Learning to spend

Spreadsheetman · 20 October 2019 at 6:28PM

Interesting topic. I know I'm going to have a lot of trouble bringing myself to spend after operating in emergency saving mode for the last few years. I don't have any DB pensions, so nothing is guaranteed.

The fact that the first few years of post-retirement investment performance are the most important is also going to make it hard. If the markets go well I might be able to coax myself into spending a bit more, but if it's rocky then I will probably get even tighter.

Triumph13 · 20 October 2019 at 6:44PM

A lot depends on how much slack you have in your budget. If things are tight then I can imagine the fear of them getting tighter would be difficult to cope with. If, on the other hand, you have made sure you have enough, or more than enough, then it's just a psychological issue rather than a practical one.
The most fundamental point I would make is 'It's okay NOT to spend it all.' Once your basic needs are met there is very little correlation between spending and happiness so don't feel you have to spend it because it's there.
We saved hard for year to retire early, including doing a couple of extra years 'just in case'. Using reasonable assumptions we could probably now spend quite a bit more than we have been spending, but we are happy with our current spending level so why should we? In fact we have spent a bit more, but also saved money in other areas so not much change in the end.
I did struggle at first, sticking more and more conservative assumptions in to make the spreadsheets match our current spending and generally fretting. I have felt much happier since going back to more mainstream assumptions, giving myself a very fat budget to measure against each month and consistently coming in well under it. That successfully tricks my brain into thinking that I am 'saving' the amount I'm under budget rather than 'spending' the amount I spend. Strange but true.

Albermarle · 20 October 2019 at 7:18PM

Plus I don't enjoy (perceived) extravagance, and feel much happier with a sense of having achieved value for money.

More than likely it is this attitude that has put you in a comfortable position in the first place and you can not just change the way you are , or want to.
Probably if you were the kind of person who liked to spend then you would be less comfortable now.
One of life's ironies...…...

Marcon · 20 October 2019 at 7:54PM

I can't now find the link to the relevant article, but a while back a survey of some of the country's leading IFAs/wealth managers made interesting reading. They were asked what advice their clients were least likely to follow. The near-unanimous response was 'spend more' when that advice was given to well-off clients in the 60+ age bracket. As other answers have already said, changing the savings habit of a lifetime clearly dies hard!

Sea_Shell · 20 October 2019 at 8:09PM

Albermarle wrote: »

More than likely it is this attitude that has put you in a comfortable position in the first place and you can not just change the way you are , or want to.
Probably if you were the kind of person who liked to spend then you would be less comfortable now.
One of life's ironies...…...

So right!!!! (this needs more than just a like)

the_cat · 20 October 2019 at 8:25PM

Thank you all, it's nice at the very least to realise I'm not unusual in this way of thinking!
THe habits of a lifetime have got me to this point at an early age compared to most(53) but it will it seems be hard to break away from. Ironic as pointed out by Albermarle.
We have a very healthy amount to do us in SIPP/savings as well as DB pensions to see us through to state pension age. In fact, we are likely to start reaccumulation after the first 5 years based on projected annual spending more than our current expenditure, so there is no earthly reason for these doubts...........didn't stop me hitting the reduced isle in the supermarket today though:rotfl::rotfl:

Some great ideas to ponder here though

tigerspill · 20 October 2019 at 9:02PM

Marcon wrote: »

I can't now find the link to the relevant article, but a while back a survey of some of the country's leading IFAs/wealth managers made interesting reading. They were asked what advice their clients were least likely to follow. The near-unanimous response was 'spend more' when that advice was given to well-off clients in the 60+ age bracket. As other answers have already said, changing the savings habit of a lifetime clearly dies hard!

I have a friend retired at the same time as me in April. He engaged an IFA and this was exactly what he was advised - "spend some!".
He went out and bought a nice car (not a very extravagant one but what he wanted). Good for him!! Wish I could do it just like that.

enthusiasticsaver · 20 October 2019 at 10:36PM

the_cat wrote: »

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?

My DH retired 3 years ago and I am coming up to 2 years retired and we were also in the position of initially feeling unhappy to spend given we were 58 and have 8 years until state pension age. We have also always saved and given our income is now less than when we were working we are using our pensions (DB) to live off and this is covering our lifestyle but using savings to do things to the house and pay for more expensive holidays so they are going down. Previously our savings went up not down so this was a little disconcerting initially.

We engaged an IFA who modelled our cashflow until the age of 99 so that was reassuring to see how much spare cash we could draw on until it got too low. I initially told him that we would be happy with our DB pension income plus an extra £10k per annum from savings/investments until our state pensions kick in but his modelling shows that £20k per annum is more than affordable so we both found that reassuring. He also told us to spend more.

I use a budget software programme called clear checkbook which essentially gives all our savings and investments a purpose. I allocate our monthly pensions into budgets and we live within that and we put aside money from the pensions into savings envelopes to cover car running costs, holidays, gifts and house repairs etc. I also allocated some of our instant access savings into these envelopes so I know that there is money aside for car replacements, long haul holidays and house improvements although we have just put in a new kitchen and 2 new bathrooms. Our investments in stocks and shares isas are just set aside as a back up reserve if the savings run low although from a tax point of view we may be drawing on the SIPPs annually until our state pensions kick in.

I have found the budgeting monthly (as I have always done) and allocating savings to a purpose is reassuring and given us more confidence to spend and book holidays or things to be done to the house although I am still careful as I am that type of person. I do not think I will ever be the sort of person who spends regardless and my DH has always just followed my lead in regards to that. He just needs to know that he has money in his personal account for his hobbies and leaves the rest to me.

Zero_Sum · 20 October 2019 at 10:52PM

Although Im about 20 years away from retiring, this is the thing that will be the biggest culture shock. That said Im planning on having quite a few holidays.

Sea_Shell · 21 October 2019 at 7:14AM

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.

Learning to spend

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