The Lemon Fool

New website I saw mentioned in the press today - Retirement Living Standards, based on independent research by Loughborough University (https://www.retirementlivingstandards.org.uk/).

One thing I thought quite interesting were the spreadsheet examples of spending down to quite a lot of detail (there is a zip with them linked in the 'details' section). I thought they were useful starting points for people to build on with their personal spending - but might remind people about things they had forgotten about.

Thanks for that. I have been keeping a detailed summary of my expenditure over the last 3 years or so and I am afraid I go into the comfortable level to an uncanny degree although I spend a lot more on my house heating and lighting and garden and less on clothing and shoes. I am on my own nowadays. IO alos spend a lot more on overseas travel because I use my State pension as my travel fund.

I think that it is quite good though as an excellent guide for anyone wondering about costs in retirement. very interesting.

Dod

I agree with Dod - it is really interesting.
I took early retirement and "FIRE'd" at the early age of 51.
My logic was that I felt that I could pay myself the country's median wage after deductions (about 21K or £1750 a month).
The children are "off the books" and the mortgage paid off. Many families have to live on that sort of household income, so if I couldnt make it work I ought to be taken outside and gently put out of my misery.

That income level roughly equal to the the "comfortable" bracket according to the above website. So to my suprise I came to the same conclusion via a completely different route. i remember sitting on to of an Alp, talking to a recently retired Swiss gent who commented - "You need about 2000 a month". (Swiss francs presumably) which, again, is in that ball park.

I think the take out from this is that a bit of common sense will put you in the right area and you don't, perhaps, have to worry too much about religiously tracking expenses etc. Having said that having those income examples are really useful to people outside of being personal finance geeks. So really interesting stuff and I hope it takes off and gets people thinking about saving appropriate amounts for retirement.

Matt

I will probably not keep up my tracking of expenses for ever but I certainly find it interesting to see where my money goes. I do not know why but my house is a rather expensive place to heat and maintain. For anyone who has not done so I can certainly recommend keeping tabs on expenses for a year or two. I always now look forward to the year end summary because of course some expenses do vary from month to month but looking at a year is very instructive I find.

Dod

Good to see it includes intermittent costs like new kitchens and cars, as too many people look at their own budgets for their single nervous year leading up to FIRE, when they've chosen to put off any expenditure they can.

Dod101 wrote:I will probably not keep up my tracking of expenses for ever but I certainly find it interesting to see where my money goes. I do not know why but my house is a rather expensive place to heat and maintain. For anyone who has not done so I can certainly recommend keeping tabs on expenses for a year or two. I always now look forward to the year end summary because of course some expenses do vary from month to month but looking at a year is very instructive I find.

Dod

For years I have kept a note of all actual monthly expenditure, including things like taxes paid, which I started doing in the late 90s. That was a labour of necessity at the time after some major financial setbacks. By 2001, thanks to the dotcom bubble, I had recovered financially but kept up the discipline as it is so interesting (well, it is to me!)

I find it necessary to keep a running monthly average as expenditure is so irregular from month to month. I also keep a separate account for anticipated big ticket items, such as car purchase, and this is not included. Despite seeming to be such a careful budgeter, my wife and I are nothing of the sort. We live modestly within our income level by nature rather than design. Basically, we live off natural dividends plus a small 5K pension. The running monthly average for this year to last month was GBP4,274. No doubt, this is well above national income levels so we could obviously survive on much less (and may have to in a downturn).

I would heartily recommend such an approach to everyone. I find it comforting rather than living in ongoing uncertainty which I suspect is the norm.

TP2.

TahiPanasDua wrote:I find it necessary to keep a running monthly average as expenditure is so irregular from month to month.

If you don't mind my asking, could you please explain what you mean by a 'running monthly average'? Like you, I have lots of data from previous years, but I find it difficult sometimes to extract meaningful information from it which increases my understanding.

MyNameIsUrl wrote:

TahiPanasDua wrote:I find it necessary to keep a running monthly average as expenditure is so irregular from month to month.

If you don't mind my asking, could you please explain what you mean by a 'running monthly average'? Like you, I have lots of data from previous years, but I find it difficult sometimes to extract meaningful information from it which increases my understanding.

I can't speak for TP2, but I took it that if you know you are going to spend 3k once a year from now, you need a running save of 250/month to ensure that the money is there when you want it. The trick is to have enough at the start so that you can establish various "pots" and fund them so that the cash is there when you want it - 3 monthly / yearly / 4 yearly / whatever.

MyNameIsUrl wrote:

TahiPanasDua wrote:I find it necessary to keep a running monthly average as expenditure is so irregular from month to month.

If you don't mind my asking, could you please explain what you mean by a 'running monthly average'? Like you, I have lots of data from previous years, but I find it difficult sometimes to extract meaningful information from it which increases my understanding.

There is nothing complicated involved.

We have a working bank account for daily needs in addition to another with about 2 years expenditure as a standby top up facility in the event of a market drop.

Starting in January each year, I calculate and record the actual expenditure during the month.
In February I record that 1. February expenditure. 2. January plus February's expenditure 3. January plus February expenditure divided by 2. And so on.

An actual record is as below.

Jan 7,295
Feb 5,706 13,001 6,500
Mar 3,423 16,424 5,474
Apr 2,304 19,770 4,940
May 2,617 22,387 4,477

The average figure gives me a better picture as individual monthly expenditure can vary widely.
It's all easier than it looks.

TP2.

I ran Quicken 2004 for 5 or 6 years before retirement-gave me a real handle on our actual spending
I still run it -gives you a running total of my monthly spending-easy then to reduce spending in time
The home page shows all our assets every time the programme opens
My wife who does most of the spending can see instantly where we are as she enters spending
Use a Credit card where possible -a bit more breathing space before having to balance the books
Clear card every month
Spend as much as we did working!-now 73
You could probably get a copy of Quicken 2004 on eBay -works on Win 10
xxd09

I looked at the linked page with interest, I already have a system of three budgets for income, basic, good and excellent ! The ratio between them is around 1.0 : 1.6 : 3.0

I use a system of recording casual expenses on an app on an iPhone, Next. ( not the shop !)

Select the icon for the expenditure, enter the amount ( I round to the nearest pound) and that's it, you can change the date, make a transaction recurring or add a description, easy, so I use it. Provides simple reports and graphs and there is an iPad version too.

I enter two amounts on an automated monthly basis, one is household expenses estimated over a year, includes utilities, a figure for car replacement, motor expenses ( insurance , servicing, consumables), the tech budget ( a five year estimate of hardware and cloud services etc)

It's surprising how much expenditure is discretionary, you don't have to go on expensive holidays and over time the attraction declines, you don't have to change cars etc, replace phones or computers.

I believe knowing your outgoings is incredibly important for a relaxed lifestyle, its not the amount but the knowledge that is ok for your income and the option is available to cut it significantly. ( in a previous business life, monthly management accounts were incredibly useful and save your bacon when you have automated rules that a negative cash-flow for a month means an embargo on the avoidable expense until the deficit is made up)

Circumstances can change often unexpectedly and alter long term budgets quite a lot. We are moving downsizing ( 4 bedrooms to 1, although the new property is slightly more expensive, the effective living area is about the same) this has prompted us to get a couple of ( they are surprisingly expensive ) German E Bikes, this is neutral on the travel budget but healthier, more pleasant and a bit green ! ( Car life will be extended significantly as local trips will be largely on a bike)

The desire for long haul travel reduces the more you do it and a growing awareness around us that a reduction in our environmental footprint is sensible.

The conclusion is that expenditure rose sharply on retiring at 49 and at 61 the expenses are probably peaking but will decline over the next few years, thus planning for a set fixed pension income to last you out is probably sub optimal.

Hariseldon58 wrote:....
It's surprising how much expenditure is discretionary, you don't have to go on expensive holidays and over time the attraction declines, you don't have to change cars etc, replace phones or computers........

The desire for long haul travel reduces the more you do it and a growing awareness around us that a reduction in our environmental footprint is sensible.

The conclusion is that expenditure rose sharply on retiring at 49 and at 61 the expenses are probably peaking but will decline over the next few years, thus planning for a set fixed pension income to last you out is probably sub optimal.

It's been interesting reading this thread. What people do is clearly a matter of personality and circumstances.

I don't do any budgeting, but I do keep an eye on three things:

The value of my share holdings, which naturally fluctuates - by about 33% over the past 5 years. That seems a bit alarming in retrospect, but it is not as volatile as the FT100 (46%).

My overall cash withdrawals from my holdings. Averaging about 2% per annum over the past 5 years, so I think I could safely up my expenditure if I wished to.

My holiday expenditure. This is far and away my major discretionary item and it is nice to know that I have some 'fat' to cut if absolutely necessary.

My taste for long haul travel shows no signs of declining yet - at age 70. Still plenty of places to go to! One of the reasons I took early retirement was the desire to do more holidaying.