If you've always been a saver how do you come to terms with never saving again?

[Nevertime]

I've always, since I first left school put a portion of my earnings away for a rainy day.

Often without a specific goal, just to have a cushion, to know that when the car or washing machine needs replacing I can pay cash and latterly with one eye on retirement.

I'm now early 50s and in a place where I could either retire soon or (more likely) reduce my hours, by spending some savings to live on until I draw my pensions.

I have enough savings to do this for several years, provided nothing big changes. Eg. A big increase in inflation or losing my job.

I don't "need" to save any more but I feel uncomfortable about putting myself in a place where I can't replace what I spend.

Presumably this isn't an unusual position, particularly for FIRE retirees. How do you get your head around it? It's always been a bit of a comfort blanket for me, to know I live well within my means and have enough savings to get myself out of most sticky spots.

Keep some savings for that "cushion". Save a little per month for your "fun money" and use it to treat yourself. Save to spend now. I do!

I retired at 54, but was paid a handsome lump sum and a generous pension from that date as part of a package. Like you I had no reason to save again. But I still do a little, like putting some away for birthday and Christmas gifts, holidays and the like. Nothing like the amounts I used to save, but old habits are hard to break!

Best of luck to you, and enjoy your retirement, you will not regret it, I promise you.

Maybe try to see yourself as a planner rather than a saver?
Or focus on spending your time well rather than your money now?
But perhaps early retirement isn’t for you. Part-time might suit better.

This is a really interesting topic. When the pensions freedoms were introduced a few years ago there was lots of worry about people spending all their savings, but actually the opposite is more of an issue and many people are living more parsimoniously than they need to in later life.

I think PP is right to suggest you keep a cushion (when you say you're ok if there's no massive increase in inflation, that raises alarm bells to me at the moment!).

I think you need to have a proper retirement plan (with a professional?) looking at how your finances are likely to work for the rest of your life, including work, investment income and pensions. That will give you a rough budget of what you can sensibly spend each year, rather than just thinking of it as a pot you will use up.

I sometimes think of it this way, although some may say it's rather morbid.

Let's say you will live until you are 95. You have a pension or two and a property.

You divide the total of the savings by the number of years you have left and that amount, let's say it's £2k, is the amount of money you have to play with every year.

That's if there was no interest at all on the savings.

If you have a property that could be sold, should you need to go into care.

Sorry if this is depressing.

@Mosaic123 how do we account for inflation?

That's the flaw in my plan!

@Mosaic123
Yes, agreed Inflation might be our biggest problem , we may be heading for double figures. What seems like a heathy income now might be a pittance in 20 years.
I don't think spending should be spread evenly. The first 5 years of retirement, expenditure will be higher as you will be full of energy and have lots of plans. The middle years less so and as you get older health and care costs increase.

The benefit of a defined benefits pension is it’s index linked, so inflation isn’t a worry. Annuities are expensive, especially if index linked, but they can also take care of inflation.

Otherwise, inflation is a serious worry over the long term. For the risk averse who don’t want to take any risk with their retirement fund, any interest is almost always below inflation, so the value is being eroded every year. An advisor can help you do your calculations so you have enough for the future after inflation. I think it’s important to model best case, medium and worst case inflation scenarios, as well as best, medium and worst case investment returns, assuming you have a defined contribution pot which is invested and will remain invested.

If you’re just bridging the gap betweeen early retirement and when a defined benefit pension pays out, or partially bridging until state pension, inflation can still have an impact, but you’re not looking at your core income being eroded by possibly 35-40 years of inflation.

Isn't this why it's best to stay invested, rather than holding as cash savings (plus paltry below inflation interest rates). Then withdraw at roughly 4% a year. 3% if its a very bad year. And then assuming a rough growth rate of 7% plus, inflation is accounted for. Have a Google of the 4% rule, as I (in my amateur status) understand it, it's well established. There are charts to show that this holds up in most circumstances for 30 years. If you want your pot to last longer, take a lower percentage. But read more about it for the details.