Retire Early Lifestyle
Retirement; like your parents, but way cooler

 
 

Retire Early Lifestyle Blog  Free Newsletter Subscribe/Contact Us

Advertise on RetireEarlyLifestyle.com info here

In 1991 Billy and Akaisha Kaderli retired at the age of 38. Now, into their 3rd decade of this financially independent lifestyle, they invite you to take advantage of their wisdom and experience.

The Cost of Working

Billy and Akaisha Kaderli

As you contribute every month to your 401(k), you've probably asked yourself, "Do I have enough to retire?" But perhaps you should be asking, "How much am I paying to work?" After all, maintaining a career -- and the lifestyle that often accompanies it -- isn't free.

How much is work costing you?

Housing, transportation, and taxes make up most of the expense of working. But there are other areas as well, like clothing and eating out that take a sizeable bite of your personal and family time.

Houses and rent in high-employment areas are more expensive than those in "depressed-employment" markets. So you need to live near job opportunities or be willing to make a long commute, the latter of which increases your gas bill and adds wear and tear to your vehicle, not to mention your psyche. Your spouse needs a car, too, to efficiently run the home and to haul the kids and pets around. If both of you are pursuing careers, then you have to add day-care expenses to your monthly bill.

According to AAA the average cost of owning a car (May, 2014) is 59.2 cents per mile, or $8,876 per year based upon 15,000 miles of annual driving. And assuming state and federal taxes take 30% of your income, you'll need to earn $11,540 just to cover the costs of car ownership per a tax calc. A daunting thought indeed.

 

Some professions require that you keep up an image, including any or all of the following: a house with the right address, a car that is suitable for a partner of a firm, impressive watches or jewelry, and professional clothing with the necessary dry-cleaning expenses. You are encouraged to represent the company itself with proper shoes, handbags, or briefcases, essential computer traveling cases, and cell phones. There are also pricey haircuts, manicures and nail buffings, hair coloring to look young and vigorous, or perhaps a membership to a country club or golf lessons so you can schmooze with potential clients.

Keeping fit can be expensive, too, with a gym membership or personal exercise equipment quickly racking up bills.

When we were working, we treasured our moments at home. We didn't want to spend our precious time cleaning it, so we employed a service. It was the same for mowing the lawn, pruning the trees, or planting flowers each year.

There are social pressures, too. Working couples are often so busy that getting together with family and friends causes the social calendar to be scheduled far in advance. Small yet significant moments with children can disappear before our eyes, and having unstructured time to simply unwind seems a distant luxury.

Houses themselves aren't free, either. They must be adequately insured, repainted, renovated, recarpeted, and otherwise maintained, with roof repairs or plumbing problems adding sizeable sums to the minus column. Don't forget the cost of utilities. The larger the home, the more space you must heat or cool. If people looked at owning their home in the same way as running a business -- tracking every dime they've invested, plus the hours of their labor to maintain it -- they would be shocked.

A recent Wall Street Journal study found that "the cost of keeping a typical home up to current standards for 30 years is almost four times the purchase price." The sobering conclusion, according to the Journal: "Almost every house, no matter how recently or expertly built, is a money pit." It's enough to make the "Home Sweet Home" sign in the kitchen shudder right off the walls.

You might be enjoying the recent run-up in property values. It's a terrific feeling until the home is reassessed and your property taxes increase to reflect that new value. Are you now paying $3,000, $4,000, or even more in annual taxes for that privilege of ownership?

These days, both partners want the chance to express themselves in a career or to pursue a mental or creative challenge. Since each spouse is working, taking the time to cook at home is not always a convenient option. Constantly eating out, rushing to pick up something on the way home, or using packaged microwave products definitely ratchets up your food expenses.

And then there are the yearly vacations. Spending thousands of dollars to justify the enjoyment of a few weeks off so you can tell your co-workers what a fabulous time you had feels great, until your tan is gone and the credit card statement arrives.

This whole scenario is starting to add up.

 

What to do?

1. If you are preparing for retirement, you may want to consider different housing options. Are you planning on staying put or moving to a more economical location? Will you need the same amount of square footage?

And why not try someplace new? There are many ways to downsize your housing expenses. You could rent or purchase a condo with amenities that management takes care of for your enjoyment. You could move to a sailing vessel or houseboat, or maybe an RV. We know many RV and boat "full-timers" who have long ago given up the conventional house. It's not because they cannot afford one -- it's that they prefer the unhampered lifestyle.

Or consider a move to a less expensive country. There are expats in just about every corner of the world, and this is the time of your life to live your dream. When we first retired 24 years ago, we shared a spectacular house with some others on the tiny island nation of Nevis, in the West Indies. Since our friends worked all day, we had a mansion with a spectacular view overlooking three islands all to ourselves. Upon returning to the U.S., we slowly traveled through the West full-time in a fifth-wheel trailer. We know others who have done house exchanges in return for living in a faraway land. There are so many options, you only have to use your imagination and look for opportunities. Besides, you can always buy a house whenever you want... they're everywhere!

2. Take a look at your transportation outlay. Will you continue to need two cars? Will you be able to get by with other choices, like public transport, a moped, a golf cart, or a bicycle?

For instance, we live in a location that is within walking distance to grocery stores and restaurants and has shuttle service to the airport. Our entertainment options are also close by.

3. Exercise during retirement can be a daily part of life. Walking is free. Tennis, hiking, biking, rollerblading, tai chi, or yoga cost almost nothing.

4. Dining is an area of expense in which you have great control during retirement. Perhaps going out to lunch is a better value than meeting friends for dinner. Or better yet, learn to cook! Eat fresh! It's healthier and more economical. You won't be nearly as rushed as you were when you were working, and being smart in this one area can give you substantial savings.

5. Don't forget the impact of lower taxes once you're retired. Having no earned income means you'll pay no more payroll taxes. Now is the time to simplify your tax structure, before you leave your job.

Upon retirement, you'll find that many of your expenses can be dramatically reduced. Once you understand your cost of working and deduct this amount from your budget, you might find that you're much closer to your goal of financial independence than you realized.

Free Newsletter, Subscribe here

About the Authors
 
Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurerís Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on Amazon.com.

Source:  WSJ, Repair Costs Exceed A Home's Purchase Price

Billy and Akaisha continue to journal and photograph their world travels.

HOME   Book Store

 

Retire Early Lifestyle Blog      About Billy & Akaisha Kaderli      Press     Contact     20 Questions     Preferred Links     Retirement     Country Info    
Retiree Interviews
      Commentary     REL Videos