How are you spending your retirement funds ?

[hattie43]

My pension is in a SIPP and although I could retire I'm still working and will do so until I stop enjoying it . A post on another thread got me thinking , the poster was late 50's I think and was saying they are spending a lot of their fund now to travel / hobbies / entertainment whilst they are healthy and mobile and if they only have enough money to watch telly in their 80's so be it .

I've always thought my funds would be used evenly no matter my age but I can see the logic of spending and enjoying whilst physically well to do so .

On the other hand what if you need more for care in later years .

How do others approach this .

We’re aiming to spend more in the first 10 years of retirement, but even doing that our money is projected to run out in our 90s. Not everyone needs care costs, if we don’t have enough money for it we could use equity in our house.

Out philosophy is that we’ve worked hard all our lives to save for retirement and we want to really enjoy it as much as possible for at least 10 years.

Most people with DC funds front load their retirement spending, some even spending some whilst working.

We are retiring at 55 and hope to have twenty good years. Hopefully lots of travel primarily. Financially it's viable.
Neither of my parents made it to 70. We've worked out we won't 'run out of money' until well into our 80's and will still have a property to sell. Tbh, although we could also end up sat in front of a tv by that point I'll take the risk.

I think it is so hard to envisage what you will spend until you are in it.

I anticipate spending more in the early years on some adventures, moving home and future proofing it (high spend), getting more settled (low spend), then needing to buy help and care in (higher spend), then needing to go into care (seriously expensive).

I intend to plan in detail what I want to do, what I can afford to do and then go and do it hopefully without too much continued thought on finances.

I think that's good advice thankyou . I really need to consider how I plan to spend my retirement and budget accordingly.

We have bought a camper van and are planning lots of trips over coming years - although I still work a few hours a week we plan on getting out & about as much as possible. Plus the usual foreign holidays for a bit of luxury! DH drew up endless spreadsheets before he took early retirement, so we know what we can fund. He has a great company pension now and then we will get a state pension within the next 10 years to halt the drain on our investments. Neither of his parents lived to state retirement age so he is living well while he can.

We’re planning to retire at 55 (next year). DM was diagnosed with bowel cancer at 62 and died within the year. We want to do more of what we enjoy while we still have the capacity, and we know too many people that didn’t make retirement age, or only retired for a short time. That’s been the impetus to aggressive saving for early retirement.

we will have state pensions and 2 small DB pensions from 67. We also have S&S ISAs and SIPPs.

The plan is to spend every last penny of the SIPPs before 67 as well as taking the passive income (dividends) from the ISAs.

According to my calculations we should be able to sustain our current household income without working (about £3k a month), rising at 3% a year. No plans to do anything substantially different from now except not work and do more of what we already enjoy.

That’s likely incorrect for tax planning. Makes no sense to take from a taxable pot, or to drain assets outside IHT rules before those that are included.

Clearly if you will survive on <£15k each, then not as relevant, but it’s still the wrong way round.

You’re right WRT IHT but not for income tax. I’ve run the numbers and I’d pay 30k more in tax if I take SIPP withdrawals after pensions kick in. So, for us, this works better. IHT is not something we are overly concerned about.

@hattie43 , my husband and I are extremely fortunate and he pays for all our holidays of which we have many very nice ones with his share dealing. We do feel (60 & 63) an urgency after having put our life on hold a bit while caring for our children and then my parents to really enjoy our retirement, you just never know what’s round the corner.
We moved eighteen months ago to a house we had built which is walkable to our local town and train station so that we’re not dependent on driving if that becomes impossible and the house has been arranged with a downstairs bedroom and shower room. The room we now use as a study could be easily converted to a bed/sitting room for a carer if ever we need one and we will have the funds from investments to pay for our care. We had been quite determined during our working lives to make sure we did our best not to be a burden on our children in old age.
If I did have to choose I’d be living my best life and perhaps think about equity release if either of us needed care. Life is for living.

A combination of using personal allowance in pensions and then some ISA capital usually works out cheaper, but it does depend on total take (and your DB size).

The ‘rule’ is never prepay tax. Any tax you can delay, will save money, but the DB’s may tip the balance. If you’ve checked a combo, that’s cool, but not everyone runs the numbers.

You really have planned .
I was thinking about travel primarily but you're right my home has to be factored in because there is no public transport in my road and once I stop driving I'll be stuck .
Gosh retiring takes so much planning in many aspects.

Obviously it is hugely individual - with some retirees still caring for their own elderly parents.
Statistically though, people spend much more in the first 10 years of retirement.

Only about 10% of people go into care, so statistically it isn't that likely, even though, clearly it is astronomical if you do end up having to pay it. That said, as a pp said, if you are a home owner then your house can be sold to fund that if the time comes.

I went to a retirement planning webinar not long ago, and they said the same.
People tend to travel, and will often future proof their homes (re-roof, new boiler, etc) and buy a "good, reliable car" etc when they first retire and then plan to not need to spend on those things again.
Once you hit 80, not many people have the same energy or desire to do so much (and that's if you live that long - neither of my parents did).

There’s no way I could have afforded to start spending my pension in my late 50s. But would like to do a few good travels in my late 69s.

I have a spreadsheet which I mess around with. The plan is when I’m 75+ depending on health the state pension and residual savings will be used. Prior to that I reckon 15 good healthy years of travel. I met a friend who retired at 60 ten years ago and they said their tip is to travel as much as possible in the first 10 years. After that it’s down to genetics, etc etc.
im not planning to fund my care. If I still have a house so be it. But I’m not budgeting for care.

Neither of my parents or in laws went beyond 75. Infact my mum went very early and didn’t get a chance to have her pension. So I’m not saving for care in my 80s.

I took early retirement at 57 but couldn't get Teachers Pension until 60 I won't get state pension until 67. I'm 63 now. DH is retiring early at the end of this month. He'll be 59. He will get CS Pension in September when he's 60 and state pension at 67. We are planning to spend more on travel whilst we are able health wise, we have 2 two week holidays booked for this year. We plan to eat out twice a week and to go on trips and weekends away, we've bought cricket memberships for Warwickshire as we both like watching the cricket and we are going to go to Australia to see the Boxing Day Ashes at the end of 2025 and spend a month or more there. When I'm in my late seventies or eighty plus I don't think i'll travel much or be spending as much. DH and I both went on retirement courses and they told us both on separate courses to load our retirement so we spend more in the first 10 years and less after that. Also no one can know how long they will have in retirement before they die. We are going to make sure we enjoy ourselves whilst we can. No point splitting evenly not having enough to treat yourself in the early years but too unwell to care in later years.

I'm in my second year of retirement . So far I'm able to live on my work pension. My lump sum is untouched at the moment. I'm planning on going on lots of nice holidays and doing the final bits to the house.
Live is for living - money is for spending. I'd worked for 40 years so it's time to enjoy the fruits of that,

NHS worker here, I did retire and return aged 60, which gave me a lovely lump sum and a monthly income. I continue to work but just 2 days a week and will continue to do that until I get my state pension aged 66.

The lump sum - some of it went on a campervan, a cruise and a long haul holiday to see relatives. The rest of it remains in a savings account. Both DH and I come from families who live long lives, but nothing is guaranteed.

We plan to have a good long holiday aboard once a year and lots of campervan trips in between.

We downsized a few years ago and have a lovely little house by the sea. If we can carry on having this kind of lifestyle into our 70's - 80's, that would be wonderful. If we don't, then our children will benefit from a decent inheritance.

There is a distinct pattern of retirement spending - initial years after retiring are high spending - you’re as young and healthy as you’ll be in retirement and people travel, help out kids etc. they then slow down and spending drops as they don’t travel, eat out etc, and then the last few years spike with care costs.

DH retiring this year having been in receipt of a DB pension from another job for the last 3 years, and I get a DB pension next month. DH also has a DC pension from current job which he may draw some tax free payments from if we need to top up our income pending receipt of our state pensions, but we should be able to live happily on our DB pensions.

We are planning to travel quite a lot and considering buying a camper van. Too many people never get to enjoy their retirement.

We will be working until about 63 it seems then getting retirement pensions and the lump sums with the aim of buying a motor home, paying mortgage off etc. Our dc will be 19 but special needs so will caring for them when retired, hopefully bringing along for the adventures. Would be nice to retire early, i would love to, but circumstances with new mortgage and schooling. X

We downsized to a coastal location 11 years ago. After renovating our new home we spent eight or so years having lots of holidays either in our touring van or on a cruise along also enjoying friends staying or travelling to them. Poor health hit then. Me first then my husband who had major surgery last year. He’s much better now, although I’m still not as mobile as I’d like we’re re-renovating bits of our home and having different holidays. The touring became a chore so the van went, we stay in small hotels or self cater in comfy cottages. We’re enjoying our coastal location too. No need to go far.

Regarding finances we planned to have enough saved not to worry although our pensions are modest, we do budget still and big expenditure must come from the savings pot, all anticipated. My husband isn’t at all worried about paying for care in the future, I am but realise we are sitting in a resource that would fund us both for a good while.

We had envisaged more time with the caravan in the U.K. and also seeing far flung places. We learned retirement can be a time when plans needs to be flexible, different isn’t necessarily bad, it’s just different. Life is unpredictable. Our motto now is to do what we can while we can and not worry too much about tomorrow. Just our approach.

Picking up on what a PP said, aren't the three phases referred to by financial advisers as "go go", "slo go" and "no go"?

One thing I've noticed with my parents & in laws now they are in their mid/late 70s is that, sadly, they have fewer opportunities to do things as so many of their friends are either ill themselves or caring for a partner/spouse who is ill. Three years ago, MIL regularly went away (well, subject to Covid restrictions) with 4 couples and two other widows. It is now her, one other widow and one of the couples.

we've bought cricket memberships for Warwickshire as we both like watching the cricket and we are going to go to Australia to see the Boxing Day Ashes at the end of 2025 and spend a month or more there.

Sounds like my type of retirement