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Reducing expenditure in retirement

Discussion in 'Retirement' started by the hippo, Jun 7, 2018.

  1. the hippo

    the hippo Lead commenter Community helper

    There are lots of threads on this forum about pensions, ARB and so on, but not much about how to save money and spend less after you have retired from teaching. One obvious thing to do is to go on holiday during term-time. Reviewing your transport options might also save some cash. Any other ideas? Suggestions?
    stopwatch likes this.
  2. eljefeb90

    eljefeb90 Senior commenter

    It isn't that difficult really. I have found that ,psychologically, you don't need so many treats any more to compensate for the lack of time and the stress. I spend more time cooking for us and looking for good deals, as well as spending less on transport. In addition, the lump sum gives you security. I was never able to save that much as a sole earner with three kids, so I personally feel much better off. I haven't felt the need to cut back, quite the reverse now the kids are gone and the mortgage paid off. Budgeting is far easier with fewer calls on your salary and 'big events ' (marriages/home improvements) covered by the lump sum. I am firmly of the opinion that you start spending your assets in retirement,so saving is out. I have relatives who lived very frugally and never enjoyed their money. They became too infirm to go anywhere or died young and left their money to feckless relatives and the taxman.
  3. PeterQuint

    PeterQuint Lead commenter

    One idea would be to move to another country in Europe where it’s cheaper to live.


    Only joking - great idea for a thread. This intetests me, too.
    lizziescat, Jamvic, stopwatch and 5 others like this.
  4. Rott Weiler

    Rott Weiler Star commenter Forum guide

    An obvious statement but what you save depends on how you spend your money now! Spending profiles are different. I did a detailed analysis of what I & my OH spent for a month, literally every penny, (was going to do it for 3 months but it was so tedious I gave up after a month) and then estimated what we would spend post-retirement.

    If you use a retirement lump sum to pay off your mortgage that's a massive saving of course. Using a lump sum to pay off any debts if you can may significantly reduce your outgoings (Disclaimer: I am not a financial adviser!)

    Transport costs can also depend where you live - if you live in London all tube bus tram rail in London area is free 24/7 once you reach 60.

    Some items I hadn't really thought about also saved a lot. All those expensive Costa coffees stopped. No more dry cleaning bills. Much less expenditure on 'work clothes' - I can go the whole summer with just a few cheap T-shirts and shorts!. More time and energy to track down those 'best buys' for energy, broadband, mobile, car and house insurance etc . And actually doing something about buying a smaller cheaper to run car. Generally having more time to spend getting best value for money.

    Cost of food went down for us because we cooked fresh meals at home nearly every day - none of the 'too knackered to do anything other than a takeaway' any more.

    Doing stuff at home DIY an save a lot if you have the skills (it wouldn't have done for me....)

    Being able to take advantage of all sorts of 'Off peak prices' - holidays as you say, train travel, cinemas and theatres, local swimming pool, even hairdressers. UK Senior Railcard at 65 gives one third off train travel even if it's the cheapest off-peak ticket already. 'Concessions' entry prices usually starts at 60.

    Some costs go up though. Cost of lighting and heating will increase if your house had been unoccupied during the working day but now isn't. I noticed more wear and tear that needs factoring in - carpets looking worn and needing cleaning more often etc . And being less worn out and more free time might mean you go out for more meals, visits to places, than you did before, but that's discretionary spending only if you have the money. And some people say their alcohol bill goes up, that nice bottle of wine in the garden on a sunny summer afternoon.... (I'm talking about friends who say that, not me of course :) ).
    Last edited: Jun 7, 2018
  5. Lara mfl 05

    Lara mfl 05 Star commenter

    Working out your 'budget' for the month is always a good place to start. So often when one is earning good money, one doesn't always keep track of exactly what one is spending.

    Heating costs may actually increase if you'll be at home more, so you might look at searching around for the cheapest deals, if you haven't had the time to do so before.

    Finding out when your local stores have 'coming out of date' offers and stocking up when things are on offer might be more of a possibility once you've got more time. Planning the week's menus in advance so shopping doesn't have wastage by the end of the week. Again when working this sometimes 'goes by the board' in the busyness of teaching.

    For women, expenditure on clothing and 'beauty' should decrease, as you won't need to keep 'looking tiptop good' for every day and again you can look at the many budget ranges.
  6. the hippo

    the hippo Lead commenter Community helper

    It was a bit depressing to think that some costs might actually go up in retirement, but I think that you might be right, Lara mfl 05.

    During the summer holidays, our expenditure rockets because we know that we are only going to be in Bulgaria for six or seven weeks and so we do tend to pamper ourselves. We also have to pay our bills for the whole year, even though we are only there for the summer. Things like home insurance and the bill for security company are the same, whether we are there or not.

    Here in China, we manage to save most of my salary each month and this year we had a rather expensive holiday in the Philippines during the Chinese New Year. I don't think we will be doing something like that in retirement. Maybe we will just get in the car and go camping in Greece.
  7. lindenlea

    lindenlea Star commenter

    That's the key I think.
    needabreak and Lara mfl 05 like this.
  8. LadyForlorn

    LadyForlorn New commenter

    My retirement was all a bit ‘sudden’ and ‘unusual’ as I retired at 42 with two school-aged children. On paper, my income has massively reduced, but as a family we don’t really ‘feel’ worse off.

    For a start, I’m not paying for wraparound childcare at a cost of £100 a week during term time. That’s £3,800 a year saved (although part of it was paid for out of gross salary).

    We have saved a fortune on food. With two full-time workers, food shopping was done in a rush. We’d end up buying things we didn’t really need because we hadn’t had time to check the fridge/cupboards to see what we already had in and we wasted a hell of a lot of vegetables/salad. We ate a lot of higher quality convenience food (Taste the Dfiference/Waitrose cottage pies etc) which would cost about £7 for two people. Now I can prepare a meal for four for half that.

    Alcohol consumption has gone down a LOT. I was suffering from the “I’ve had a hard day, I need a glass (or 3) of merlot”. We are saving about £30 a week on booze (very embarrassing, I know),

    I now have time to ‘shop around’ for decent deals on things. Our British Gas Homecare renewal just came through and they wanted to charge £530 for the next year. When working I would just have paid it. Shopping around got it down to £180 for the same level of cover but just with a £50 excess.

    Holidays are cheaper. Just being able to go away one or two days either side of a school holiday saves a fortune. Again, having the time and energy to shop around helps. We have discovered that Center Parcs in Europe costs half that of the UK equivalent and for a better spec. Our main holiday this year will be skiing in the Netherlands Center Parcs in October half term. The entire holiday, including a week’s worth of ski lessons, equipment hire and a 3 bed lodge has come in at less than £2,000.

    I’m no longer buying work clothes or shoes. My printer cartridges are not being used to print school resources. I’m not paying union fees. We don’t eat out as much to compensate for the loss of ‘family time’. I also don’t need the spa membership in order to unwind from a stressful term at work.
  9. Dunteachin

    Dunteachin Star commenter

    Yep, gas and electric bills soar, particularly during a long cold winter!
  10. marlin

    marlin Star commenter

    The Senior railcard is available once you are 60 - not 65. :)
  11. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Duh! I've just organised one for someone's 60th birthday present! Must have had a stopped thinking moment... :oops:
    PeterQuint, Lara mfl 05 and marlin like this.
  12. marlin

    marlin Star commenter

    Or a senior moment! :p:D
    Lara mfl 05 and Rott Weiler like this.
  13. Rott Weiler

    Rott Weiler Star commenter Forum guide

    I know hippo's question is about expenditure not income but it bears repeating that your reduction in net/after tax income when you retire is much less than the reduction in your gross income because of the way the tax system works, and because after retirement you no longer pay NI or pension contributions. A reduction in Gross pay from c £40k to a pension of c£20k for example is a 50% reduction in gross monthly income but only a 30% reduction in net monthly income (back of envelope calculation using TES pay calculator). eg A gross salary of £22,917 [M1 outside London] is monthly net £1,467 if you are working but net £1,753 if it's pension (approx.)
    Last edited: Jun 7, 2018
    Jamvic, bevdex, PeterQuint and 3 others like this.
  14. heldon

    heldon Occasional commenter

    We finish in just over three weeks time and key for us in retiring early was learning to live on less money over the last 15 years or so. It then becomes part of how you live, small car, searching best value, enjoying the free things in life. We even make our own wine and enjoy the process.
  15. Sundaytrekker

    Sundaytrekker Star commenter

    As I’m working part time as well I’ve found I don’t need to worry about reducing expenditure as I don’t feel worse off. In fact, with no mortgage now and no uni costs or adult offspring at home, I probably have a bit more disposable income than I’ve been used to. I’m not paying lots of thousands in pension contributions and tax either.

    Petrol costs have reduced a bit but I still average just under 200 miles a week. I don’t need headteacher type clothes but enjoy buying new casual clothes so still spend more than I need to on clothes. Heating costs have gone up but I refuse to be cold at home.

    I’ve had a couple of term time holidays but they have been further afield so not really cheaper so far. I probably spend more on things like coffee and lunches and weekday outings but they are enjoyable. If I had to I could make do with less but it’s fine as it is.

    My next big decision is whether to keep my car or what to buy instead.
    Lara mfl 05 and PeterQuint like this.
  16. eljefeb90

    eljefeb90 Senior commenter

    Yes, the bills do rise but a lot of the time you don't need the heating on in the day, once you've had the heating on in the morning. You can invest in a single room heater, to save heating the whole house. If you feel like hunkering down and are really mean, you can invest in a plug-in throw and watch 'Escape to the Country '.
    Alternatively, the winter is when you go on holiday. The prices are far lower and you could take out a long-term rental for £450-600 a month on the Spanish costas where January temperatures reach a daytime high of 18 degrees most days. Why go away in our summer when prices are high and , worst of all, the kids are off?! Florida and the Canaries have even warmer winter temperatures, but prices are higher than in mainland Europe. It's like going out on a Monday night as opposed to standing four deep at the bar on a Saturday night.
  17. eljefeb90

    eljefeb90 Senior commenter

    As someone has already mentioned, doing it yourself can save you lots! . I don't consider myself a great DIY -er , far from it! However,I have painted and decorated a lot, re-roofed my verandah, insulated a summer house, repaired and re roofed a tool shed and built a tandoori oven in the last eighteen months. The materials have cost a fair bit but it has given me a sense of purpose and achievement. It is really amazing what you can pick up from YouTube.
  18. ViolaClef

    ViolaClef Lead commenter

    Oh, no @Rott Weiler! A Costa coffee is a permissible treat, surely? I recommend going out for a nice coffee instead of a meal - it’s certainly cheaper.

    And, @the hippo, as @Lara mfl 05 says, planning meals to make at home and then drawing up a shopping list is much cheaper too. As is buying supermarket own brands.
  19. the hippo

    the hippo Lead commenter Community helper

    Winters are mercifully short in Bulgaria, but they can be blooming cold with some serious snow.

    Mrs Hippopotamus wants to convert the car to LPG. Once we get back to Sofia, we need to get the engine reconditioned at the NIssan garage and have a new catalytic converter fitted. That is going to be expensive, but with luck it will mean lower fuel petrol bills in future. Then it will be a waste of money getting it converted to LPG. In Bulgaria, an LPG conversion is expensive and I have read on the Internet that it does not do the engine much good.

    As for heating, we had thick slabs of insulation stuck onto the exterior of our villa. Then the workmen plastered over a plastic net with coloured plaster, we so did not need to paint it. The next step is going to be expensive: installing a new central heating system. We want to have the option of burning wood and pellets, just in case we cannot be bothered to cut up the wood for ourselves when we are really ancient.
  20. stopwatch

    stopwatch Lead commenter

    ... but if you find the time to get a much cheap energy supplier, some of this will be offset by cheaper unit costs ;)
    Lara mfl 05 likes this.

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