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Robert and Sue lived frugally and set aside a high saving rate in their working years, allowing them to retire comfortably with two homes. The couple said they worked hard to paid everything off so they could finally just enjoy life.
So what does their monthly budget look like and how might yours differ as you explore a snowbird retirement lifestyle?
Robert and Sue’s Monthly Budget
The couple works with financial advisor Ben Lies, president of Delphi Advisors. They shared their monthly budget below, asking to remain anonymous.
Primary Home Mortgage
$0
Primary Home Taxes and insurance
$584
Primary Home Utilities
$210
Secondary Home Mortgage
$0
Secondary Home Taxes and Insurance
$334
Secondary Home Utilities
$165
Secondary Home HOA
$135
Auto Loans
$0
Auto Insurance
$275
Gas
$175
Groceries
$500
Cell Phones
$180
Travel
$1,000
Entertainment, Subscriptions, Eating Out
$1,350
Clothes, Shopping, Grandkids, Misc.
$2,750
Total Monthly Expenses
$7,658
Two-thirds of their budget ($5,100) is discretionary. They spend just $2,558 on structural living expenses.
“Among my clients, I see three types of snowbirds. First, you have folks like Robert and Sue who keep their expenses low and their lifetime of frugality allows them to maintain two houses and travel often,” Lies said.
“Then you have the ultra wealthy who do not worry about cost and the second home serves as a tax have,” Lies added. “The third type have similar wealth as Bob and Sue but carry mortgage debt on the homes and either continue working, spend less or risk running out of money.”
So how might other retired snowbirds budget differently, especially if they have mortgage debt?
Snowbird Budget Variations
The average U.S. home costs $357,275 according to Zillow. Imagine a retired couple owns two homes, each costing the average home price and each bought with a 20% down payment at 6% fixed interest. They’d pay $1,714 a month per property, adding $3,428 to their monthly living expenses.
Robert and Sue could cover that from their discretionary spending, simply cutting back to $1,672. But that’s less fun.
Alternatively, they could explore cheaper places to spend the winter. Fernando Angelucci of SSSE left his career as an engineer and today buys self-storage facilities on his own schedule, spending his summers in Chicago and his winters in Brazil.
“I own a home in Florianópolis, which costs far less than a comparable U.S. home. When I’m in Chicago, I book a short-term rental for four months at a time. I opted not to buy another home in Chicago due to their debt spiral and increasing property taxes,” Angelucci said.
As a snowbird, the world is your oyster. You can spend your summers and winters anywhere you like. Buy or rent. Start scouting out your ideal places to split your time, with budget as your only limitation.