retire early to spend free time as you want; travel, study and
learn, play sports, pursue a hobby…
In 1991, at the age
of 38, we left our fast track lives, packed it up, sold everything, and moved to
Nevis, a 36 sq. mile island in the Caribbean. From there we started traveling
and haven’t looked back.
Are we living the
life YOU want right now? Is this idea appealing?
to tackle the notion of early retirement, there are several key
questions that need to be answered. There are the tangible issues of
money, the matters of personal time management while retired, and
the very crucial but intangible subjects of fear and risk
On a walkabout in Manly,
people put off the intention of retirement into the “someday”
category, like it will just happen on its own. Meanwhile, the
thinking, planning and saving components are neglected all together
until that illusive day arrives. For some it never does appear, and
for others its attainment comes with a mixed bag of things never
quite sorted out.
Our retiring early
challenged the belief system of everyone we knew. We heard all sorts of
comments such as:
“Retirement is for
old folks.” “I could never sit around and do nothing all day.” “I couldn’t
retire unless I had a gazillion dollars.” “You’re too young to retire.”
What does it take?
What does it take to
It takes a mixture of
desire, a plan of action and self-knowledge. Ask yourself: “Do I have any of the
three ingredients mentioned here?”
Believe it or not, some people
never want to retire. To have a blank calendar in front of them is
scary. They like routine and knowing what is expected of them day to
day. This provides a certain security and knowingness in their
lives, and this is what they want. Questioning this whole set up
would fracture their foundations. These people would not be a
candidate for early retirement.
beaches in Belize
large blocks of free time to fill as you choose sounds exciting, if
pulling out maps of the world stirs a wanderlust in you, or if
pursuing a hobby or sports activity more fully makes you breathe
easier and brings a smile to your face, then you could put a
checkmark next to the first qualification.
great,” you say. “I want to do it, I just don’t know how.”
yourself. Are you a spender or a saver? Can you put off immediate
gratification for a more long range goal? Do you have any idea of
the amount of money you spend in a month? In a year? Or in any
particular category, like groceries, gasoline, clothing?
When we decided to
analyze the notion of not working for money any longer, we had to get a firm
answer to the question of how much money we spent on ourselves in a year. When
we excluded the expenses of working (stylish work clothing, restaurant lunches,
travel expenses, car parking, dry cleaning, etc.), the expenses of maintaining a
large house (gardener, house repairs, cleaning service, insurance), and the cost of stress
releasers like high priced vacations, shopping sprees for the fun of it, the
expenses for large parties, and so on, we found out the exact amount of money we
spent just on us. It amazed us how small this amount was.
This is where you
start. We decided we needed $20,000 a year to live (1990 dollars. Today, 26
years later, we consistently
spend less than $30,000 annually for all our
travel, housing, transport, taxes and medical expenses.) It is from here that
you need to look at the investments you've made, and figure out how you could
pull out your annual expenses, including inflation.
to be heavily invested in equities, and still are. In the
very tough market crash, (2008) we did reduce exposure, but not enough to
escape it entirely. However, our net worth today is higher than when
we started, after expenses and inflation. Our plan is simply,
reverse dollar cost averaging, selling shares as needed and we try
to prevent losses due to market downturns whenever possible. Of
course we use
low cost tax advantaged ETFs to
facilitate this. The withdrawals could be set up automatically, but
we choose to direct it, and with today’s internet available
worldwide, it is easy. The money is then transferred to a money
market account with check writing, debit card and bill paying capabilities.
Taking a break in Ecuador
got the bills paid, but how do we travel to exotic locations on less
than 30K? Remember,
retirement is a lifestyle, not a two week
vacation. You are going to spend “X” Dollars per day staying at
home. But, why not fly or bus to some place interesting, get local,
and rent a furnished apartment or stay in an inexpensive hotel?
Getting local means
having fun shopping at local food stores, trying their products, and meeting
folks who live there and learning where and what the “bargains” are. Make a game
of it, have fun and don’t take things so seriously. Remember, it’s a lifestyle
and you don't have anything to prove to anyone.
Popular guide books
are excellent sources of information ranging from hotels to interesting things
to do, most with prices quoted. The longer you stay in these locations, the more
your expenses will be amortized and soon you will find you’re spending the same
or less than at home.
For example, we have
been to Australia and New Zealand for a 3 month period where our daily average
is easily a whopping $80-$100 per day. We then balance that amount by staying in
Thailand for 3-4 months where our daily spending is about $35 a day. This
averages out to be $63 a day, or $23,000 per year. (And these figures include
airfare, all transportation, healthcare, great Australian wines, lamb, brie,
apartment rentals, Thai massages etc.) Are you getting our drift?
we track our spending daily, a habit we formed from running our
business, we know that some days the average goes through the roof
(travel tickets etc. can spike these days), while on other days we
spend little or nothing. But when we add it up and divide by the
number of days we’ve been retired, our daily average is well within the
range of $30,000 per year.
enough with the numbers…it’s time to take the leap of faith.
bus with a machete in Ecuador
ingredient is a little trickier: self-knowledge. There are many ways
to do this and there is no one-size-fits-all. You’re in charge of
your life so make it what you want.
What kind of person
are you? Can you stand apart from the crowd? Do you need constant excitement?
What are your housing requirements? Do you want to keep up with the
Show-off-skis? Can you entertain yourself? Do you like nature? The city? High
priced toys? Is your spouse on the same page as you regarding this goal? What do
you like to do with your time, and do those things require high financial
maintenance? Do you enjoy variety? Volunteering? People? Routine? Travel? What
would you do if you had a blank calendar? Or if your phone didn’t ring? Or if
you didn’t receive a paycheck? Can you adapt to change?
Making the list
Part of our
Pre-retirement program was to list all the things we wanted to do and learn,
places we wanted to visit, books we wanted to read, and anything we were excited
This list is very
cannot come up with a list, or if watching re-runs of TV shows is on
it, you are in trouble. The purpose of this list is if and when
there is ever a bored moment after retirement, or if you ever wonder
why you took this leap, then take that list out, look at it, and
remember why it is that you wanted to retire in the first place.
gives you the impetus to move forward, off any block of inertia.
you know yourself, and your “requirements” for fulfillment, the rest
just falls into place. Once you are comfortable in your new
lifestyle of financial independence, and are self-assured in this
placement, all sorts of opportunities present themselves. The
possibilities are limitless, and it is only you who hold yourself
Two decades of
Since we have left
the conventional working world, we have visited dozens of countries, played
tennis worldwide, took foreign cooking courses, volunteered teaching English as
a second language,
tennis courts in a small city in Mexico,
massage to the locals in Mexico, imported a basketball scoreboard for the
gymnasium, taken thousands of photos,
written ten books and stories for
magazines and newspapers, hiked, biked, bussed, trekked, scuba’d and made many
lifetime friends along the way. No paycheck could have ever bought these
experiences for us nor given us the gratification we have received.
Because of our
lifestyle, and the freedom to design how we spend our time, we have also been
fortunate enough to do End
of Life Care for our parents. These occasions to do
so were priceless for the both of us.
Risk, safety and
Some have said that
they admire what we are doing, but they think it is too risky for them. Life
itself is a risk. There are no guarantees for anything; health, marriage,
bear markets, the unexpected, weather, tragedy. Since we have been retired, we
have “survived” all sorts of things including SARS, the Asian Bird Flu, the bear
market of 2000, the first Gulf War, the market crash of 2008, and some funny
traveling debacles just to name a few. If you want a guarantee, we say: buy a
Risk has a price,
and so does security.
Why not live the life
of your dreams? Do the mental and physical examination, take the leap of faith,
and perhaps we will meet on this Road Less Traveled.