In contrast, Mrs G and I are lucky enough to be SWAMIs in our late 40s. Our current budget is $166,200. We have one teenager living at home and another adult child who is still a partial dependent. Our ‘child-free’ retirement budget is $140,000, so pretty similar to what you are saying you need. It is, most definitely, NOT a mustachian budget. We have a nice family home, fully paid off that will need some ‘right-sizing’ when we are kid free.
The big difference for me, is that at $140k, we can live what I’d consider to be a luxury retirement, NOT merely a comfortable retirement. This includes:
* Good food – fresh fruit and veg, gourmet butcher, fish markets
* Eating at cafes and restaurants once a week (myself) or twice a week (Mrs G). A couple of times a year we’ll go somewhere particularly fancy.
* We’re not big drinkers. Maybe we’d have one bottle of wine a week between us. The bottles we have would be $20 to $30 as a rule, but occasionally will open something special.
* Private health. Limited medical expenses to date, but starting to increase the amount we spend on allied health pretty consistently – physio, dental, optical are all increasing. A bigger allowance in our retirement budget than we have now.
* Mrs G has a regular beauty routine in the budget – I don’t ask questions, but I do admire results. My ‘beauty routine’ involves the local Italian barber who keeps commenting that I’m looking more and more like my father (see previous post).
* We don’t currently have a cleaner, but there’s room in our ‘retirement’ budget for one
* We have a gardener who comes every week in summer, every two weeks in autumn and spring and once a month in winter. This expense is in our ‘retirement’ budget, but I suspect will disappear as we ‘right-size’ to a lower maintenance place.
* We also have a pool maintenance guy who comes a couple of times a year. Again, in our ‘retirement budget’ but will disappear as we ‘right-size’
* We go to the beach for roughly four weeks a year, staying in nice self-contained apartments overlooking the water. Because our youngest is still in school, this corresponds to school holiday periods when it’s reasonably expensive. This will go to eight to ten weeks (outside of school holiday blocks) when we are kid-free
* Our current budget allows for one three to four week overseas family holiday each year (including our not-at-home adult child). Again, currently taken during school holidays, so not the cheapest option. Our kid-free budget allows for one four to six week overseas holiday off-peak for the two of us and a second shoulder season three week holiday where we’ll pay for the two of us, plus we’ll cover economy airfares for the kids (if they want to join us).
* Six to eight interstate trips a year, either visiting family or little getaways.
* An allowance to replace each car every seven years with a new model. One car is a luxury brand and the other is a mass brand car. We currently have two cars, but I suspect that we’ll move to one luxury car once our youngest moves out of home. Edited to add: Our 'oldest' car, the luxury one, is currently five years old. It's still amazing and I think we'll hold onto it for longer than two more years. But we have a replacement budgeted
* An allowance to do a small renovation every two years – eg a bathroom or a kitchen or new carpets throughout the house, etc
* An allowance for one-off things that are nice to haves – we call it our ‘wishlist’. Want a new lounge suite? Sure, if there’s enough money in ‘wishlist’ to pay for it.
Mrs G and I carve out a couple of hours every few months to reassess our spending and our budget. We are very conscious of our spending and we work to optimise it for our own ambitions.
As an example, with our overseas travel we don’t stay in luxury hotels like the George Cinq Hotel in Paris or The Dorchester in London or The Waldorf Astoria in New York, as the experience doesn’t warrant the expense over a mid-range hotel, in our opinion. But we don’t hesitate to spend on a unique luxury experience on safari in Africa or near the ‘wild wall’ part of the Great Wall in China or to stay in a castle in France or an ancient Roman villa in Sicily. We feel very lucky to be able to afford such a luxurious life.
Similarly, we manage our costs around things we don’t get value out of. No PayTV, not worthwhile for us. No money spent on food delivery. Pre-paid mobile phone plans, refurbed handsets held until they die. We review our insurances every year – we still need them, but if shopping around saves us money that can go towards our next holiday then it’s a massive win.
If you genuinely feel like you can’t live a luxury lifestyle on a retirement income of $140k per annum, I would encourage you to think about what expectations aren’t being met, review your budget or offer up a case study for critique.
