134 Is The Magic Number, Will It Be Enough?
Updated: Oct 24, 2020
So, if you read my last post, you will now know that I decided to retire at 43, I'll be 44 when it happens in just 58 days, I've got roughly $1m dollars, I plan to live until 100 and I need to spend $134 per day to not have to get a job for the next 56 years.
OK, so you're all caught up, back to the task in hand, will 134 bucks, 105 English Pounds or 2100 south African Rands be enough for me, the missus and Winston the pupster to live a decent life without having to break too much of a sweat? Well friends, lets find out.
Lets make this easy and convert it into a monthly income which will be roughly $4, 000 (or 3,150 pounds or 63,000 Rands)
So the following bills need to be paid:
We paid of the mortgage when we moved form the UK to SA (one of the reasons for the move is SA is cheaper than Blighty) so we don't have that major bill. Win!
We recently installed solar panels and apart form a bit of paperwork we're waiting for, that will essentially make us energy neutral e.g. free! for at least 20 years. There is no mains gas supply in SA and the bottled gas for the kitchen lasts over a year and costs less than $70 so lets essentially mark energy as free (I'll roll the $6 per month for gas into something else)
Property taxes or rates which cover, water, sewerage, refuse and general city maintenance costs on average $200 per month.
Home & Car Insurance is $200 per month as we've already down-sized the fleet to a couple of minis, an Audi A7 (which I'm selliing) and a 1973 Ford F100 truck that needs restoring and I can't quite part with despite knowing it's a money pit.
Petrol and Vehicle Maintenance will drop to around $150 per month as I won't be driving 50km a day to work anymore.
Health Insurance is $350 per month but also has a savings account to build up for emergencies so I'm going to assume that will cover health in totality
TV, Music Streaming and Internet is $100 (internet is expensive here but super important to me)
Domestic Help is $200 per month. I know! that's a luxury we shouldn't need but I love not having to do cleaning and ironing so I've cut it by 50% so I don't have to spend a large part of my life doing something I hate. Plus it's creating a job for someone else.
Winston's food and bits count in groceries but Vets are expensive so lets assume $50 get squirreled away to maintain his full puppy power.
Home Security is a necessity here so we have personal armed response panic alarms which cost $10 per month for us both. Let's double that to maintain cameras and an alarm. $20
Groceries is the big boy, this is all food, drink, pet stuff, take out and eating out. That runs to around $1700 per month.
Miscellaneous charges like bank charges, maintenance and the like costs around $200 including contingency money.
So that pretty much covers the bases and comes to around $3,020. But wait, where is the fun I hear you say?
Mrs H and I both pay ourselves an allowance that covers cellphones, clothes, gadgets (for me) make-up (for her) and generally anything we want for ourselves including socializing with friends (I've included socializing together in groceries. We take around $665 each per month for that (recently reduced form $1000) so if I add that, we have a life worth living.
So that all comes to a hefty $4,350 per month which firstly just overshoots the runway, but secondly feels fixable. I'm calling it, we're going to cut $500 off the grocery bill to $1,250 ( which still feels like a lot) and make the official proclamation of:
Yes, I can retire on $134 per day and live on $4,000 per month. (but only because I blasted my mortgage to zero, bought some solar panels an tighten up on the food shopping.)
OK, so that's a weight off the shoulders (and a weight off the waistline when I cut the grocery bill) and I feel I've kept it fairly simple but without missing much. so lets recap:
I'm going to start the journey with $1m or thereabouts
Stop working and give up my salary completely
Mrs H will work for 2 more years (or as long as she chooses to)
We'll live on her salary plus any side-hustle income I can generate from my planed endeavours (more about those later) for the next 2 years.
After that, if she decides to call it a day, we'll begin to live off our savings
We'll live on the equivalent of $134 per day and pretty much maintain our current lifestyle
Inevitably following our passion will lead to a couple of side-hustles and passive income streams
All of this will be inflation protected
We'll plan to have a 10% annual return on our investment at a 4.5% inflation rate
We'll re-balance the whole thing each year and hopefully increase our living standards so we can travel more and enjoy life to the full
We'll live to 100 and leave behind the original $1m for a little inheritance for the (now self-sufficient) offspring or the cats home depending on the mood we're in when we're 100.
I like this plan a lot and I really feel like it will be better than that as I think I can invest for a 12% return or use my skills to make a little extra pocket money to invest or our expenses will go down a fair bit., I think we'll do better than we think and I'm excited about that.
I want to travel more and I have along bucket list and a long time to do it so I think while I'm waiting for Mrs H to join me, I'm going to focus a bit of time, but not too much on some cash generating ideas, soem will be short term and involve high effort of high reward over the next 24 months and the others will be super low effort repeating income that will give us a nice little trickle of cash into the pile for the long term.
I think it's going to be awesome and 58 days cannot pass quick enough!
Until next time, cheers.