Retiring in luxury might seem like a dream reserved only for the rich, but the truth is, you can live a luxurious life in retirement without being a millionaire and you don’t need to live in a mansion. You just need to figure out what you consider luxury and then prioritize your finances to make it happen.
For example, you might consider having an outdoor kitchen luxurious, or you might just want a small house, but a fancy car. Maybe all you need is some in-home theater entertainment or a game room. Whatever you prefer, you can do it on a budget.
To achieve your goal, your most important task will be to save money, but you need a specific strategy to make it work. Here’s how to save money to support your goal to retire in luxury.
1. Start saving money immediately
Retiring in luxury is easiest when time is on your side. The most important thing you can do is start saving money as soon as possible. The more time you have to save, the more of a retirement fund you’ll generate. If you’ve got a while to go before you retire, you’ve got the advantage in this department.
No matter what your current situation, start saving money right now. Don’t put it off, and don’t worry about how much you can save at first. Even if you can only save $20 or $100 per month, start there. Just saving $100 per month for an entire year will put $1200 in your savings account. That’s $1200 you won’t have if you don’t start saving now.
In one year, your financial situation could change, and you could be able to save much more on a monthly basis. So, start saving now, especially if you’re not already in the habit of saving money. Be consistent in how you save. Choose a percentage to save from every paycheck you get and save more whenever possible.
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2. Start investing to grow your retirement fund
While tucking away a percentage of every paycheck for retirement is necessary, you can’t just save money – you also need to invest it to grow your retirement fund. This applies whether or not you want to live in luxury, but more so when luxury is your goal. Growing your retirement fund is easiest when you have sufficient time before you’ll retire because investments need time to mature.
One of the most common investments is a CD, but you have other investment options. If you have a minimum of $10,000, consider the following types of investments:
- A 401(k) match. If you have a significant amount of money to invest, you should seriously consider a 401(k) contribution. It’s common for employers to match your contribution by 50%, which means if you contribute $10,000, your employer will match you with $5,000. That’s huge!
If you have even more money to invest in your 401(k), remember that your employer will only match your contribution up to a certain percentage of your salary, which means you’ll need to contribute double that percentage of your salary to get the maximum match. For instance, if your employer matches up to 3%, you’ll need to contribute 6% to get the full match. - Maxing out your IRA. If you’re using an Individual Retirement Account (IRA) to fund your retirement, maxing out your IRA will benefit you long-term. You are limited, however, in the amount you may invest. Currently, you can contribute up to $5,500 annually. However, you’ll get a tax-deferment, which will help.
- Paying off credit card debt. This might not seem like an investment at first, but it will save you a whole lot of interest if you pay off your credit card debt immediately. If you’re in significant debt with your lines of credit, you’ll end up paying thousands of dollars in interest over the next several years. The average American pays $800 per year in interest for their lines of credit.
Instead of giving all that money to your credit card company, pay your credit cards off up front and put that money into your savings account or other worthwhile investments.
The more you invest now, the more time you’ll have to reinvest your earnings to continue earning even more money for your luxury retirement goals.
3. Create your dream home and retire where you are
When you think about retiring in luxury, you might picture living in a beachside home or in a fancy high-rise apartment building in Florida. These types of living arrangements can be luxurious, but they’re also expensive. If you retire in an apartment building, you’ll be paying monthly rent. If you buy a new home by the beach, you’ll be taking on a new mortgage, which means high monthly payments forever.
Have you thought about spending a little money to renovate your existing home or add luxurious amenities? You could even hire an entire team of interior decorators to redesign your home from the ground up and make it feel like a completely new house. Doing this would still be cheaper than buying a new home somewhere else.
Think about your ideal luxury amenities
Creating your dream home right where you are is an excellent way to retire in luxury without taking on additional expenses. What kind of amenities would make you feel luxurious? A home theater? A wine cellar? Smart appliances? Fancy art on the walls? A hot tub on the back deck? Start building whatever amenities and luxurious you feel drawn to instead of taking on more rent or a new mortgage.
Here are some ideas for the types of luxurious amenities you can add to your home:
- A home theater system
- A game room
- A full bar
- An enclosed hot tub
- An indoor pool
- A resort-style pool
- An additional room for entertaining guests
- A music room with all your favorite instruments and surround sound
- An indoor playroom for your grandchildren
- A smart home appliance network
- Indoor and outdoor flowers
- A pool table
- A home gym
- A walk-in closet
- A golf club membership
- New high-end kitchen cabinets
- A jacuzzi bathtub
- A tennis court
- A mini golf course if you have enough land
These are just some ideas to get you thinking about what you can add to your home to create a feeling of luxury without having to buy a new house.
Have high mortgage payments? Don’t move – refinance
If you’ve lived in your home for a while, consider refinancing your mortgage to save some money each month. You’ll get much better rates by refinancing an existing mortgage than you will taking out a new one to buy another house. And don’t forget about all the equity you’d be losing by starting over. When you’re on a budget, it’s definitely easier to build luxury into your existing life than it is to start from scratch.
4. Move to a cheaper area
It’s common for retirees to move to a more affordable area, but most people resist spending money to make their retirement more comfortable. If your goal is to retire in luxury, then moving to a more affordable area is an excellent way to generate the funds to create a life of luxury.
You can save tens of thousands of dollars by moving to a cheaper area where the cost of living is significantly lower than where you currently reside. You’ll find places like this in the states, but don’t rule out moving overseas.
Living overseas is very affordable
Some overseas locations are so cheap that people retire there in droves. Other locations are a little less known, but just as cheap. For example, the cost of living in Johor Bahru in Malaysia is about one-third of the cost of living in the United States. According to International Living, a couple can retire in Johor Bahru on a salary of $1,700 USD per month. It’s kind of a well-kept secret.
Johor Bahru isn’t the only popular, cheap overseas destination for retirement. Other options include Chiang Mai, Thailand; Olón, Ecuador; Medellín, Colombia; and Panama City, Panama.
With a solid plan for saving and investing, moving overseas can be an excellent way to support a luxurious lifestyle. The money you save on living expenses can go toward more comforts.
Also, keep in mind that if you decide to retire overseas, you won’t necessarily need to buy your own house because renting a house or apartment can be cheaper than your mortgage payment.
5. Buy your luxury items used
Part of retiring in luxury will involve buying luxurious things like home décor, furniture, rugs, planters, artwork, and more. Some of these items are quite expensive when purchased brand new.
Here are some examples of luxurious items you may want to buy to create a luxurious atmosphere:
- Beautiful, large outdoor pots for landscaping
- Tapestries
- Fine art
- Nice area rugs
- New carpeting
- A fancy backsplash for your kitchen
- Antique furniture
- High-end furniture
- Fancy curtains or drapes
- Fancy dinnerware, including plates, cups, bowls, and silverware
- Luxury linens for your bed
- Luxury pillows
- A high-end, comfortable luxury bed
- A wall-mounted big screen television
- A wall-mounted electric fireplace
- Leather recliners with cup holders for your home theater
- New light fixtures, like a chandelier for your dining room
- A clawfoot bathtub
You can save money on these items by searching for them across classified ad sites, eBay, Etsy, and even Amazon. You may even find some items at your local thrift store, like Goodwill or Salvation Army.
Other places to look include garage sales, estate sales, and online stores for the major thrift store chains. If you don’t find what you’re looking for online, try saving your searches in your account so you will be notified anytime someone posts something up for sale.
6. Splurge when you can
Splurging isn’t exactly money-saving advice, but it is part of retiring in luxury on a budget. The whole point of saving money in this context is to be able to afford to shape a luxurious life. So, it goes without saying that you should splurge when you can because that’s why you’re saving that particular amount of money.
Splurging doesn’t mean you have to spend irresponsibly or deplete your entire savings. What it means is that you shouldn’t avoid spending the money you’ve saved to create a life of luxury in retirement.
To splurge responsibly, simply create a budget based on your financial situation. For example, if you’re saving $400 per month for entertainment, then spend that money doing what you love. Go play some rounds of golf at the country club, visit that fancy movie theater, eat dinner at some luxurious restaurants, or save your money for traveling.
7. Cut your unnecessary expenses
It has to be said – cut your unnecessary expenses. You might not even realize where all of your money is going unless you track your spending to the penny. You could have subscriptions and memberships billing every month that you don’t even use or want.
Check your credit card and bank statements to identify recurring payments for services you don’t actually care about. Cancel your unwanted subscriptions even if it means paying a fee. You’ll pay more over time finishing out your subscription than you will if you just pay the cancellation fee.
Maintain your own idea of luxury
What you consider luxurious may not be what society at large considers luxurious. Try not to be swayed by what society says to buy, and stay focused on what you prefer. For instance, many people would consider a Lincoln Town Car to be a luxury car, but if that’s not your idea of style, go with your own preferences. Maybe to you, a Jeep is a luxury vehicle.
Not everything expensive is luxurious, and not everyone agrees on what constitutes luxury. If you’re going to save money to retire in luxury, don’t waste your money building a life that isn’t your own. Get a solid plan for saving and investing, and then use your funds to retire in luxury according to your own standards; you’ll have a much happier retirement this way.