds in 15 years?
    Originally posted by DT2001
    I don't think there has been any period where a 4% SWR has depleted funds in 15 years. However if you start retirement with a bear market for a few years, I wouldn't be aggressive with withdrawals at that time.
    • cfw1994
    • By cfw1994 22nd Oct 19, 9:03 AM
    • 475 Posts
    • 421 Thanks
    cfw1994
    I suppose the biggest fear is always "running out of money".
    Originally posted by Brilley
    Mmmm, yes, it feels like that.....but.....

    If, as friends of ours, expect expenditure to reduce post 74 then maybe you can be more aggressive with your withdrawals in the 1st 15 years in the knowledge that you’re basics will be covered come what may from SPA. Does any 4%SWR or Guyton Klinger sc!nario deplete funds in 15 years?

    Make your bucket list and try to do it without stressing yourselves about money left thereafter.
    My thoughts having had 3 friends/relatives fighting cancer recently and all in their 50’s or younger (fit, healthy diets and no family history).
    Originally posted by DT2001
    ....having been to 4 “too early” (including 2 good friends my age )funerals in 2018, my biggest fear is not living long enough to enjoy those later years....hence a relentless focus on stopping “regular” daily work ASAP and an almost daily incursion to this and other forums

    Yes, plenty of sums to do: for me, having flexibility in both spending and also perhaps optional part time earning feel key.
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