Investment

What is the difference between household management before and after early retirement?

◆ The idea of ​​halving living expenses suddenly is NG
The number of people who want to retire early also in "Money Plan Clinic", which answers readers' money consultations, is increasing.

This article discusses the differences between household management before and after early retirement. The key lies in how to downsize living expenses.

Most people thinking of early retirement will be managing their assets, including household management, with the intention of preparing money for XX yen by the age of 50, for example. It's about downsizing living expenses by the age of early retirement.

◆ It is difficult to reduce living expenses at a stretch
Downsizing in this case would reduce monthly [yearly] expenditures, but people would not be able to adapt to suddenly drastically reducing living expenses. Among them, those who have a lot of income and spend a lot in the working [working] era need to be careful.

Suppose that one month's living expenses are 500,000 yen, and A is 350,000 yen. Let's say that both are thinking of retiring early at the age of 50, and that their financial assets at the age of 50 are the same, and their monthly living expenses after the early retirement are 250,000 yen.

Both A and B need to keep their living expenses down considerably, but A is more difficult.

Mr. A halves the expenditure of 500,000 yen before retiring early, so life should change completely after early retirement. If you buy that, you can't do that, you can't do this, you can lower the grade of fun liquor, you can refrain from paying for cards, and so on.

After an early retirement, you may have a few months, but after that you can spend money like a diet rebound. Of course, I can't say that Mr. B does not have that risk, but Mr. A has the higher risk.

In order to avoid being like Mr. A, it is necessary to gradually reduce living expenses before early retirement and get used to saving lives.

If A is 40 years old, living expenses will be reduced by 50,000 yen for the next three years, further 50,000 yen for the next three years, 70,000 yen for the next two years, and 80,000 yen for the next two years [Give an image in an extreme example].

◆ Reducing housing costs
Even if not as extreme as Mr. A, the key to reducing living expenses is to reduce fixed costs.

For example, housing costs [mortgage and rent]. Eliminating housing costs can be very effective if you want to reduce the cost of living after early retirement. At the same time as saving [increase] money, you should try to repay the mortgage early and hopefully pay off early.

If you want to keep your housing costs down, single-family houses are better than apartments. In the case of condominiums, administrative expenses and maintenance reserves are incurred for a lifetime, and if you own a car or bicycle, the parking fee will be a stupid expense.

For single-family homes, repair costs are incurred, but they can be repaired at their own pace, and the money they collect temporarily goes out, but they do not go out with monthly fixed expenditures. The lack of a parking fee etc. will also reduce monthly fixed costs.

Early retirement is also possible with rentals, but the fixed expenditure of rent comes out every month, so the money you need to prepare for early retirement increases [the active era is very difficult]. In the case of rent, it goes without saying that you live in a place with low rent [property] in order to reduce fixed costs.

Leaving a "car" is also effective in terms of reducing fixed costs, but living in an area where public transportation is not well developed can hurt your life without a car.

Car ownership should be considered according to your lifestyle. It goes without saying that you own a car with low maintenance costs.

◆ Maintaining health is also key. Be sure to join the National Health Insurance
As with housing costs, a major difference in reducing fixed costs is the review of life insurance. Life insurance [including health insurance] should be canceled or paid out, in relation to financial assets, rather than a review.

However, when looking at the life after early retirement of those who are thinking about early retirement, it seems that few people are thinking about spending a life that pays attention to their health. Even if you are confident in your health while you are young, as you get older, more and more care for your hospital will increase.

Harm to health is directly linked to increased variable costs. I hear that many of the causes of becoming a "downstream elderly" these days are due to harm to health. Being healthy is also a requirement for downsizing after early retirement.

Even if you pay a large amount of medical expenses, there are fewer cases of tax benefits such as medical expenses deduction because your income is low after early retirement.

Life insurance is basically unnecessary [if you are worried, secure a minimum medical insurance], but be sure to join the National Health Insurance. If you do not subscribe, you will have to pay all medical expenses. Be sure to get 30% of the right to be paid at the window, and be sure to join the National Pension to receive a pension after 65 years of age [also preparing for early retirement].

The sooner you retire, the better the public system should be.

Sentence = Yasuhiko Fukano [money guide]
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