Advice on transition to a fixed income stream ?

[lost and found]

Hi everyone

I'm looking for some advice (or resources) on how to transition from High income / High saving rates to living off a fixed income stream?

My wife (37) and I (39) together with out two children are approaching early retirement, probably in the next 12 months. However, with high incomes there has always been a degree of flexibility in our spending and whilst we've tracked our expenses we've never budgeted per say.

I'm mindful that my wife and I have different money personas and I want to make sure that my wife still feels she can spend on things she gets valued from, but that we have some guardrails around how we manage our money so that we don't end up having lifestyle inflation and or compromise the portfolio. Ideally way of putting out finance on autopilot so we can enjoy life.

Hopefully that makes sense.

Thanks

[Greystache]

My wife and I retired at age 55 around 8 years ago. Like you, we had a good household income and lived well below our means but had no formal budget. About a year prior to retirement, I started mapping out where we spent our money. Kind of like reverse engineering a budget. Then I altered this budget based on what I thought our retirement would look like. So I changed allocations for things like travel and health care.  Once we pulled the trigger and retired, I monitored our actual spending and compared it to our budget on a monthly basis. I think I did this for the first two years. I changed the allocations for each budget category based on actual spending but our total annual spend was very close to our budget. After a while, we got more comfortable with our ability to match our spending with our budget and now we only check our spending at the end of the year. Even though we no longer consciously monitor our spending, we always hit our budget right on the nose when we check at the end of the year.

[ddoren]

Similar to Greystache, we started about a year out. In our case we were living in a country where we weren’t going to retire, so we left a fair bit of play in the budget to account for lifestyle differences. We then set a directional budget for the year and then lived on that only while we sent any extra salary to savings. Each month we did a true-up and compared theoretical vs actual expenses. We reset and retuned a bit here and there during the pre-retirement year. By the time we pulled the trigger on an early retirement, we were fairly sorted out. In retrospect this was more about building confidence in our thinking/planning than it was about actual numbers. Hope this helps

[Cassie]

I would live on what you intend to spend for a year and see how it feels. You don’t mention the ages of your kids but they do get more expensive as they grow up. Are you paying for college, have you figured out the cost of your healthcare, how much travel you want to do and other discretionary expenses?