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)

($79 Jan - July,
$105 Aug - Dec)
Total (Core)$5,550$66,600$182
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
  • 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

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: 201320142015201620172018, 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!

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Jeremy, Winnie, Julian, & Jaiden
Go Curry Cracker!