It's been half a year since I retired early, and I've not regretted it for one moment. The time has flown by. These first six months have been a good mix of the more mundane things (like everyone, I have my chores, but I now do them when I want), enjoyable times catching up with friends (when I would previously have been at work), and exciting trips to France for skiing, the Czech Republic and Germany for running events, and the UK to see my daughter.
When I decided to retire early, I wasn't sure whether I could afford it. That's where my blog started, to record how much my early retirement costs are, and to share the information so that others who are thinking of doing something similar can look at this "real life" cost information to help with their own decisions.
Now that I've been keeping track of the costs for six months, I'm getting some useful data. It's not the whole story because some costs only come along once a year or come as a complete surprise (like my broken car windscreen this month!), but it is giving me a good idea of whether my early retirement is sustainable.
I'll have a look at the June numbers in a moment but, before I do:
A recap that for Sally and me, we assumed a before tax retirement income of £50,000 ($61,692) per year, which equates to an after tax income of £3,700 ($4,567) per month. This is therefore the budget that we are wanting to live within. We set this as our budget because I thought it should be enough for a comfortable lifestyle and I'm confident that our savings and investments can generate at least this amount of income (and hopefully quite a bit more).
The aim at the moment is to find out how much it costs us to live for our normal life. We're therefore living pretty much the same as we used to, and seeing how much it costs. We are trying to make some smart choices, like not always shopping at the most expensive supermarket, but we're not sitting at home doing nothing just to reduce the cost - we've worked hard to be able to retire early so we want to enjoy it.
Right off the bat, I should say that, for the first six months, our costs have been more than our budget, by quite a lot!
But, despite this, I still think that we will get to live within the budget in due course.
So, here are the numbers for the month of June, the six months and also the monthly average:
Looking at the month of June, our cost of £4,379 ($5,405) was more than our budget of £3,700 ($4,567). The costs that hurt us this month were:
Holiday (for our July/August trip to UK we booked return flights from London to Geneva, 5 weeks car rental and a week in a holiday cottage).
Going out costs were high because there were a lot of functions connected to the end of the academic year at the school where Sally teaches.
The electric bill was high because it is over 40°C every day so the expensive air-conditioning is working overtime.
But I think the monthly average cost over the six months is the more important thing to look at. Unfortunately, we're still overspending on this measure, with an average monthly cost of £4,760 ($5,876) compared to our budget of £3,700 ($4,567). Despite the current overspend, I still think that we can live within our budget because:
We've already cancelled the Cleaning/Gardening Service of £115 ($142) and so we won't have these costs going forward.
Our grocery costs are high because Dubai is expensive and we also have our son at home for another month or two until he goes to university. I think we would reduce this and save £322 ($397) for just Sally and myself if we were living in Europe or North America.
Holiday and overseas running events - the average monthly cost is £1,184 ($1,462)! If we carry on spending at this rate for the whole year, then that would be an annual cost of £14,208 ($17,544). There is no way we will spend this much normally, and I think we will save at least half of this, which would be £592 ($731) a month.
The above three items would save us £1,029 ($1,270) which would reduce out average monthly cost to £3,731 ($4,606), which is pretty much on our budget of £3,700 ($4,567).
There will be some other ups and downs. For example, we haven't yet had the cost for car insurance this year, and fuel costs in Europe or North America will be more than in Dubai, but on the other hand, eating out will be much cheaper in Europe or North America.
I always feel that these blog posts about the costs are a bit boring and nerdy. However, it is exactly this type of information that I was searching for when I was trying to make my decision about whether I could afford to retire early.
For those interested, the costs for each month are shown below. If you want to see my comments for a particular month then you can go to the blog post for that month (I've put a link to the blog posts for each month below the table).
Links to previous monthly cost blog posts:
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