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  • FIRST POST
    • the_cat
    • By the_cat 20th Oct 19, 1:01 PM
    • 2,099Posts
    • 11,347Thanks
    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 1
    • cfw1994
    • By cfw1994 20th Oct 19, 1:19 PM
    • 519 Posts
    • 476 Thanks
    cfw1994
    • #2
    • 20th Oct 19, 1:19 PM
    • #2
    • 20th Oct 19, 1:19 PM
    Good luck!
    I'm in the position of strongly considering the same move in the next 6-9 months.
    The move from accumulation to decumulation is, I feel, the hardest mental step to take.....so watching with interest!

    I suspect in my part it will be focussing far to closely on finances for the first 6-12 months....but that can't be bad, right? I think tracking spending closely (to start at least) will be important to me, to try to get a sense of the sums working out as I hope!
    • Sea Shell
    • By Sea Shell 20th Oct 19, 1:26 PM
    • 2,943 Posts
    • 5,262 Thanks
    Sea Shell
    • #3
    • 20th Oct 19, 1:26 PM
    • #3
    • 20th Oct 19, 1:26 PM
    We've recently done it!! (I have a thread!! - shameless plug)

    It's early days, so we're still in the mildly cautious stage.

    We've been monitoring our spending closely for approx 3 years, and we don't anticipate any major changes just yet.

    When you've "squirrelled away your nuts" for years, it takes a change of mindset to start digging them up!!!
    " 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"!!!
    • Brilley
    • By Brilley 20th Oct 19, 2:19 PM
    • 162 Posts
    • 144 Thanks
    Brilley
    • #4
    • 20th Oct 19, 2:19 PM
    • #4
    • 20th Oct 19, 2:19 PM
    ...similar situation when we went early a couple of years ago. Did lots of spreadsheet analysis and "what if's but still struggling with the concept of spending rather than saving, and since "finishing"our overall "pot" has gone up!

    Even my "worst case" projection shows we could probably spend at least 60% more in retirement than we did when we were working..... Completely daft as we have no debt and nobody to leave it to either.
    It's very hard to get out of the "saving" mode, however I think the best thing to do is set up a spreadsheet with your current balance and projected incomes, then decide how much you can "afford" to spend, and then spend it! (Which is exactly what we have now done, but still find it difficult!).
    Good luck, and I look forward to hearing any pother comments!
    • Linton
    • By Linton 20th Oct 19, 2:31 PM
    • 11,501 Posts
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    Linton
    • #5
    • 20th Oct 19, 2:31 PM
    • #5
    • 20th Oct 19, 2:31 PM
    Been there and done it. My solution is:
    - create a year by year spreadsheet based on actual capital, assumed investment returns, inflation and annual drawdown amount.
    - adjust the drawdown until you are left with a moderate sized pot at say 95.
    - Regard the assumed drawdown as a target to be achieved. If you find you cannot achieve sufficient expenditure to use up your drawdown allocation spend some of your capital on a significant one-off item such as a holiday, new kitchen, gift to family, or a charitable donation.
    - update the spreadsheet annually adjusting the numbers in the light of reality


    I have found that despite varying actual investment returns over the years the drawdown stays pretty constant. If it doesnt your portfolio is too risky.
    Last edited by Linton; 20-10-2019 at 2:34 PM.
    • tigerspill
    • By tigerspill 20th Oct 19, 2:55 PM
    • 420 Posts
    • 223 Thanks
    tigerspill
    • #6
    • 20th Oct 19, 2:55 PM
    • #6
    • 20th Oct 19, 2:55 PM
    I am in this situation.
    I have retired (53) six months at the end of October and OH has 20 months to go.
    My earnings were by far the majority - an this "tap" has turned off.

    I have lots of spreadsheets - all positive. The last six months shows I am OK in the war that have changed as expected.

    I have build a lot if contingency in and I dont need to have anything left at the "end" so prefer ro run my assets down to zero utilmately.

    Everything says I am in really good financial shape - but yet I still can't spend money that way I think I can and should.

    This is really hard!
    • waveydavey48
    • By waveydavey48 20th Oct 19, 3:44 PM
    • 70 Posts
    • 92 Thanks
    waveydavey48
    • #7
    • 20th Oct 19, 3:44 PM
    • #7
    • 20th Oct 19, 3:44 PM
    Very interesting thread - thank you. I'm in the same position as OP and just can't shake the, frankly bizarre, mindset that spending the money we have saved over the last 40 years is just wrong. Watching with interest.
    • cfw1994
    • By cfw1994 20th Oct 19, 3:52 PM
    • 519 Posts
    • 476 Thanks
    cfw1994
    • #8
    • 20th Oct 19, 3:52 PM
    • #8
    • 20th Oct 19, 3:52 PM
    Been there and done it. My solution is:
    - create a year by year spreadsheet based on actual capital, assumed investment returns, inflation and annual drawdown amount.
    - adjust the drawdown until you are left with a moderate sized pot at say 95.
    - Regard the assumed drawdown as a target to be achieved. If you find you cannot achieve sufficient expenditure to use up your drawdown allocation spend some of your capital on a significant one-off item such as a holiday, new kitchen, gift to family, or a charitable donation.
    - update the spreadsheet annually adjusting the numbers in the light of reality


    I have found that despite varying actual investment returns over the years the drawdown stays pretty constant. If it doesn't your portfolio is too risky.
    Originally posted by Linton
    Do you have an example perhaps 'sanitised' copy you could perhaps share in a pm?

    I've been working on one for some time, but I don't yet feel it is cohesively tying spending to the investment performance: perhaps I am focussing too much on modelling investment performance & not enough on "what the spend goes on"!

    Very happy to share back (to anyone who wants to pm me!), I'd welcome feedback!
    • Mnd
    • By Mnd 20th Oct 19, 4:18 PM
    • 1,453 Posts
    • 2,289 Thanks
    Mnd
    • #9
    • 20th Oct 19, 4:18 PM
    • #9
    • 20th Oct 19, 4:18 PM
    I am prepared to lease you my wife who will have no reservations at call about spending your money
    • Alice Holt
    • By Alice Holt 20th Oct 19, 4:21 PM
    • 3,474 Posts
    • 4,031 Thanks
    Alice Holt
    I am in this situation...

    Everything says I am in really good financial shape - but yet I still can't spend money that way I think I can and should.

    This is really hard!
    Originally posted by tigerspill
    And me.

    Even telling myself that purchases now come with a 40% saving, (less money subject to IHT), hasn't really done the trick.

    Decades of critically assessing spending in order to build the funds for future eventualities, is a difficult habit to change. Plus I don't enjoy (perceived) extravagance, and feel much happier with a sense of having achieved value for money.

    One thing I found I have been able to quite happily spend money on, is gifting . This could be -
    a) Funding saving schemes / SIPP's for my nieces (particularly as it involves investing for the future !);
    b) Gifts to favoured charities; and
    c) Gifts / treats as a thank-you to friends who have been important in my life.
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
    • NeilCr
    • By NeilCr 20th Oct 19, 4:33 PM
    • 3,506 Posts
    • 5,409 Thanks
    NeilCr
    And me.

    Even telling myself that purchases now come with a 40% saving, (less money subject to IHT), hasn't really done the trick.

    Decades of critically assessing spending in order to build the funds for future eventualities, is a difficult habit to change. Plus I don't enjoy (perceived) extravagance, and feel much happier with a sense of having achieved value for money.

    One thing I found I have been able to quite happily spend money on, is gifting . This could be -
    a) Funding saving schemes / SIPP's for my nieces (particularly as it involves investing for the future !);
    b) Gifts to favoured charities; and
    c) Gifts / treats as a thank-you to friends who have been important in my life.
    Originally posted by Alice Holt
    And me, too!

    I think it's seeing your savings dwindle a bit and knowing that you probably won't be able to replace them.

    I am in a very lucky position in that I am "comfortable" and am, also, about to receive a considerable inheritance. Even with this I struggle with spending money. In a way it's hard as I don't really need anything. I rarely drive and have an old car which suits my needs. I love my house so have no need to upgrade and I am not a holiday person - inhibited with this, too, because of a very needy and cranky cat

    My lovely partner and my friends urge me to spend and not worry but, even though I know that is right, I still hesitate

    One thing I do do is to get the best tickets and stay in top hotels when we go out and about. And I have a cleaner (one of the best things I have ever done) and don't fret about food and drink shopping and eating out

    I am glad I am not alone. My partner thinks I am mad. She would definitely be out and about spending it!
    • Spreadsheetman
    • By Spreadsheetman 20th Oct 19, 6:28 PM
    • 322 Posts
    • 387 Thanks
    Spreadsheetman
    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
    • By Triumph13 20th Oct 19, 6:44 PM
    • 1,642 Posts
    • 2,358 Thanks
    Triumph13
    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
    • By Albermarle 20th Oct 19, 7:18 PM
    • 1,859 Posts
    • 1,197 Thanks
    Albermarle
    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
    • By Marcon 20th Oct 19, 7:54 PM
    • 1,414 Posts
    • 1,126 Thanks
    Marcon
    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
    • By Sea Shell 20th Oct 19, 8:09 PM
    • 2,943 Posts
    • 5,262 Thanks
    Sea Shell
    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......
    Originally posted by Albermarle
    So right!!!! (this needs more than just a like)
    " 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"!!!
    • the_cat
    • By the_cat 20th Oct 19, 8:25 PM
    • 2,099 Posts
    • 11,347 Thanks
    the_cat
    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

    Some great ideas to ponder here though
    • tigerspill
    • By tigerspill 20th Oct 19, 9:02 PM
    • 420 Posts
    • 223 Thanks
    tigerspill
    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!
    Originally posted by Marcon
    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
    • By enthusiasticsaver 20th Oct 19, 10:36 PM
    • 9,591 Posts
    • 22,281 Thanks
    enthusiasticsaver
    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
    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.
    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
    • Zero Sum
    • By Zero Sum 20th Oct 19, 10:52 PM
    • 1,394 Posts
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    Zero Sum
    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.
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