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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 3
    • the_cat
    • By the_cat 22nd Oct 19, 6:48 PM
    • 2,099 Posts
    • 11,347 Thanks
    the_cat
    Mmmm, yes, it feels like that.....but.....



    ....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.
    Originally posted by cfw1994
    Yes it's far more scary to think of running out of health (or time) than money
    A useful thing for us all to remember! In fact, when looking at the alternative, sticking around long enough to run out of money could easily be viewed as a positive!
    • DairyQueen
    • By DairyQueen 23rd Oct 19, 8:07 PM
    • 1,030 Posts
    • 1,843 Thanks
    DairyQueen
    This thread so resonates with me.

    OH and I have always been squirrels. We married late and so had previously planned our respective pensions as supporting us each in our divorced states. When 'I' became 'we' I eventually reviewed the retirement plans, expenses, assets and income. Gulp - "that can't be right". I spent months checking and rechecking. Whichever way I stress tested we were on course for a much more comfortable retirement than we previously dreamed. Two can live much cheaper than 2 x 1 and we will not deliberately ring-fence for inheritance.

    The difficult part has been trying to adjust to this new reality. Our cash has taken a hit over the last few years (various reasons) so we have been very careful on discretionary spends. We also currently maintain two homes from necessity. As a result we are not inclined toward conspicuous consumption. OH's biggest vices are his expensive taste in wine and food.

    When OH retires in around 18 months the amount available for discretionary spends will significantly increase and we will be able to maintain that level of spending if we choose. So, OH and I decided to 'train to spend' as we too have the psychological barrier against spending/decumulation to overcome.

    Training 101:
    This year OH has replaced his 10-year-old car and we are planning the very few costly trips on our bucket list. The irony is that both OH and I are 'travelled out' and our appetite for long-haul in particular is no longer sharp. We have therefore decided that when the current properties are sold we will 'up value' and purchase our dream property. Home is a priority for us both.

    These are the first steps toward decumulation and we are hopeful that they will help us to adjust without that slight feeling of panic about running out of money.

    OH is now looking forward to retiring whereas, until recently, he was a OMY kinda guy. I suspect partly fuelled by insecurity about income in retirement.
    • Terron
    • By Terron 23rd Oct 19, 9:46 PM
    • 570 Posts
    • 599 Thanks
    Terron
    I lost my job when I was 54, reviwed my savings and found I had enough to live moderately for the rest of my life, with some left over for emergencies, and with the state pension coming on top of that.

    But living off my capital just felt wrong.


    I invested in BTL and after a couple of years was living moderately off the income.
    This year I have taken my DB pensions. Next year a couple of annuities (with 10.6% GARs) will start paying out. That is on top of the BTL income.
    So now I have no excuse not to spend, but it is still hard.


    I have made a little progress.

    I replaced by 12 year old car with a 2 year old one (with less than 2k on the clock), mostly using a PCLF.

    I have booked to go watch a couple of test matches in South Africa in January. I even upgraded the main flights to premium economy.
    • shinytop
    • By shinytop 24th Oct 19, 7:27 AM
    • 600 Posts
    • 675 Thanks
    shinytop
    Good thread and also relevant to me, having just retired. I lurch between "OMG what if I don't have enough money!!?" and "How much!!? We can't spent all that!" The truth is somewhere in the middle and we are fortunate to have a good mix of enough DB/SP to maintain our pre-retirement living standards and some DC/savings for extras.

    We don't have expensive tastes though and never have. Looking at my peers I "should" have a large, new German or Swedish SuV but I've just bought a 3 year old Japanese family hatchback. We should go on expensive cruises and all-inclusive holidays but we get cheap economy flights and use Airbnb and public transport when we get there. We like eating out every now and again but are happy with a pub meal (and I don't drink either so no expensive wine). I spend a bit on motorcycling and gym membership but it's not that much. We are quite generous with gifts though and we've helped our son out with house deposit, etc.

    I think, like DairyQueen, we'll spend some money on our home; we're moving (if our house ever sells) and may well up-size, in price if not dimensions. It's going to be an intersting time for us.
    It's a nice problem to have and one thing is for sure is that it's better than working.
    • Parking Trouble
    • By Parking Trouble 24th Oct 19, 8:28 AM
    • 637 Posts
    • 222 Thanks
    Parking Trouble
    There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

    I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

    The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

    I feel very, very lucky to have been born in my generation.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • Sea Shell
    • By Sea Shell 24th Oct 19, 8:37 AM
    • 2,980 Posts
    • 5,628 Thanks
    Sea Shell
    There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

    I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

    The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

    I feel very, very lucky to have been born in my generation.
    Originally posted by Parking Trouble
    I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

    Parents have paid for house, good pensions and can retire early.
    Their 2 adult children are currently renting or have large mortgages.
    Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
    They use this money towards a house of their own.
    They have a home, but no cash savings or investments or pensions.
    They can't retire early.

    This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!
    " 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"!!!
    • cfw1994
    • By cfw1994 24th Oct 19, 8:43 AM
    • 524 Posts
    • 477 Thanks
    cfw1994
    There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

    I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

    The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

    I feel very, very lucky to have been born in my generation.
    Originally posted by Parking Trouble
    I doubt the “disasters” look on a “learning to spend” thread....I’m sure there are a good number out there.

    I broadly agree that many here (50’s upwards) have perhaps been very lucky, and the nextgen will have more challenges....although I do feel many I know have worked pretty hard along the way!!

    We only have limited DB funds due in the years ahead....so there is some DC modelling here to figure things out.

    We have a couple of young people coming to the end of Uni lie and starting to find their way....which has it's own challenges, of course!
    Whilst I still have a decent income, we’ve tried to “educate and kick start” them into savnigfor the future with small payments to LISA, ISA & a pension fund.
    I do feel we (as a country) generally do a pretty woeful job in teaching children to handle money, spend/save/give etc.....
    • Zero Sum
    • By Zero Sum 24th Oct 19, 8:50 AM
    • 1,399 Posts
    • 1,095 Thanks
    Zero Sum
    I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

    Parents have paid for house, good pensions and can retire early.
    Their 2 adult children are currently renting or have large mortgages.
    Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
    They use this money towards a house of their own.
    They have a home, but no cash savings or investments or pensions.
    They can't retire early.

    This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!
    Originally posted by Sea Shell

    £200k each is somewhat optamistic (unless living in SE). Average will be closer to half that. Then when they actually do inherit, the kids will be around retirement age themselves.
    • Anonymous101
    • By Anonymous101 24th Oct 19, 8:59 AM
    • 1,449 Posts
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    Anonymous101
    I have a slightly different take on this to most of the comments on here so far. I'll put it out there and it may or may not strike a cord with some.


    I'm more of a spender by nature. As my salary has increased over the last 5-6 years I have also been learning a lot about Financial Independence and investing. I found myself in the fortunate position of having a surplus each month and rather than spending money increasing my "standard of living" as most people choose to do, I opted to spend money buying my financial independence through investing. Reflecting on this I think I still have the same mind set of spending my salary each money. I use zero sum accounting to budget how much I can spend and save each month and I used other strategies such as paying myself first etc. However it still boils down to "spending" all my wage every month.


    Others have mentioned the shift in mind-set when one moves from the accumulation to de-accumulation phase. I think this will be particularly challenging for people like me and I'm not yet sure how best to approach this. I've got several years to a decade of the accumulation phase left so plenty of time to work on it but I'd be very interested to hear other peoples thoughts on this.
    • Triumph13
    • By Triumph13 24th Oct 19, 9:39 AM
    • 1,656 Posts
    • 2,396 Thanks
    Triumph13
    There are so many positive experiences of early retirement on here. Seems to be no disasters which is very encouraging.

    I do wonder though if this is a rump of baby boomers who had well paid jobs, benefited from the housing boom and many with DB pensions?

    The next generation are going to be in a very different situation and I suspect there will be an increase in much tougher challenges to retire comfortably.

    I feel very, very lucky to have been born in my generation.
    Originally posted by Parking Trouble
    The DB pensions are the big change. When they were the standard you automatically ended up with a decent pension without having to think about it. The next generation will have to consciously take the decisions to cut back on current spending to fund their retirement. Many will struggle with this.
    • Triumph13
    • By Triumph13 24th Oct 19, 9:52 AM
    • 1,656 Posts
    • 2,396 Thanks
    Triumph13
    I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

    Parents have paid for house, good pensions and can retire early.
    Their 2 adult children are currently renting or have large mortgages.
    Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
    They use this money towards a house of their own.
    They have a home, but no cash savings or investments or pensions.
    They can't retire early.

    This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!
    Originally posted by Sea Shell
    If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

    I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

    This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.
    • Anonymous101
    • By Anonymous101 24th Oct 19, 10:18 AM
    • 1,449 Posts
    • 1,186 Thanks
    Anonymous101
    If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

    I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

    This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.
    Originally posted by Triumph13


    I agree this is a great approach and something I too will look to establish with my children. I won't be getting a significant inheritance but I do have a wealth of knowledge about F.I. to impart into my children and raise them in such a way that they are much more likely to achieve F.I. at an earlier age than I did. The key thing for me is the passing of the mind-set and knowledge of how to achieve F.I. Once it is established as the aristocracy which you referenced showed this can be maintained for generations.


    Additionally as the F.I retiree ages and hopefully has a larger and larger surplus of money they will be in a position to pass a lot of that wealth onto their children and aid their F.I. efforts. Not to mention that if drawing down on investments rather than purchasing of annuities then there will likely be residual wealth to be inherited rather than lost to companies.
    • jimi_man
    • By jimi_man 24th Oct 19, 2:44 PM
    • 239 Posts
    • 278 Thanks
    jimi_man
    I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

    Parents have paid for house, good pensions and can retire early.
    Their 2 adult children are currently renting or have large mortgages.
    Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
    They use this money towards a house of their own.
    They have a home, but no cash savings or investments or pensions.
    They can't retire early.

    This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!
    Originally posted by Sea Shell
    I disagree with this. I think someone may have already mentioned this but people are having children later and living longer. Consequently inheritances are happening much later too - often when the children are probably settled financially and maybe their children may benefit from the money more.
    • ianthy
    • By ianthy 24th Oct 19, 8:14 PM
    • 130 Posts
    • 74 Thanks
    ianthy
    I am really enjoying reading this thread. My OH says we have been in jam tomorrow for years and now it's time to spend more. It's easier said than done - we are currently selling the family home and downsizing - which will trigger some spending on renovation works but will leave a sizable sum. Since last year we have been upscaling - better holiday accommodation, nicer restaurant, better taxi services etc., It does take a conscious decision to actually commit to the spend more and then enjoy it.
    • GSP
    • By GSP 24th Oct 19, 9:01 PM
    • 245 Posts
    • 88 Thanks
    GSP
    It's more difficult now, but retiring people also seem to forget how difficult it was for them to get on the housing ladder themselves all those years ago. In most cases going down to one wage when the kids came along made it more of a challenge to juggle finances to get through each month.
    It was only in the latter stages of their work life where things began to get easier with the kids supporting themselves more and the OH going out to work.
    Nowadays, I hear more of both young parents having to go out to work while people of our age look after their kids more.
    As regards to trouble spending retirement money, just remember you can't take it with you. What a waste, all that squirreling for nothing, apart from your kids who would much rather you enjoy yourselves.
    Enjoy it more now being more mobile and able to get around better.
    Enjoy it more now as you will be in better health.
    • DT2001
    • By DT2001 24th Oct 19, 9:26 PM
    • 152 Posts
    • 143 Thanks
    DT2001
    This thread so resonates with me

    We have therefore decided that when the current properties are sold we will 'up value' and purchase our dream property. Home is a priority for us both.

    These are the first steps toward decumulation and we are hopeful that they will help us to adjust without that slight feeling of panic about running out of money.
    .
    Originally posted by DairyQueen
    Whilst I commend the use of funds to do what you want i.e. buy your dream house, having accumulated funds over time, it is, playing devils advocate, just purchasing a different asset!

    I, like so many on this forum calculate different retirement scenarios. I utilise the forum’s wisdom however I have chosen to ignore my home as a potential source of capital. It is a fallback position should the future investment returns be very poor. I know we’ll not spend our expected income however OH likes her work so still accumulating. Decumulation will have to be by gifting to children.
    • DT2001
    • By DT2001 24th Oct 19, 9:34 PM
    • 152 Posts
    • 143 Thanks
    DT2001
    If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

    I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

    This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.
    Originally posted by Triumph13
    My MIL has amend!d her will to jump a generation for a considerable part of her estate.
    I think IHT at a reasonable level is OK however the more you tax the more those with greater funds will pay for advice to ‘hide’ and avoid ‘legitimately’ this tax burden.
    • Terron
    • By Terron 24th Oct 19, 10:44 PM
    • 570 Posts
    • 599 Thanks
    Terron
    I am a baby boomer, and things weren't as good as some people seem to imagine.


    In my first job the pension scheme was only open to managers. I started a private ones, bu they were DC not DB.


    Getting on the housing ladder wasn't that easy, certainly not as easy as the decade before the credit crunch. I managed it in 1989 - just before the biggest housing crash in history. I went into negative equity on that flat, and lost a little on my second. Only with my third home will I have made a profit (currently selling it).


    My second job had a FS pension, but that has not turned out as good as expected. Increases once the pension is in payment are "enturely at the discretion of the trustees". They have given two 1% rises in the last 17 years. That DB pension is not so decent.



    In my third job there was a hybrid pension. The DB underpin was 1/80th of salary rather than the 1/60th of normal FS schemes. Still the underpin applies as it did better than the DC part. The scheme was ended before I left the company so I had 9 years in it. The company agreed to extend the legal requirement on rises once in payment to all yeats, that is CPI with a cap of 5%.


    Having had parents who grew up during WW2, experienced a large drop in our lifestyle due to the inflation of the 70s and lost my savings on my first property I was fairly thrifty. I did not increased my spending as my income increased, Rather I saved a lot. I inheirted a bit from my parents and when I lost my job put that and a lot of my savings to work. Thus I have a good income now.


    My sisters went a different route. They both became teachers and got DB pensions with full indexation. That route is still open.



    My neice is earning more than I did at her age, even allowing for inflation. I don't know about her pension, but she is trying to buy a flat in London in her 20s and has a reasonable chance of doing so.
    • swindiff
    • By swindiff 25th Oct 19, 9:10 AM
    • 603 Posts
    • 343 Thanks
    swindiff
    We will be in the lucky position of not really having to decumilate a pot of money as both our main pension and SP are DB. So still pretty much getting a guaranteed wage each month but without the hassle of having to go to work for it. There will be the possibility of inheritance from parents, if this does come we will be in the position then to hopefully get our own children on the housing ladder.
    • Parking Trouble
    • By Parking Trouble 25th Oct 19, 9:25 AM
    • 637 Posts
    • 222 Thanks
    Parking Trouble
    It's more difficult now, but retiring people also seem to forget how difficult it was for them to get on the housing ladder themselves all those years ago. In most cases going down to one wage when the kids came along made it more of a challenge to juggle finances to get through each month.
    It was only in the latter stages of their work life where things began to get easier with the kids supporting themselves more and the OH going out to work.
    Nowadays, I hear more of both young parents having to go out to work while people of our age look after their kids more.
    As regards to trouble spending retirement money, just remember you can't take it with you. What a waste, all that squirreling for nothing, apart from your kids who would much rather you enjoy yourselves.
    Enjoy it more now being more mobile and able to get around better.
    Enjoy it more now as you will be in better health.
    Originally posted by GSP
    We all maxed out our borrowing to get on the housing ladder. 100% mortgage, 4 x combined income?

    It was considered worth stretching yourself. These days you have no choice because house prices have outstripped wages. Plus lenders are much more risk averse.

    It was a lot easier back then, including moving up the ladder because the leap to the next level was far, far less.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

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