The Retirement Newsletter: Don’t do as I do, do as I say

Issue Number: 183 (36) — not following my own advice!

Nick

Dec 01, 2024

Photo by Author — Introducing the Grey Wagtail

Welcome

Welcome to issue number 183 (36).

This week, I reveal that I cannot follow my own advice.

So, what have I done?

My advice

In issue 177 (30) — Moving from saving to spending — I discussed how we need to move from a saving to a spending mentality in our retirement, and I said:

“I am not suggesting that I go mad and splurge on big-ticket items such as boats and cars (all of which have hidden recurring expenses). ”

And what have I done?

What have I done?

Well, I went and bought a narrowboat. So much for:

“I am not suggesting that I go mad and splurge on big-ticket items such as boats”

I bought a 57 foot (17.4 metre) long, 6 foot 10 inch (2 metre) wide boat. (If you are unfamiliar with narrowboats, they originated on canals in the UK. They were designed to move cargo around the purpose-built canals. These canals tended to be narrow, hence narrowboats.) You can see how it’s all going over at my YouTube Channel and a video about taking ownership: The Adventure Begins: Taking Ownership of My First Narrowboat.

This move fits in with one of my many retirement plans, which I wrote about in issue -121 (so, 121 weeks, or over two years): What am I going to do once I retire?

Essentially, there were five plans:

The ski plan — spend as much time skiing as possible. My knees put a stop to that plan.
The travel plan — Travel the world. COVID-19 took the shine off that idea.
The Europe plan — Travel Europe in a camper van. One word — Brexit.
The UK camper van plan — Explore the UK in a camper van. This may still happen.
The narrowboat plan — Buy a narrowboat and explore the waterways of the UK — this is happening.

However, I was not particularly set on any of the plans, but if you had asked me back in September 2021 when I wrote the newsletter, I would have said narrowboat was towards the top of the list.

But I thought getting a boat was an unobtainable goal, as they are not cheap to buy and have running costs. Hence, I tried to put myself off the idea. I took a course (see Awareness and Boats) and went on a narrowboat holiday (My first month of retirement). But that only made things worse. I was hooked.

So how did I manage it? And what impact has the boat had on my pension?

Impact on pension income?

In short, getting the boat has not directly impacted my pension or income. So, how have I managed to do that?

Many years ago, I set up something I called the “naughty fund”.

Pension Savings

When I started taking saving for my pension seriously, I looked at my regular income, worked out the maximum I could put each month into my pension, and still have a reasonable lifestyle. I decided that any money left over at the end of the month would go into what I jokingly called my "naughty fund”, which would be used for doing something extravagant when I retired. Something that would celebrate being retired.

The fund was for doing something experience-related, and I initially thought this would be a round-the-world trip. Instead of buying a possession, it would be an expenditure based on experience.

I had three rules for this fund. The first was that it would not be a regular savings fund, and if I didn’t put money into it for a month or two, it didn’t matter. The second rule was that if I budgeted for something, for example, a holiday, and there was money left over after the holiday, that would go into the fund. The third rule was that any unexpected income would go into the fund.

I set the fund up as a stocks and shares ISA (individual savings account), which in the UK has a limit to the amount you can invest in a year. Any interest earned or growth of the ISA is tax rate.

I decided to manage the ISA myself and pick the stocks and shares. This was, after all, my “naughty fund”, and I thought I would have some fun and gain experience in the financial markets.

The "naughty fund” worked surprisingly well.

I built a surprisingly large nest egg by paying small amounts and playing around in the markets. Much of the market gains were due to luck rather than financial skills, but the investments did well. Any dividend income I received was invested back into the fund, and while there were some bad years over the long investment period, the fund performed better than expected. I was surprised at how much I had in the fund at retirement.

I used the “naughty fund” to buy the narrowboat and left sufficient money in the account to run it for many years. Hence, the purchase and operation of the boat do not impact my pension overall. However, it could be argued that I should have invested the money directly in my pension, but we all have to have some fun in our lives. We all need to do something daft and have something to look forward to in our retirements. Hence, the “naughty fund.”

Have you set up a "naughty fund” for your retirement, and do you have some outrageous plan that you plan to execute? Please let me know in the comments.

This week in the Retirement Hustle

This week in The Retirement Side Hustle I look at Video Editing Software.

In the video, I begin by discussing the video editors I use. I introduce iMovie and then move on to discuss Final Cut Pro and Camtasia. I discuss the pros and cons of each program and why I still use them. I also introduce two novel pieces of video editing software: Descript and Audiate.

The Retirement Side Hustle Newsletter is subscription-based. However, each video comes with a free minute or so that allows you to confirm the content, and if you take out a free subscription, you get full access to one edition.

Nick’s Wanderings — The Grey Wagtail

As I now have a narrowboat, I will be sharing links to videos of my adventures, this week, how it all started: The Adventure Begins: Taking Ownership of My First Narrowboat:

Next week

In next week’s issue, I will discuss how I am struggling with dark mornings and early sunsets in retirement. These never bothered me when I worked, but they do now — which is odd.

Thanks

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Until next time,