Transition from saving to spending

[HangTime]

For someone that's not bad with money/numbers in general I put surprisingly little thought in to it.

Basically I put almost nothing into a pension during my 20s, a fairly normal amount in my 30s and then put loads in so far during my 40s in an effort to sort of catchup. I remember a few years back getting a statement saying my pension would be worth about £7k a year or something, which was somewhat concerning. It's a lot bigger now which is slightly surprising given the usual doomsaying about the impact of not building your pot early enough, so I suppose my advice to people would be it's never too late.

As for the real subject at hand, I think I will struggle with this transition. As my income has increased, I've not really increased spending. Still living in the same house we bought when I earned about 20% of what I do today. So if I don't spend much money when I have disposable income, I think it's unlikely I'm going to retire and start splashing the cash.

 

[aaronyuri]

Spend more now.
I'm very anti FIRE because you might get a couple more years of retirement. But you are absolutely not promised those years. Even if you are alive, you might not be able body enough to enjoy it.

I don't have kids, so this is even more relevant

Depending on your age, I'm in this camp. I could have been a long way along the retirement journey at this point but have spent a huge amount of money on travelling and enjoying myself. Easily a few hundred k gone.

My mate is the total opposite. He is the most frugal human I have ever met. He's been on one holiday in about 9 years. He's got a lot of cash in the bank but spent most of his 20s sat in his house/flat.

For me, that's not a good thing. You are only here once and will only be of age for certain things once. When that time is gone, it's gone and no amount of money is going to make up for it.

That's my 2 pence.

 

[Hagar]

As for the real subject at hand, I think I will struggle with this transition. As my income has increased, I've not really increased spending. Still living in the same house we bought when I earned about 20% of what I do today. So if I don't spend much money when I have disposable income, I think it's unlikely I'm going to retire and start splashing the cash.

If you have never been a big spender you will be unlikely to change in retirement. We have a joint pension income of 40k and having a modest home always end each month in surplus. We have six figure savings which will never be spent in our lifetime, health permitting it will be passed down. We have never made this transition. Living well but within our income.

 

[HangTime]

will only be of age for certain things once. When that time is gone, it's gone and no amount of money is going to make up for it.

That's something I've sort of come to realise a bit too late. In the past, I took the attitude that I didn't want to go travelling etc, as I'd have plenty of time for that when I got older. What I hadn't banked on was the restrictions having kids would put on my life, and the fact it will be harder to enjoy leisure time when I'm say in my 60s due to being less physically able etc. It's kinda weird, when you progress from childhood to adulthood you think "this is great, I no longer have the restrictions I had as a child" but may not see that the restrictions will come back before long in a different form (responsibilities). There's this sort of sweet spot in your 20s, it's the only time most people have both the freedom and physicality to do whatever they want (albeit money can be a limitation!). Even leaving money to one side, I have some regrets about not doing more in general during my 'prime' (mid-20s).

I think I saw some crappy but effective infographic on LI that illustrated this, the balance of time, energy and money, and how that changes during your life so you never have all 3 at once.

 

[aaronyuri]

That's something I've sort of come to realise a bit too late. In the past, I took the attitude that I didn't want to go travelling etc, as I'd have plenty of time for that when I got older. What I hadn't banked on was the restrictions having kids would put on my life, and the fact it will be harder to enjoy leisure time when I'm say in my 60s due to being less physically able etc. It's kinda weird, when you progress from childhood to adulthood you think "this is great, I no longer have the restrictions I had as a child" but may not see that the restrictions will come back before long in a different form (responsibilities). There's this sort of sweet spot in your 20s, it's the only time most people have both the freedom and physicality to do whatever they want (albeit money can be a limitation!). Even leaving money to one side, I have some regrets about not doing more in general during my 'prime' (mid-20s).

I think I saw some crappy but effective infographic on LI that illustrated this, the balance of time, energy and money, and how that changes during your life so you never have all 3 at once.

It's one of those instances where hindsight is a wonderful thing.

I wouldn't be too hard on yourself for not capitalising on it - I ****** away a big pile of money and still wish I had done certain things (like live in a different country) that I chose not to.

I am very much of the opinion that, when you're early in adulthood and deciding what to do with your time/money, most don't consider the fact that their mobility or physical attributes will change. Those just aren't thoughts that enter your mind or you consider possibilities. That's my logic on where those choices come from.

 

[Mr Badger]

It's one of those instances where hindsight is a wonderful thing.

I wouldn't be too hard on yourself for not capitalising on it - I ****** away a big pile of money and still wish I had done certain things (like live in a different country) that I chose not to.

I am very much of the opinion that, when you're early in adulthood and deciding what to do with your time/money, most don't consider the fact that their mobility or physical attributes will change. Those just aren't thoughts that enter your mind or you consider possibilities. That's my logic on where those choices come from.

Without wishing to turn this into an "OK Boomer" debate, there seem to be plenty of older people today who claim the younger generation are frivolous spendthrifts for daring to treat themselves to a coffee on their break. When they should be working every hour and saving every penny for a house deposit. Although there is some logic behind that position, it completely fails to take account of the very real issues you have raised.

 

[aaronyuri]

Without wishing to turn this into an "OK Boomer" debate, there seem to be plenty of older people today who claim the younger generation are frivolous spendthrifts for daring to treat themselves to a coffee on their break. When they should be working every hour and saving every penny for a house deposit. Although there is some logic behind that position, it completely fails to take account of the very real issues you have raised.

Indeed. I've been fortunate enough to do what I did but still manage to buy a nice house, etc. If I could do it all again though, I would have definitely done more and spent more.

That free spirited, experience craving version of me is still there, but it's harder to do that now. Example: I still travel, but now I'm more about an all inclusive break and just shutting away all of my responsibilities rather than being in a different place everyday and doing different things. My free time has become about removing myself from my responsibilities (running a business, doing up a house) rather than gallivanting around an island seeing things.

I did a full 10 day Sicily trip 2 years ago, and I came back more exhausted than when I bloody went in the first place! I had to go on another holiday 2 months later to actually wind down and relax.

 

[Efour]

When I go to a new place now I'm always slightly on guard and looking for comfortable and easier "safer" options

I think back to being a kid/20 something....
My uni gang all went to Australia for a year and I backed out because I got what I thought was gonna be a decent job, it wasn't it was ****, I just talked myself out of going.
It was after that I got the oilfield job and started traveling and seeing places with almost wreckless abandon... Lol
I used to do stuff and go to places that now genuinely freak me out.
I think the sheer naivety of youth, living for the moment, no long term plans... It's kinda wonderful.

I honestly don't think I'm going to live past 60/65 if I'm extremely lucky. It seems to be a generational trait and tbh whatever, if I die then I'm dead. I won't know. Then if there is an afterlife...oh well oops I guess.

I don't know if I'm happy about everything and financial planning of the future. I am married but no kids, and no plan to kids
So Ive never really gone down that final route of responsibility to the death.
So I'm really half the man of a decent parent. I think that. I'm hopelessly immature with my humour. I'm so sure I't will be a regret but hey ho put it on the pile whatcanyado.....

It's quiet liberating really, my money is mine and it doesn't have to stretch. I/we really do what we want when we want and money is almost never an issue. I guess it's good I don't have lavish tastes or addictions.

Wtf am I rambling at 4am
Oh yes,vi guess I'm lucky I hopefully will never experience the transition from saving to spending

 

[Selekt0r]

I'm right on the cusp of deciding whether to take early retirement at 56. I'm lucky to have built up a sizeable defined contribution pot, and also have a couple of defined benefit pensions which I can take from age 60, but even so I am still finding it difficult to step away from a good salary and make the transition to relying solely on decumulation of my pension pot and savings for the next few years until the DB and state pensions kick in.

The '4% rule' is a reasonable rule of thumb, however my personal view is that it is probably overly-cautious provided that you are prepared to be flexible. Firstly, it was based on a 50% equities/50% bonds portfolio with increases of withdrawals by RPI every year (even in bad years), and a 95%+ success rate back-tested across even the worst historic periods such as the great depression. With a 100% equities portfolio, decent cash buffer (2+ years income), and some 'guardrails' around increases (or even small decreases) in withdrawals depending on portfolio performance I think a higher initial withdrawal rate is safe enough - even more so if you factor in state pension + any DB pensions.

I'll be starting with approx 7% withdrawals for a few years until DB pensions kick in, where it drops to 5%, and then <4% once state pensions kick in a 67. If the markets misbehave then I'll rely on the cash buffer until they pick up again.

I'm sure I will bite the bullet sometime later this year (also need to sort out a medical issue that I'm currently relying on my work-provided BUPA to resolve before I finish). Can't wait...

 

[413x]

I really wish I was in a more AI stable career.
The plan was to start doing contract work. Work for 9 months or 12 then travel a bit. Come back and do some more work.

This was very feasible post covid. But with AI now? It seems crazy to not take any jobs. But then... What's the point. I'm just living, existing etc etc.

Its really really hard to make a decision.

Have I got enough money?

I'm very much at the point where time is more important than money... Unless my career dies. I dunno. I've never really had a path in my head. All I know is the time I spent travelling between jobs last year was the best time in my life. And I need to do more before I die/lose health to point of not doing it