I'm almost at my one-year anniversary of being retired. My husband Doug, is keeping the books now, and presented the preliminary fiscal year-end results to me in a PowerPoint presentation at our most recent board meeting. Ok, he just told me the numbers in the bathroom yesterday as I was putting on my makeup.
I have a theory for this result. You spend less money when you are happy.
The year before I retired, we dramatically reduced our spending to "practice" our retirement budget. We still spent money on things that made our life easier while I was still working (housecleaning, gardening, gym membership, and take-out meals), but we went ahead with some other cutbacks in order to start taking the retirement budget for a test-drive. For me, the sacrifices weren't that hard because of the light at the end of the tunnel, retirement.
But there was an even more shocking bathroom-board-room revelation. The year before that, two years before I retired, we spent some serious cash. At that time, I really thought the dream of early retirement was going to be impossible. I had come to accept our current lifestyle as a given, and I couldn't imagine where we would make budgetary cuts and still be happy.
The irony is, I was spending so much money because I wasn't happy. I was dissatisfied with my job, so I spent a lot of money on work clothes. For one thing, shopping for work clothes on my lunch hour was a nice diversion from work. For another thing, I felt happier going to work the next day because I was going to get to wear that cute, new outfit. I thought I was on to something. It made work more bearable. So I thought.
When we went on vacation, I figured, I have a well-paying job, I only get 3 weeks off a year, so we may as well make them spectacular. I thought spending money on the 5-star hotel suite with the ocean-front balcony would make up for the fact that I only get to do it 3 weeks a year. I deserved it. I deserved the luxury. It made working more bearable. So I thought.
I could go on and on with the ways I tried to spend away my dissatisfaction with my job, but the bottom line is this: we currently spend about 60% of what we spent in those heyday spending years, the years before I thought that early retirement was a realistic possibility. (As a side note, it will go down to 50% of that number after we sell our second home).
Here's the kicker--we spent far more than my after-tax salary in those high-living years. As I became more and more unhappy in my work, more resigned to the idea that I would have to do it for many, many years to come, we spent a lot more money than my paycheck.
We made up the difference by taking money out of savings, of course. I figured, if I couldn't retire early anyway, what do we need all this savings for? As it turns out, we were taking more out of savings in those years than we are now to live on in retirement.
In other words, if I kept working, we would be depleting our savings FASTER than we are now that I am happily retired, living on less.
The difference between then and now is that I'm happier. I'm not trying to buy happiness anymore. Happiness is just a lot cheaper in retirement.