2020 was our 8th full year of “retirement.” While much of the world seemed a bit more chaotic than usual, we were fortunate to be largely sheltered from any abnormality.
We had a pretty good year – we started with a big ski trip to Japan (Jr’s 1st), traveled a bunch locally, had a baby, and joined a country club. We also upscaled our housing, our taxes, and our domestic staff.
These things were not inexpensive, but even so our spending was no higher than our most profligate travel years (just 3x our 1st year.)
2020 Cost of Living
Here is a rough pass at our 2020 cost of living. These are mostly estimates since we stopped tracking expenses a few years ago, so numbers could be 5-10% higher.
(Numbers don’t add perfectly due to rounding)
| Expenses | Monthly | Annual | $/day |
| Housing | $2,800 | $33,700 | $92 |
| Health insurance | $26/person/month ($79 Jan - July, $105 Aug - Dec) | $1075 | $3 |
| Transportation | $275 | $3,150 | $9 |
| Food | $1,575 | $19,000 | $52 |
| Entertainment | $275 | $3,150 | $9 |
| Misc | $525 | $6,259 | $17 |
| Total (Core) | $5,550 | $66,600 | $182 |
| Other | $4,500 | $56,000 | $150 |
| Total | (~$10,000) <--- | $122,600 | $335 |
That “Other” category is pretty big (~$56,000) so here is a break down:
- Baby – $18,000 (see the full breakdown of expenses)
- Childbirth – $5,000
- Baby hotel – $6,000
- Postnatal home care – $1,800
- Nanny – $4,200 (3 months)
- Crib, etc… – $1,000 (most baby stuff now just flowing through a circle of friends)
- Taxes – $12,388
- Income Tax – $10,288 (2019 taxes paid in 2020 – intentional due to harvesting massive capital gains)
- Self-employment taxes – $5,000 (paid throughout 2020 as estimated taxes – great way to get tons of award points!)
- CARES Act stimulus income – (-$2,900)
- Montessori pre-school – $10,000 (includes some summer sessions)
- Country club – $9,500 (joining fee and ongoing dues)
- Donations, charitable and political – $3,000
- Reverse inheritance – $2,000
- Home purchases – $1,000 (dishwasher, shelf, air fryer, etc..)
- Travel – $0
- Japan ski trip – $3,500
- Local travel – $1,000 (mostly used credit card free night certificates)
- Cash out rewards points – (-$4,500)
Analyzing our Expenses
20 years or so ago when we first started planning early retirement, we had this idea that we would increase our cost of living over time if the stock market allowed. Which it did.
So a reasonable (and oft asked) followup question is, “If the market dropped significantly, would we reduce our expenses in kind?” I thought we would, probably, but it turns out the answer is no? Maybe if the downturn was longer… (markets already back to all-time highs…) The main thing is we continue to spend less than 4%.
Our core cost of living is now about $66k/year. This is about 10% higher than last year, in part due to moving into a larger apartment at Christmas time 2019 and the remainder because of a ~5% decline in USD purchasing power (the core numbers in the table above are just bumped up 5%.)
Life is pretty simple. We’ve designed our lives to have a nice home in a city center within easy walking and biking distance of everything we care about, and easy access to bus and subway. We continue to be car free and care free.
For our non-core expenses, the majority ($28k) is child related – the birth of our 2nd child (and related expenses) and pre-school for our eldest. Jr starts public elementary school in the fall which reduces school costs to ~$0, and kid #2 probably won’t be born again until his mid-life crisis.
We also had 2 large “1-time” expenses, the up-front cost of joining a country club ($8k) and a large tax bill due to harvesting massive capital gains ($10k.)
We also pay some self-employment taxes, or as I like to call it – an involuntary annuity purchase with reasonable ROI. These wouldn’t exist without blog income, which also reduces our ability to do tax-free Roth conversions and capital gain harvesting. You win some, you lose some.
This brings our total cost of living to ~$120,000 – $335/day.
Average spending over the entire 8 years of early retirement is much lower at $82k/year – $225/day.
For reference, here are the annual spending summaries for the previous 7 years: 2013, 2014, 2015, 2016, 2017, 2018, and 2019.)
Photo Tour
2020 in photo form – some international travel at the beginning, local travel in the middle, and then simple family life for the duration.
 International travel |  Local travel |
 Biking 3000+ km |  Best Bros |
 A little foot soak after a long day |  Yummy homemade carbs |
 Reading with the kids |
Conclusions and Projections
2020 was a good year on a personal and family level.
2021 seems pretty straightforward – we don’t plan to travel and will just spend our time and money in a “normal” way – biking, swimming, tennis, painting, baking, etc…
So core expense of $66k. Income taxes will be zero or in that range. We’ll also get some stimulus payments and 2 full child tax credits.
Jr starts elementary school in the fall, which will reduce our costs by ~$1k/month for Q4 and beyond, but most likely we will have our nanny for the full year.
According to my spreadsheet, this puts our total cost of living for 2021 around $100k.
Thank you for reading and for your support. I hope you have a great 2021!
Please share your GCC love on Twitter, Facebook, and Instagram.
Jeremy, Winnie, Julian, & Jaiden
Go Curry Cracker!
Boy is growing up quick!
I thought food would be cheaper in Taiwan? Maybe I’m just thinking about eating all the xiang chang and cong you bing and lu rou fan from the side streets. That’s the best!
And the fruit… the lychee.
I’m not sure what we spent exactly. But probably less given we didn’t fly anywhere or buy any big ticket stuff.
Actually, we had a night doula for a while. So that was costly! But worth it.
Sam
Yeah they grow up fast… I guess you were in Taipei 5-ish years ago?
All that stuff is pretty reasonably priced… most of our prepared meals go in the $3-$10/person range with the occasional $30-$50/person meal. Dairy is a bit pricey – a pint of Haagan Dazs is ~$10 for example. Add some coffee and bubble tea and it’s not too hard to get to $50/day for all food.
Having help with the baby at night is truly priceless.
Hmm, feels like 2021 has a $10k allocation towards the n+1 written all over it….
We did have 2 more embryos that we could have tried, but we have decided to stop at 2 kids.
I always enjoy these. I find it interesting that you have let your expenses creep up. Why not, if you can afford it? :) You could always dial it down if you needed to.
I chose not to ski this year due to the pandemic which freed up cash similar to you not traveling.
Wish you a and your entire clan a great 2021.
Jr and I were hoping to ski a few weeks ago but that was also cancelled due to pandemic. Maybe 2022…
Hope you have a great 2021 also, thank you.
The expenses are certainly creeping up but why not? You have the money so might as well enjoy it right?
Would love to go skiing in Japan one of these days. Have heard lots of good stuff about skiing in Japan.
Hakuba where we went is really nice and there is a sweet Marriott redemption in the village… hotel was $500-$700 USD per night during ski season but we stayed 5 nights for only 100k points.
Maybe I missed this, but what is Reverse inheritance?
We are giving money to our parents rather than the other way around.
Wow, babies have gone up in price. I remember ours cost something like $1,500 each when we had them. And wouldn’t you know they are way too old to sell now for a big profit. We spend about $100K in retirement with no kids at home and no mortgage, and that’s less than half of what we could budget if we wanted to, but it is kind of hard to spend more than that in this low cost of living rural location. Plus we are having all kinds of fun. We also are members of a country club but just for the tennis. And if we just had some skis we could do that here, there is like a foot and a half of snow here in South Arkansas and its still nearly a white out blizzard. This is a once in a lifetime southern storm.
Hope you can stay warm and cozy. I left the Midwest in 2000 after a blizzard experience as I didn’t care to repeat it.
I think this is about the upper limit for us… not really sure how we could spend more until college. We might do a trip to the Maldives for my 50th birthday in a few years which could be pricey, but I’ll try to use points for the hotel.
Great report,
I like the approach you are using to adjust your living expenses as long as you stick to the rule:
“The main thing is we continue to spend less than 4%.”
The approach allow you to enjoy your wealth while maintaining a reasonable safety margin.
I think your approach is now full FatFI.
We were fortunate to retire in the early stages of a prolonged bull market… compound interest is a pretty amazing thing.
Why not, if portfolio withdrawal *4% and blog income is more than core expenses should be good right?
I’m amazed at the healthcare costs everytime =) Although we stay in a cheap country, where you can get a 3 bedroom home in an expensive city for $1k per month, our healthcare payments are similar to the US model. Not sure at which point that breaks, but it’s already unaffordable for 90% of the population. Also, schooling is quite expensive here now, since public schooling has collapsed. I guess that’s the joy of trying to live a first world experience in a developing market. At least the housing is cheap, in monetary terms, for now so that offsets it somewhat.
Enjoy 2021, what a wonderful time to be FIREd, lots of time to spend with your small kids and wife =).
Yeah smoke em if you got em
Which country are you in?
2020 seems like a very exciting year for you and your family. The best thing is that you all stayed in Taiwan. I know my wife and I have been so fortunate to be here in Taiwan as well.
Your little one looks like he is growing pretty fast. That is exciting to have a beautiful family, and being able to enjoy the pleasures of early retirement to spend time with them.
2021 will be quite straightforward. It seems you all will save some more money in 2021 with your oldest going to elementary school, and less travel.
Cheers to a great 2021.
Great update on how you and the family are doing. So envious of your healthcare costs. The boys are growing quickly.
Our best to you in 2021.
Off topic, but word on the street is that Vanguard is going to allow rollovers and admiral shares in their solo 401ks; has anyone heard this?
How did Winnie’s blog stop updating？
She still posts on Facebook sometimes but she mostly lost interest in blogging…
Can you ask Winnie to write a blog post on the IVF feasibility of a US couple (both US citizens) going to Taiwan on a short trip? If it is feasible, what would be her suggestions, like any health care plan to buy ahead, the minimum days need to stay in Taiwan, or so? That will be huge help to a lot of people.
I’m afraid Winnie has mostly lost interest in writing these days…
But… generally you are looking at a 2-4 month process, depending on if things are successful with the first implant (W was never pregnant on the first try.) I’d lead towards the longer end of that time range.
Taiwan also has a thing where they can only do IVF for legally married couples, so you would need a marriage certificate and a copy that is translated into Chinese. I’d call ahead to your IVF clinic of choice to discuss in advance.
Oh, BTW, they can read, write, speak Chinese, and like Chinese medicine.
You all are so open about your expenses I love it! Kids cost a lot of money though 😅
I feel like my biggest hurdle right now is American healthcare. Your healthcare costs are envy inducing!
Cheers.