In saving, investing and preparing for retirement, many people hope to have some of the high-priced possessions they couldn’t afford to have during their working years. This can include luxury items such as vacation homes, boats and luxury cars. But how can those be affordable on a retirement salary?
Possessions like those can also take a big bite out of your retirement savings, not to mention your retirement income.
For that reason, it may be best to rent the lifestyle you want in retirement, or at least the part that screams luxury!
Preserving Your Capital for Your Lifestyle
If you’ve inherited a large amount of money, you may consider buying luxury possessions, since you’re doing it with what is essentially “found money.” Found money is money you weren’t expecting to have. Another example is a tax refund or money received from a milestone birthday.
If you’ve saved and invested your money in order to have a comfortable retirement portfolio, you’ll most likely want to preserve most of that capital to cover more basic lifestyle expenses.
A retirement investment portfolio is accumulated primarily to provide you with retirement income. Since the ability to increase that portfolio substantially after you retire is usually limited, you’ll want to keep the money for the original purpose. Though high-end possessions are the stuff of dreams, the fundamental job of your retirement portfolio is to provide you with regular income.
Live the Wealthy Lifestyle Without Having to Buy It
Just because you dedicate your retirement portfolio primarily to providing income and preserve core wealth doesn’t mean you have to totally do without luxurious possessions. But instead of buying, you can rent it!
Not only will that give you the experience of using them for a time, but it will do so at a small fraction of what it will cost to buy and own them outright.
Here are some examples of highly desired luxury possessions and how you can rent them rather than buy them.
Owning a boat is a very common desire, particularly in retirement, when you will have more time as well as the mobility to live in an area close to the water and even in a warmer climate. But even a modest cabin cruiser can cost several hundred thousand dollars, to say nothing of the maintenance costs of keeping it up. So instead of buying a boat, consider renting one. You can rent one for anywhere from a weekend to a season, from individuals and local companies in the area where you live. It’s often said, “The two best days in a boat owner’s life are the day he buys it and the day he sells it.” You can simply rent a boat and spare yourself both extremes.
A Vacation Home
Another common retirement desire is owning a vacation home. But like a boat, owning a vacation home can cost several hundred thousand dollars and add a stream of expenses to your life. Instead, you can rent a vacation home nearly anywhere in the world through Airbnb. The online service boasts you can “find hosts with extra rooms, entire homes and unique accommodations like castles and igloos.” And not only does it cost a lot less than owning a vacation home, but you can vacation anywhere in the world whenever you choose.
A Luxury Car
Everyone wants the look and feel of the rich and famous, and retirees are no exception. But many luxury cars can cost more than a typical suburban house. That’s to say nothing of the cost to insure and repair them. It might be better to rent luxury cars from time to time, rather than buying one. For example, you can rent all kinds of luxury cars from Gotham Dream Cars. You can rent a Ferrari, Lamborghini, Bentley, Porsche, Aston Martin or Rolls Royce for as little as $395 per day, if you live in California, Florida or the Northeast (Washington, DC, to Boston). Not a bad deal at all for an occasional taste of luxury driving, especially when you compare it to the cost of owning one of these upscale vehicles.
A Private Jet
If you really want to go high-end, you might contemplate buying your own private jet. This takes the cost of owning a luxury item to a whole new level, since private jets can cost millions of dollars. As an alternative to owning a private jet, NetJets offers you the opportunity to lease one of their jets on a monthly basis (with terms from 24 to 60 months). They bill it as “ideal if you fly less than 50 hours per year.” It’s only a fraction of the cost of owning a private jet, and they maintain the aircraft for you.
Other options include:
When you’re talking high-end luxury possessions, never buy what you can rent — especially when you’re planning for retirement.
The Benefits of Renting the Good Life, Rather Than Buying It
Is this whole discussion of renting luxury possessions rather than owning them taking some of the fun out of planning your Golden Retirement? Maybe so, but it may also protect and preserve that Golden Retirement.
Renting luxury items has certain definite advantages over buying them.
If you own a boat or a vacation home, you may be faced with the uncomfortable decision of having to sell in the event your retirement income declines, such as a stock market crash or high medical costs or other emergency. If you rent them instead, you can simply adjust your renting schedule to match your income level.
All major possessions, be the boats, luxury cars, vacation homes or private aircraft, will require the time and expense of maintenance. When you rent them, you have none of that, and you have more free time for everything else you want to do in your life.
Change in Interests
Since owning major possessions is a long-term commitment, there isn’t much room for changing preferences. For example, at 65 you may be content with a vacation beach home in Florida. But what do you do when you wake up on your 71st birthday and decide you want a beach home on a Caribbean island instead? Renting a vacation home preserves that option.
A Real Life Example
Our own Justin McCurry, fellow staff writer here at Investor Junkie, has a similar story. It’s a real-life example of renting your lifestyle in retirement without the high price of owning.
“A few years ago, I convinced my mom to skip the retirement beach house purchase ($200,000–$500,000) and stick with renting a few weeks per year max ($600–$2,500 per week depending on size and season). That strategy worked well for a few years, then she lost interest in going to the beach more than once a year and prefers cross-country train trips now.”
As a result of not buying the beach house, Justin’s mom preserved the option of changing her mind and her preferences later on.
Make Retirement About Experiences, Not Possessions
It’s nice to dream of living a life of luxury in retirement, but it’s likely experiences will prove to be more valuable than gold-plated possessions. And since retirement comes in the later stages of life, you will probably have developed an appreciation for the brevity of life that will make experiences even more important.
It’s not an exaggeration to say experiences can add more to your life than even the most valuable possessions. Experiences are what you do with your life, which means they really are your life.
And from a financial standpoint, experiences carry no fixed costs the way expensive possessions do. You can increase or decrease your experiences on a level consistent with your income.
And since you will have plenty of time in retirement, you’ll have more time for those life-enhancing experiences than you ever had before.