Retirement £ mindset

[chrismckay]

I have previously posted this on the non US forum, but would also welcome the views of you guys!!

I would like to ask the members of the board whom are completely retired, in particular those without a final salary or guaranteed income, how did you find the psychology of transitioning from accumulating your retirement pot to actually spending it?

I am a few years away from retirement but I have been playing out the scenario in my mind

I have always had the inbuilt desire to save money, not for the ability to buy fancy things but more for the feeling of safety, I get peace of mind from it. Now I know that if you do the groundwork and accumulate enough and have a sensible withdrawal rate then everything should be fine, but after a lifetime of saving it will need a big change in my way of thinking in order for me to fully enjoy the fruits of early retirement without having an anxiety over spending the money!

Can anybody relate?

Chris...

[GerryL]

We savers can find it hard to switch to spending mode, but it can be done.
I learned shortly before I retired that I had saved enough that I run little risk of ever running out of money, even if I almost doubled my initially conservative budget. So I did.

Knowing what I can afford to spend each year, has made it easier to actually spend. I've come around to being more generous to myself as well as to others. I still consider value, so even though I know I can afford something, I will opt out if the value proposition is not there for me. (E.g., no way I would spend $100 for a blouse.) And I always like a good bargain.

I'm not yet spending up to the annual allowance I have given myself, but I am definitely spending more freely than I ever have -- and I am enjoying making contributions to my favorite charities. Looking forward to upping my travel spending when I get the opportunity.

[Dandy]

I was forced to retire at age 60 in 2008 but had a moderate pension and retiree health insurance. I still found it difficult to switch from saving, having a salary, a company match to withdrawing -- especially in the midst of a major market correction. Also, jobs openings of almost any kind were rare and so were home sales. I remember on morning walks to the local deli worrying about the cost of coffee going from $1 to $1.25 --that's another $1.75 a week

My allocation included a decent amount of cash/cash-like assets which I used sparingly. It is a different world when you realize you have maybe 30 years of retirement and the "pot' is basically all you've got -- and I had a pension that covered about 1/2 our normal expenses and no mortgage.

So I think retirement is often a bit of a wake up call that brings the reality and the worry to the forefront. Also it was a reminder that your retirement date is often not your decision.

[WoodSpinner]

OP,

In my case it’s been a long process of getting used to being retired and switching from net savings to spending.

I started planning a bit late (age 57) with an idea of being able to retire in a year. I had been on auto-pilot, saving, enjoying life, and my job for years. Figured I would retire around 65 but no definite plans. Things shifted for me the prior year, my Mom passed, my younger brother announced he was going to retire and that got me thinking about my own plans.

Found this forum, started learning, finding tools, checking, cross-checking, modeling, and checking again. Pulled the plug at the end of 2017 with a great deal of trepidation, a well modeled plan, and a Plan-B, Plan-C etc.

Fast forward to today, I am much more comfortable in Retirement but still maintain our plan and the mindset is slowly shifting. Starting to think I may have plenty and need to ramp up my giving to family (e.g. early inheritance) and charities. More concerned with Tax Planning than with managing my spending. My confidence in Retirement has increased — it’s a huge difference from where I was at the start of 2017.

That said, I am continuing to remind myself that the planning and control I feel are illusory. My relationships, health, mindset and luck are really much more impactful at this point. Life happens, I need to be resilient, flexible, and keep a positive mental mindset to thrive.

WoodSpinner

[visualguy]

The difficulty of the transition on the financial side depends on the levels of assets and spending. If the ratio between the two is good, then the transition shouldn't be hard. There could be a fear of unexpected large expenses or large sustained drops in the stock market, so having a good margin of safety really helps to feel comfortable.

The bigger difficulty in my view is in other aspects of transitioning from work/career to not having those, and, yes, the loss of income is part of that difficulty even if that income wasn't necessary anymore by some reasonable measure. For those who mostly liked their occupation, it can be quite difficult, and not a step to be taken voluntarily without serious thought.

[Sandtrap]

The transition can be very difficult for those without the "security/comfort" of pension, annuity, or other similar income stream.

What worked for DW and I was to have confidence in a very sound financial strategy (boglehead retirement investment finance basics) backed up by more than sufficient assets to "mostly" (no guarantees) fulfill the income stream needed in retirement.

Again, without the "security/comfort zone" of a pension, annuity, or similar income stream, it is better to plan very conservatively. For example: if 25X retirement annual expenses are needed at age 65 with a projected 3-4% annual withdrawal rate, aim much higher than that 25X, especially if you do not have that pension type retirement income stream as a retired salary or wage earner person.

j

[tennisplyr]

Retired almost 10 years. While I have no pension and miss a steady paycheck, things are good. In the beginning it was kind of blind faith...made some decisions about investing and spending as best we could. At this point, we are definitely in a good flow spending what we need when we need it. Good health and enjoying life are much more important than what my net worth is.