I recently summarised my first year of semi-retirement as one of happiness and gratitude.
I was less stressed and more relaxed, especially about money.
It’s no secret that Poopsie and I are not very frugal. Every year, we are a bit disappointed with how much we spent but as we aren’t willing to change our lifestyle (as it makes us happy), we just have to accept that fact. This will ultimately mean we work, either full time or part time, for a bit longer because we want to be able to continue our current spending in retirement. We are okay with this and we have planned accordingly.
Our job related income dropped quite a bit in 2021 which I will cover in Part 3 of this series. While I still received some income in January (including a very small amount of long service leave paid out), I then didn’t earn any other job related income until July. Had you asked me prior to this occurring, I would have been adamant that as a result of this lack of income, I would be very careful about money in 2021.
This turned out not to be the case.
We spent as we have always spent – buying what we want, when we want it. This certainly doesn’t work for everyone but works for us. We don’t pay too much attention to our spending until I tally it up at the end of the month in Pocketbook. Usually, we then discuss reigning it in for the next month but nothing changes and we rinse and repeat in 30 days time.
However, though we don’t track it day to day, we can usually feel when we are overspending and we definitely felt we had overspent in 2021. We spent freely, we did some travel, we did quite a lot of home upgrades (furniture and things like that, not renovations). We ate out way more than usual, mostly due to lockdown and wanting to support our favourite places. I spent a few thousand dollars on a professional development course, our utilities were more as I was home everyday, we were more generous with gifts than usual and of course, we continued paying a large amount in child support. I also purchased a designer handbag which certainly was not cheap.
Couple this with reduced earnings and we did not have a great savings rate. Before I reveal it, I would just like to clarify that our savings rate is calculated on our earned income only. We deduct our spending from Poopsie’s post-tax full-time salary and my post-tax contract work earning. We do not include dividend income or any other kind of income when calculating this. We will have more on the income we earned in Part 3 of this series.
So, what was our savings rate?
A sub-10% savings rate. Certainly not great by any standard, let alone by the FIRE community’s standards.
But… we’re completely okay with it.
We’re semi-retired which means if we didn’t want to, we could save 0% and still be able to traditionally retire down the track. Our investments are working away in the background and we continue paying our mortgage which means in about 25 years, even if we saved nothing further, we would retire with a large portfolio and a paid off house. In addition to this, we both have defined benefit pensions so we will be more than fine.
At this stage, anything we do save and invest is just bringing forward our full retirement date. This is certainly something we want, but it is in no way imperative.
I am still, however, surprised by our attitude toward all this. Even though logically I know we are set for life as long as we continue working part time (child support notwithstanding), I still expected I would be nervous about money and spending and still wanting to save as much as possible to shorten the retirement date of us both. It’s a surprise to me that this is no longer a priority.
That’s not to say that we won’t continue to save, but enjoying life and finding work that we find fun and enjoyable is far more important. There is much to be said for setting oneself up early in life and then financially coasting, enjoying life along the way. It’s a great feeling!
What was your 2021 savings rate like? Share in the comments below.
You’ve already done the ‘set up’ phase and as you say have all the makings of a very secure retirement even if you saved zero. Therefore 9% is a bonus up from what you need. If it isn’t a focus for you, no need to beat yourself up over it to fit in with the ‘FIRE crowd’
I too spend a few thousand in 2021 on personal development, something I value more than the little bit of extra I could have saved.
Look at you dominating the commenting of late 😉
Definitely and I think we are mostly there. But there was certainly a time we would compare ourselves and our spending to other FIRE bloggers (like the Frugalwoods for example) and get frustrated, so I did want to share this to hopefully encourage others.
Ooooh glad you got some personal development stuff done. I am very keen to invest on myself more, it is so worth it!
Haha cannot promise that will always be the case. I have 2 speeds of commenting, asap or never….
I like to compare only for the purposes of inspiration, not for beating myself up. No point being frustrated I cannot achieve the same as someone else with very different circumstances. Two very high incomes, no children or child support in the early days, and yes some sacrifices, but also a lot of help along the way.
I really appreciate reading about your journey! I often feel a little embarrassed about “enjoying life” while simultaneously declaring FIRE goals, but I can relate to what you described—We are set up to”coast to retirement,” but it’s hard to feel it, and I know I prefer seeing a paycheck roll in even if it’s just to spend most of it on fun things. It’s good to know we’re not alone in our approach to FIRE even if it doesn’t sound or read like the typical story. Thank you so much for sharing your experience!
Thank you for your comment, Ashley. I know we have chatted about our love for the finer things in life, so I’m glad this is coming through on the blog as well and you find it helpful. Life is definitely meant to be enjoyed!