I want to learn to spend a little more, with grace, with gratitude and with a new map

Everyone is on the New Year’s resolutions track, and most PF folk want to save more. I am going to take a different line this year, because I am in a new territory. That needs a new map. It’s been a long time coming, over six months between when I started the process of transferring my DC savings to Hargreaves Lansdown and actually seeing the numbers tick up. It has happened now.

That'll be a nice Lamborghini, and to hell with the money
That’ll be a nice Lamborghini, and to hell with the money. Secondhand, in my case, as I am using five years worth of pension, not a lifetime’s worth.

So the long period of coasting between my last pay packet in June 2012 and the first appearance of a regular income in the new tax year worked. I will enter the new tax year with some working cash to spare, and all the earnings from this year to toss into the SIPP on March 31. It has been a very different perspective, living on the fossil wealth of my erstwhile career to living on an income. That period felt like a limbo – yes I had retired but there were hazards that meant I might have had to work. Now it is very likely that I will never work again, at any rate at the level of most of my working life. Sticklers for accuracy will, of course point out that a pension is also fossil wealth, but living with it expressed as an income is different to living off saved capital. The amount in the SIPP is such that I could rush out and purchase a Lamborghini – I’m quite taken by this red one  – I am not rich enough to buy the quarter-million jobs but I am good to follow through on Steve Webb’s recommendations for the lower end of the secondhand market.

Passing through the turning point is difficult – there is a big  difference between living off capital and using income

I was always a salaryman, not an entrepreneur, and so as I left the workforce and the income tap turned off, I lost my main financial navigational instrument, the first law of Wilkins Micawber – spend less than you earn. This has guided me across thirty years of working life, but once the annual income falls to zero, this waypointer spins in a pathless land and knows no North. And at the same time the source of accumulation ceased. That I was able to still accumulate is tribute to an ageing bull run that seems to have finally reached senescence. I am not complaining, as someone who now has too much asset allocation to cash 😉 I am disappointed in RBS’s definition of cataclysmic year. WTF is the use of a fall of 20%? 50% is what I want 🙂 OTOH this fellow has he S&P at 800, 1200 will do me.

For three years the answer on how much can I spend always came back ‘as little as possible’. I struggled initially because I couldn’t serve two masters, and eventually accepted the slow fall in working capital.

Decline and fall
The turning point

Some of that struggle was simply not acknowledging that I had passed the accumulation phase, had reached the apogee of my earning power and accumulated wealth. It felt wrong because for thirty years previously it would have been wrong. The switch to living off capital may be doubly hard for people in the PF community who have focused on accumulation for many years. I am lucky and perhaps privileged – my main pension is expressed in terms of income not capital and I am burning up a Lamborghini’s worth of DC savings ahead of it to avoid the penalty of drawing it early.

Everybody else’s New Year’s resolutions are how to save more or earn more. Mine are about learning to spend more 😉

Over at Quietly Saving Weenie is sensibly looking to push her savings rate up. FFB40 has set himself a plethora of goals broadly aiming to earn 100k this year and presumably save a fair chunk of it. ERG is doing forex trading and matched betting.

I now have the answer to Micawber. For the next five years I can spend up to £14k a year and not fall behind1, which roughly matches Mr Z’s Goldilocks spender‘s disposable income. If I drew an income from the ISA I could push that to 18k. That’s the equivalent to earning 20k gross p.a. which is apparently the white collar minimum in London according to FvL. God knows how people do it – I left London 28 years ago earning more than that in real terms because I was pissed off with being skint all the time and living in shared accommodation. I must have been a terrible spendthrift, because nothing indicates to me that London living has got cheaper in real terms over those three decades. But I obeyed Micawber’s rule, so while none of it stuck to the sides I was debt-free.

I have not been spending anything like 18k p.a. across the last few years. I don’t aim to take it with me into a next life, so I need to become a curious combination of Mr Zombie’s Jones’ and frugalistas. I need to keep his chart on the level, not go for the networth increase and accumulation that has been the watchword until now, otherwise I will be rich in the graveyard but poor in life. That is a big change in perspective.

We went to Orford to celebrate the milestone where Mrs Ermine bought me lunch at the Pump St Bakery  and I finally managed to crack open the wallet and blow £20 on some fine products from Pinney’s smokehouse, after observing this fine piece of cold war brutalism across the river in the January breeze.

Orfordness radio station, erstwhile site of the failed Cobra Mist Cold War over the horizon radar
Orfordness radio station, mothballed in 2012, erstwhile site of the failed Cobra Mist Cold War over the horizon radar.

The village seemed totally quiet, I guess this second weekend of the new year isn’t a time most people are on the razz. Unlike Steve Webb’s exhortation, I’m not going to go mad, but it is a significant change to my situation. I need to reflect upon the upside of spending, without being suckered into the stupid consumerism that promises but doesn’t deliver. I spent so much effort over the years to shoot needless spending, and I find I don’t know what to do here.

Then last night we went out to the Fox at Newbourne to celebrate some more, and in returning we passed the Firm and I recalled the first time I had come there twenty-seven years ago, also in the night, and it felt as if the circle had turned now fully, when I change from being a retiree to being a pensioner 😉 The pub has positive memories from the Firm – many project topping out celebrations as well as a fair few summer lunchtimes dreaming up project ideas or setting the world to rights in the distant early years before the dotcom bust. It was a different world of work then, much more creative and less micromanaged routine paint by numbers…

I froze all my SIPP savings in cash as of March 2012 because I believed I was leaving then and would have needed to liquidate that AVC fund as a pension commencement lump sum. It happened to be a local high for  the FTSE100 around the 5900 mark. I occasionally cursed myself in the intervening period for not leaving it invested, but I lived by the old rule of thumb – don’t have capital you expect to call on in less than five years in the markets. If the period is longer it’s worth taking the volatility of the markets because inflation will also be eating at the value. And as it turned out the FTSE100 is within spitting distance of March 2012. Had I kept it in the 50:50 FTSE/global fund I would be notably better off now. But what the hell. At the moment the stock market can’t hurt2 my SIPP or main pension, and I’m okay with giving up the upside. I will take market risk all in the ISA and soem unwrapped equity holdings.

I am now an oddity in the PF universe

because I have crossed to the other side of the accumulation/decumulation divide. Most writers are in the accumulation phase. Indeed the only other exception I can think in the PF blogs I read is Jim. As such my aims and risk profile have changed in a big way. There are many standard FI/RE things on my old map that I will not need to do –

no need for pension saving (beyond the £3600 to get £720 p.a free money for a few years). Having earnings has buggered this tax opportunity up somewhat anyway.

While on zero income I carried an emergency fund of several tens of thousands in cash across the three years, because I needed to be my own lender of last resort in an emergency. Nobody lends money to someone without an income3, but I have an income now. I was lucky – no emergency happened. Some of this erstwhile cash reserve needs to get invested and start working for me now that I have an income and could borrow against the future income stream again, in the same rationale as Jacob ERE. Of course I will still need an emergency fund of sorts, but much less. I will retain my NS&I ILSCs and shift the rest into a new S&S ISA. I don’t need the three-years expenses cash buffer to smooth investment income, because I won’t be living off investment income.

I am nominally working in this tax year, it will be my 35th and final year of National Insurance to pay. I will electively pay that NI, to become fully paid up.  I asked for a State Pension forecast which is about £7100 p.a. It’s not quite clear to me where I got this good fortune, as I have been contracted out for 20 years, and the last time I asked for a statement in 2009 the amount was £5700 p.a. I am not sure I can rely on the existence of a State pension – it’s still another 12 years before I’d get it which is 12 years for some government to decide to means test it. If I were to get that then I personally would have an income of the typical UK household. That is more than enough for me.

I have an ISA originally designed to compensate for the actuarial reduction to my pension from drawing it early, which is no longer required because I won’t draw early. A source of tax-free income is always nice, and I will continue to build this up, though the market crash will no doubt make this smaller in the near future. In the long run (10 to 20 years) it will compensate for the erosion of my pension relative to workers due to earnings inflation outstripping RPI, and gives me some buffer against modest strings of bad times. If peak oil happens, zombie apocalypse or other shocks to the system I am still stuffed of course. Otherwise I am like this Telegraph pensioner, I will never be rich, but I will never be poor. Thirty years is a long time – for perspective thirty years ago I was still working in London… Things will change.

That ISA may begin to compound. I am not a great believer in compound interest in helping you get to financial independence. But once you reach FI, and in particular if you don’t need the income from a lump of capital, it starts to snowball. In its short life of about six years of contributions and no withdrawals, the accumulated dividend income has put in about a year’s worth of ISA allowance into the pot on top of my contributions, which is being reinvested. The ISA needs splitting and part transferring to other platforms, because it is now way over the FSCS guarantee4.

I don’t really know where I’m going with the ISA because the original aims has been overtaken by events and Osborne’s changes. But I will have a lot of cash looking for a home from that large emergency fund and the PCLS, and Fortune seems to be smiling on me by beating up the stock market for me in advance for 2016. I bought a lot of gold ETFs in stages in 2015 to try and get more defensive in the face of a frothy market, and up to RIT’s 5% asset allocation. This is the first and only of my 2015 purchases to turn a profit now. The less said about HRUB, oil, mining and emerging markets the better for now, though I confess to a temptation to double down on some of those. Every dog has its day 😉 OTOH if the market continues to take even more stick then that is a time to build the HYP too – you can’t build a HYP cheaply  in the heady heft of a bull market.

What can go wrong

There is always lots that can go wrong. Let’s face it, in the 1960s of my early life we had Kennedy and Khrushchev glowering across the Cuban Missile crisis and B52 bombers on 24/7 watch over the North Pole with nuclear bombs. Somehow, despite frequent accidents we survived. The 1970s had the oil crises and the Winter of Discontent as the unions manipulated the government like puppets on a string, and 26% annual inflation in 1979. The 1980s had two harsh recessions, a lot more Cold War sabre rattling, Thatcher’s goons in running battles with Arthur Scargill’s goons. The 1990s had the implosion of Russia and all the hazards that entailed, the slaughtering of UK housing as a can’t fail asset class and the Asian financial crisis which was the birth pangs of capitalism trying to adapt to a tripling of the world workforce as the Iron Curtain and other barriers to trade began to fall. The 2000s had the dotcom bust and some of that increasing world workforce weakening the power of labour versus capital in the West; we are still trying to work out where all the rubble is ongoing to fall. The 2010s seem to be about more geopolitical risk, and ugly confluence of mediaeval religious tenets with 21st century technology, along with a lot of chickens freed by the neocons coming home to roost. On the subject of religion, in one generation the West lost all the moral and intellectual principles that were lauded by Niall Ferguson for making it such an effective economic machine with its shared values from the Enlightenment – we are all consumers now. Those shared values had their problems too – they ossified the class system and justified a lot of actions we would now disapprove of, but they were a common myth of perhaps a different nature from our current one of continuous growth. We seem to be still working on a replacement story for how/why to be better at being human, which is probably not purely a materialistic enterprise. That’s a drag given our economic creed knows the price of everything and the value of nothing.

So far we have survived. There will be change across the next thirty years, some of it welcome, some of it unwelcome. I think I have made a reasonable fist of hedging what I can. I do not have enough to hedge wars of all against all, zombie apocalypse or even the sort of aggravation Moneyweek has been trying to scare its readers shitless about to sell more magazines.

There are far too many people in the world for us all to live the American Dream of the 1950s never mind like the Wolf of Wall Street, although I hazard that we could all live like kings of old materially.  But I have come to see the wisdom of accepting the uncertainty without dwelling on it – coffee for the things I can do something about, red wine for those that I can’t change. The bearish argument always sounds smarter. But as a way of living life to the full it sucks – it raises your blood pressure and makes you miserable. So I am going to park that. Yes, I may one day regret not having a bug out bag and guns and ammo. But hopefully I will also have missed living ten or twenty years thinking about the bug out bag and the ammo. Humans need to be careful gazing long into the abyss, because else the bastard will blink and look back into you.

What I know will go wrong

There are some things we do know. Brexit or not will scare the horses, and it’s an intricate mess from which it’s hard to see which way is up. Taxes will rise, because they have to, we’ve lived beyond our means for a long time and are still at it. For all the bellyaching income taxes are in fact at low levels in living history, which is part of the problem. The young Ermine at the start of his career paid a much bigger proportion of his pay in tax and national insurance5 than the old Ermine in the last three years of his career. The solution to paying high taxes is be no tall poppy – live a reasonably economical life, because then you have the push-back of lots of people on your side. If you are going to live more than  a third up Fire V London’s scale you are going to pay a shitload of tax until you get into the upper reaches (whereupon you will pay clever people to avoid tax for you in creative and highly inventive ways). Likewise if you want to live in London and decide your children are special flowers who need private education, then this decision creates a fierce money burning furnace that you need to continually feed. You will find it difficult to minimise taxation and need to focus on increasing income to feed the fire. You takes your lifestyle choices and you pays your money.

There may, however, be trouble in raising taxation. I can imagine the integration of NI and income tax, which would hit me with a tax hike on pension income. Reducing tax exemptions are another way. Pundits are screaming blue murder about tax relief above the basic rate on pension contributions. In the UK 15% of people pay over half the income tax take. Monevator is talking about going Galt with dark mutterings about  “supporting other people’s lifestyle choices, rather than the essentials of State and a worthwhile safety net”. This was a large part of my hitting pension savings hard too.

On the other hand I find it hard to view people spending less time at the office as a bad thing. They really should spend more time with their children and see them grow up – my working class parents saw more of me growing up in the employment environment of 40 years ago than typical middle class parents both working to pay for their consumption do now. The latter of course have far more and better Stuff and numerous fast and furious fancy foreign holidays, but time isn’t a renewable resource. The days are long but the years are short. If the robots really are going to come for our jobs then more free time is an upside, not something going wrong 😉 The trouble is a lot of people won’t have that choice, the power structure is such that extra productivity will likely increase the return on capital rather than increasing overall human happiness. The solutions Asimov’s Solarians took to arranging their society so the humans had a high standard of living in a work-free world always cause palpitations in right-thinking people, so I don’t know how that will pan out.

ambitions in things other than finance too

There seems to be a big thing about goals and metrics in the PF community. Personally I think goals and metrics suck the joy out of life and work, so I don’t do that. But a total amorphous mess isn’t effective either, so I have some ambitions. January is a terrible time of year to try and start anything – we really should be starting our year somewhere between February and May so you get a bit of a leg-up in cheer and hope from Nature. Although if we are all going to sit behind screens in a virtual world like those Solarians perhaps that will become irrelevant in the years to come. We will become Spacers all watched over by machines of loving grace with “All other contact accomplished by sophisticated telepresence viewing systems”  – with the smartphone as the fore-runner of the technology.

So rather than goals I am going to go for ambitions, and I will change my mind frequently and give some of them up ere the month is out in the time-honoured tradition 🙂

No thanks. Unlike the rest of the country, I am lighter and richer in January ;)
No thanks. Unlike the rest of the country, I am lighter and richer in January 2016  than in December 2015 😉

I don’t need tosh like this – the joy of owning my own time is that life is more chilled, and as a result I eat better and less. It also helps that a lot of what I eat comes from the ground, not from the industrial food system, for that I have Mrs Ermine and the Oak Tree farm to thank.

Chris with the squash harvest. There are no Clubcard points on this lot...
Chris with the squash harvest. There are no Clubcard points on this lot…

Unlike it appears the rest of the UK, I managed to lose weight in December, and have been for some time since retiring. It is within the realms of possibility that I may one day see the same weight as when I was 21, before I draw my main pension. This is an aspect of health that I persistently and continuously screwed up while working – retire and I discover the forces of natural equilibrium slowly shift to the right target. I have still never seen the inside of a stinky gym and I’m not going to. But I have the time to walk and bike to places within the town, I don’t usually drive unless I am going to leave the city limits or shift heavy stuff. It should be noted that average people like me6 are way, way too lazy to lose weight through exercise. You can’t outrun a bad diet.

I want to do some hillwalking, to see prehistoric stones, to travel more slowly, to cycle in interesting places in the UK.

Living frugally simplifies some decisions. I want to still live well and intentionally even if this simplification is lifted.

I’m not drinking homebrew again.

I want to learn morse code.

One thing I want to do in 2016 is to bust some of the media junk out of my life and to read less crap. Before the millennium people wrote books because they had a story to tell, and publishers were valuable gatekeepers because they had to take a financial risk to publish. Increasingly it seems people write ebooks because it’s seen as a way of making money, rather than telling a story, they trade websites because they want to buy the clicks and SEO without adding value. Movie companies trot out sequels and prequels because they’re safe. All in all the media and information space is trending towards arbitrage and extractive rentierism, and the quality of material online and the signal to noise ratio of search results is falling. I spent perhaps too much of the last three years, looking at the world through screens. It was cheap and I learned a lot, but I noticed an increase in clickbait and content farming and a material decline in quality.

I want to originate, and to co-operate with creative people. I want to tell stories because I think they are worth telling, and to create and shape things because I think they are interesting. And I am privileged enough to be rich enough that I don’t need to try and make a buck, I want to pursue the intellectual freedom to craft and leave my work to speak for itself.

man-with-savingsI want to leave the world of grubbing for money behind, it is coarsening a lot of discourse as it becomes always-on. In the gig economy work spreads like velveeta into all waking hours. I occasionally talk to people and see the hungriness in their eyes as they are trying to compute whether I am a networking opportunity. I can save them the trouble. I am an introvert, a retiree and of independent means. My networking value to the gig economy is bugger all, I’m not swimming in the same ocean.

I will engage if something interests me, but people find it hard to understand that it is difficult to incentivize an Ermine with money, despite it being the universal currency of making people do what you want. There are surprisingly few people of independent means in the modern world, despite that fact that Britain is a far richer country than we used to be. The ever-hungry money furnace of consumerism is making most of us poorer faster than human ingenuity and the accumulated capital and knowledge of generations is making us richer.

I want to preserve the sweetness of this freedom from the rat race, expressed well in this 1960s ad. For thirty years I was motivated by earning more, before I was challenged by events to ask myself why. The learning and the wisdom gained in the crucible was hard won, to change the ‘just because it’s what everybody else does’ to ‘I need enough, and enough more than enough to match my risk perception and view of the world, and then stop and get off this hamster wheel’. Work is overrated – even a frugal Ermine could live like a king of old.

On the flipside, I don’t do some of the things retirees do to fill their days. I don’t volunteer, because if you want a commitment from me you have to pay, to express some appreciation for the commitment. Otherwise you may get assistance from me, but on my own terms and with no strings. That’s just me, it’s not a criticism of other people living by different values.

I can pursue some interests I mothballed because they were expensive, travel, birdwatching, recording and photography7. I may buy the oscilloscope I considered a while ago.  In general it’s yes to experiences and tools and to things I use to make and do things with other people, no to the beach and no to ‘this XYZ (mobile phone, gizmo, whatever) will transform your life’ – it never does.

I want focus. I want to do one thing at a time and pursue flow. I want to listen to music again as I did years ago – in the dark and on my hifi once it’s been repaired. I want to get off the modern trend towards doing three-and-a-half things badly rather than one thing well at any given time. I have trialled some of this with books – when I read books I read exclusively. And if the book bores me enough that I feel I want to do something else then after about five minutes I stop reading and decide this is not for me. I don’t listen to music or audiobooks when I am on my bike. I listen to the birds and try and be aware of the traffic around me, not immerse myself in a e-bubble. Consumerism being what it is, it is trying to turn this into the modern self-help religion of mindfulness. Two generations ago, parents and schoolteachers knew all about mindfulness with the two simple words – “pay attention” 🙂


I want to keep regular use of smartphones out of my life. They have their uses, but they should not become a vade mecum, despite everybody else feeling that way. If Steve Hilton can run a tech startup without a phone a retired Ermine can resist becoming a gormless zombie illuminated by the blue glow of the latest iPhandroid whatever. It is very very hard to originate anything on a smartphone, but it is a fabulous tool for passive consumption and tethering to the Hive Mind. If I want to take pictures I’ll use a camera. If I am recording I will use an audio recorder. I don’t want to tote a device that does sixty-seven things all at half cock. Jennifer Lawrence was absolutely right. You can’t live your whole life behind your phone, bro

That’ll do for ambitions for now. Across the lean years I learned how to bridge the gap with not enough, and now I want to learn to live well with enough, and live intentionally, and with grace and kindness. I am a different me from the mindless consumer, and I will handle the change slowly and carefully, because the world has become even more talented at invoking mindless consumerism, and presumably some of my inherent flaws are still latent. The challenge now is to spend wisely under my control, rather than being constrained by resources.

So yes, I want to spend more this year than last. But I want to claim the gift of the seven lean years, and spend it to enhance the quality of my life and that of those I care about, rather than to fill my house with consumer trash and my time with empty manufactured experiences. And I’d like to learn to do it with gratitude. Because for all the challenges and the doomsday razamatazz on the news, I live in a special time and place, where humanity has solved a lot of tough problems and it’s working on more. I want to tip my hat to the giants on whose shoulders we all stand, and not waste that gift in the time I have left.

  1. this is conveniently and by design roughly the maximum rate I can draw keeping below the tax threshold, plus 25% from the PCLS 
  2. obviously an unending economic crash would take me out like everyone else 
  3. this is not strictly true, there are all sorts of bottom-feeding lowlife scum that lend money to people who don’t have incomes. I’m just not prepared to swim in that foetid pool 
  4. note this is £50,000 on S&S ISAs not the higher £75,000 level for cash deposits. This is protection against your platform going bust, not against you making bad investment decisions 
  5. the single person’s personal allowance was appallingly low in 1982, less than a quarter of a modest pay level, then tax on the rest at 30% plus NI at 9% means the youthful Ermine paying 39% was closer to a modern HRT taxpayer at 42% marginal than a BRT taxpayer at  32%, and paid that high tax on much more of his modest salary than the old Ermine, although that was distorted by pension contributions of the latter 
  6. I deeply detest all sports and have done ever since school, and yet it is quite remarkable that a sport-loathing Ermine is in fact a lot less inactive than much of the adult population of the UK. Just nowhere near active enough to shift the needle on the dial regarding weight 
  7. I actually turned a profit on the latter two over the last three years. But I was using fossil wealth in terms of gear bought while working, and was limited in opportunity by limitations in finance 

28 thoughts on “I want to learn to spend a little more, with grace, with gratitude and with a new map”

  1. Hi ermine, congratulations on becoming a pensioner. I am however, fascinated and a bit confused about the mental tricks you seem to use to partition up your finances. Money is fungible, no?
    As far as I can work out you have:
    1. A defined benefit pension enough to live on, payable in 5 years, and a state pension of not insignificant worth payable 7 years later
    2. A lump of money in a SIPP which has just become accessible, which is enough to live on for at least 5 years.
    3. A lump of money in an ISA
    4. A lump of money in cash
    For the last 3 years you have been able to access 3 and 4. Now you are able to access 2 as well. I’m curious as to why this feels so very different -why you feel so strongly that now you have an ‘income’ whereas before you didn’t, and felt compelled to live on as little as possible. The income from your SIPP is not an income, it’s a lump sum you have chosen to divide by the number of years you intend to live off it. Could you not have played a similar mental game for the previous 3 years? why so compelled not to draw from the ISA, and the dismay at seeing your net worth decline, as planned?
    Partly my curiousity is because I am struggling with some of the same issues. Like you, I have a comfortable (but not luxurious) DB pension waiting in 10 years, so have a finite time for my capital to bridge. the data tells me it is possible with room to spare. And yet it is extraordinarily hard to pull the plug on my regular salary – it feels like destroying my human capital. I have no idea how it will feel to start eroding my financial capital.
    I can only feel grateful that I’ve got ‘income’ waiting for me, and don’t actually have to live off a pot if capital for possibly 40 years…
    If I do manage to do it, I’ll try and let you know how it feels to add to the post FI data points (did you miss TEA for a reason?)


    1. In theory it’s fungible 🙂 I was already a nervous wreck when I started the journey, so I was fearful of the future. And I surrendered the principles that had kept the wolf from the door for my entire adult life.

      I played many cards wrongly, so I ended up with an income suckout which has now ended (well, will do in the next TY). I paid down my mortgage in an era of unprecedented low interest rates. I hoarded that cash because I wanted to have an answer if I had health problems that money could help with (joint replacements and that sort of thing).

      When I started in 2012 Osborne’s changes hadn’t been made – they were transformation for me in enabling me to get that AVC to forestall my DB pension. I thought I would have to use the ISA to compensate for the actuarial reduction of 25% if I drew my pension now rather than in five years’ time.

      So yes, totally accepted – I was an irrational and fearful pussycat, I could probably have evened income out which is probably the rational thing to do. But I came the shortest path for me, looking back if I knew then what I know now would I have done anything differently – probably not, other than switch to the Global fund 😉 In the lean years I won the fight against consumerism, because the fight is not against the spending, it is against the false meaning and associations, and in the first year or so I was recuperating. Spending more then would have been on empty consumerism.

      You’re quite right – TEA (and to some extent MMM) are two others I often read who are over the divide! Indeed TEA identified my disease, although it didn’t manifest in the way he cited.

      And yet it is extraordinarily hard to pull the plug on my regular salary – it feels like destroying my human capital. I have no idea how it will feel to start eroding my financial capital.

      The first part of that was easy for me, I had no choice. Would I have been wise enough to listen to the warnings of failing physical health, had that happened, say like with X? I don’t know. Paradoxically it’s a very hard call to make from a point of strength.


  2. Well, I don’t see you made that many mistakes – you made it, after all! Good enough actually done is better than perfect not done 😉
    I do get the difficulty of applying micawber (also my guiding principle) to a pile of dosh. Hence the value of rules of thumb like the 4%. People need to know how much they can spend (this is why debt is disorientating and easy to market by making the repayments look cheap).


  3. I can see that you plan to continue to contribute to a SIPP. When you get to a point where you want that money, will you be able to cash all of it in or will you have to take an annuity? Will you have to pay for financial advice in order to access it? I ask because I want to pay in small amounts each year to get the £720 but would then want to cash in the whole amount without paying for financial advice in a few years. Want to get the 20% but wouldn’t want to pay for financial advice as the amounts would be small.


    1. @cma – firstly noting this isn’t advice, and that good sources of pension guidance are pensionwise

      you don’t need to take an annuity as of Osborne’s pension freedoms changes in 2014. My SIPP is well over the personal allowance – I couldn’t take that all in one go tax-free. However, I can take it tax-free if I take the 25% PCLS and then take what is left over out in a staged process at the personal allowance (~£11,000p.a.) each year for five to six years. The same will apply to you under current rules, provided you do not have any other source of taxable income in the years you draw out the pension. You can also take the 25% PCLS at 55 but leave the taxable part in the SiPP until you no longer have taxable income and then draw that out.

      I had to pay £500 for financial advice but this was to transfer AVC funds to the SIPP, this was complicated because the amount was > £30,000 and associated with a DB pension although it was a DC savings. Had I simply built the money up in a SIPP I would not have needed to take financial advice to start drawdown.

      You would be wise to talk to pensionwise before you start drawing from a SIPP because it’s free, it’s impartial and it may pick up wrinkles that you may have missed. Pension decisions are something you usually only do once in a lifetime, so it’s not something you gain experience in unless you are a financial adviser 😉


  4. Good on you. Whatever happens, please don’t give up these elegant, articulately crafted, thought-provoking dissertations, they are classy & for those of us not yet at your stage, the guidance of your experiences on the path ahead would be very welcome.

    I wonder if the increasing pain from plummeting quality of life [In our corner of Global Austeritistan] will reach enough of a threshold in the majority of the population that they reconsider their lifestyles. Do even the sea of mindless brainwashed consumers have a tipping point, or will they just keep squirming like the proverbial frogs in the boiler until they are all destitute?

    Maybe the young will look at the deal & think it’s not worth it & drop out, if it’s clearer now that after a lifetime on the treadmill doing soul-sucking jobs you’ll probably still be no better off. I know that if I was starting out now, I’d really think hard about whether anything is worth it (Varsity degrees for starters) & it was already insecure enough when I entered the job market.


    1. Thanks! To be honest I don’t know where I will be going with this, because I feel an imposter now in the PF community with the change in philosophy/approach 😉

      The challenges of plotting a way through a First World working life do seem much harder now. I probably wouldn’t have gone to university because of the debt risks. Or maybe I would have been more chilled about debt, you can’t put an old head on young shoulders. For the more able and more entrepreneurial opportunities are better, but that’s a lot less than half of us IMO. And advertising has become much smarter as well as omnipresent. It was just so much easier to avoid consumer debt 30 years ago.


  5. You will have made a good start on your new year resolution to “read less crap” if I don’t come back on here in a few days to find you’ve written a rant about today’s Telegraph clickbaity article headlined “I have three homes but all my money goes on holidays. Can I retire at 55 and send my son to university?”


  6. Great post, Ermine, thanks for the shout out and ooh, what a lovely Lambo! 🙂

    What some people wouldn’t give to be in the position you’ve gotten yourself into, where you need to plan to spend your money! Kind of reminds me of the film ‘Brewsters Millions’!

    Anyway, congratulations on getting where some of us are aspiring to get to!

    I get how hard it must be – after years of accumulating, living frugally and rejecting commercialism, splashing the cash must be quite an alien thing for you to do, when you are already happy with what you have.

    However, as you say, there’s no need to spend the cash on what the horde on the treadmill are doing, ie shiny new gadgets and wearable tech, there’s plenty of stuff that you value that perhaps you could consider, eg doing more on your birdwatching, photography and what not.


    1. Well, I did invest this weekend in working with someone on getting a camera in our Barn Owl box because they raised three chicks last year. And we have to get in there before any owls appear – he’s done the Suffolk Wildlife Trust training. That’s fun and hopefully should give some nice pictures. Not wearable at all!


  7. Its an interesting time for sure, decumulation is in many ways more challenging than accumulation – there is more honesty involved. I have a feeling that a lot of aspiring FIers hide behind accumulation as a shield from having to make difficult judgements about what they value, i.e. save everything, buy nothing – or rainy day syndrome as I call it. Decumulation forces the issue, especially if you don’t want anyone to inherit (decumulutors must be honest about there mortality). Accumulators should go through the mental exercise of what they would do as Decumulators and hopefully have that inform them how to live better today as well as tomorrow. Its refreshing to hear someone in the FI sphere acknowledging the fact they need to spend more. Its a perfectly rational response but I doubt many others around here would own up to it.


    1. It’s a very big change – accumulation is in some ways an simpler perspective. It’s very hard to envisage the changes to decumulation until it’s right in front of you – I missed enough aspects. Even simple things like discharging the mortgage too early, taking an income suckout which is now ending.

      In the longer run I will probably switch to a joint life annuity in about 20 years time to avoid some of the complexities around estimating my own mortality. Being child-free makes this an easier call as I have no ambitions to leaving an inheritance. That’s the current idea, but much can change by then.


  8. This is such a thoughtful post – and you’ve correctly put your finger on the fact that this period of life is not much explored in the FI blogosphere. There are quite a few bloggers covering the issue of living on very little in retirement, usually through need rather than choice, but that is a very different sort of thing.That makes it all the more important for you to keep giving us your well-crafted perspective!

    I had expected to go into decumulation when I ‘retired’ three years ago at 56, but unexpectedly found myself with a (very) flexible part-time home working arrangement with my employer that has turned out very well for both of us so far. So I’m still living on income for now.

    I can see that the challenges around moving into the different financial phase are as much psychological as financial, and I find myself getting quite tense when I think about the point at which my employed income will end (as it must at some point, either because I stop or because my employer does – and I’m not someone who wants to keep working until I die).

    Many of the things I enjoy now in my almost-retired life are the same as those I enjoyed in the 70s – listening to records, going for a long walk that ends in some form of alcohol or carbohydrate-based refreshment, mooching around a market, hanging out with friends at my house or theirs, painting a room a different colour. I don’t do the gigs and parties as much, but otherwise lots of the things that delight me now also delighted my 18 year old self. This is reassuring.



    1. It’s a funny old game, retirement – work almost seems to chase us out of it, even more determined refuseniks like me.

      Returning to patterns of young adulthood is an observation I can relate to – never really thought of it that way until you highlighted those similarities.


  9. The problem with care expenses arises for the first of you to go into care. After all, the expenses of the second can be paid by sale of the house. The obvious answer is insurance but I gather that firms have failed to discover how to make a living from it.

    The other answer is to ensure that the first of you to peg out does so inexpensively. Presumably the approaching peak codger will eventually lead to changes in the law on assisted suicide. I say this in an entirely sunny, upcheering way: I have no desire to linger on after, say, an incapacitating stroke or an exit into dementia.

    P.S. It’s refreshing to see someone write about decumulation: most PF blogs consist of rather self-centred musings on accumulation. At this rate maybe someone will start writing a PF blog that is dominated neither by decumulation nor accumulation, but instead concerns itself with how best to bob about through life without being a financial moron.


    1. Care expenses are so open-ended there seems no good answer, although hopefully I have a quarter-century to go before this is a hazard looking at my family history. The emergency funds for health I carried were more for some of the elective things that are being rationed on the NHS but can improve quality of life.

      Fortunately I have good health at the moment. I’m certainly with you that those few decades should get us a more rational approach to choosing when I’ve had enough – I’d much rather some of the residual capital enriches Mrs Ermine’s life or goes to change the world in a useful manner through some charity than ventilate an empty Ermine carcass. Hopefully we can find an intelligent way to make this possible in an ethical way by then, should that be the way it goes. I still think Carl Jung’s way is how I want to go – anybody who knows it is their last and wants to celebrate with the words “Let’s have a really good wine tonight.” has style. But we don’t get to choose it…


  10. Nice post Ermine, refreshing to see a different approach to the normal blogging on investing and goal setting. You do seem to be ploughing a different furrow and are happy to do it. Me, i’m still looking at the furrow in the other bloke’s field and wondering how much he’s getting paid for making it? And shouldn’t I be doing likewise instead of ploughing into my own savings? Yes, I am in a deaccumulation phase at the moment and am really struggling with it, partly due to the uncertainty of the future, the fact that I could well have another thirty or forty years of retirement to go, God Willing, and a variety of other factors that I’ll continue to moan about in my blog!


    1. We are quite close in age, it’s interesting that the perspective regarding the other furrow is so different. You made the move more electively, and I can see that choosing the time of turning point must be hard – the ‘what if’ of the road not travelled is always there.

      For me the change came as a result of a crisis – although the experience itself wasn’t great it gives me greater peace with the fork in the road because the other path blew up 😉 As Jung said – “the experience of the self is always a defeat for the ego” and I experienced that, in finding an otherwise regular career derailed 8 years short. Looking back it was all to the good because I would have wasted eight years of life earning money I didn’t need, but it didn’t feel that way at the time!


  11. I certainly feel that all our experiences in life, whether good or bad, must have a lesson in there for us, so we should learn to try & see the situation from as many different angles as possible to tease out any subtler clues.

    Also there’s no need to feel like a fraud if you are writing a finance blog yet are not only accumulating – you can easily widen the scope [without changing the pinciple] to living within a person’s means. Therefore if you can afford to splash a little cash now, it still doesn’t change how you got there. It can also be a good thing in that a lot of people want to see frugality as a means to financial independence as inevitable, unbearable suffering in poverty for ages.

    Your mission now can be to show how much it’s worth the delayed gratification, because you’re happy now while still sensibly safe financially. Your musings on current events generally, social/financial/history/culture are in any case interesting enough in their own right that I suspect many of your readership would look forward to regardless of your status. My aspiration is to be a Spumante humanist for example. ( vs Champagne socialist 🙂 )


  12. We still hew to good old frugalism. Frinstance:

    Until Feb 28 we shall be re-using our 2010 calendar, and from March 1st our 2011.


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