Retire Early Lifestyle
Retirement; like your parents, but way cooler

In 1991 Billy and Akaisha Kaderli retired at the age of 38. Now, into their 4th decade of this financially independent lifestyle, they invite you to take advantage of their wisdom and experience.

They're 68 Years Old -- And Have Been Retired for Over Three Decades

Robert Brokamp, CFP of The Motley Fool

In the second issue of Rule Your Retirement (published nearly 17 years ago), we profiled Akaisha and Billy Kaderli. After careers in the restaurant and financial-services industries, they retired in 1991 at the age of 38, enabled partially by living in exotic but low-cost areas of the world. Every few years, we catch up with Akaisha and Billy to see how their retirement is progressing. Here's the latest update.  

Robert Brokamp: Congratulations over 11,000 days of retirement! Not only were you able to retire at age 38, but your portfolio is worth more than it was on the day you retired. How have you been able to do it?

Akaisha and Billy Kaderli: Thanks, Robert, it's been a great lifestyle -- one of world travel, volunteering, meeting amazing people around the globe. We are pleased with our decision of so many years ago.

For us to make this work, we invested into low-cost stock index funds that have averaged about a 10% per year return including dividends and capital gains, specifically SPDR S&P 500 ETF (NYSE: SPY) and Vanguard Total Stock Market ETF (NYSE: VTI). From that 10%, we spend 4% or less, leaving the difference to compound. Today, with both of us receiving Social Security plus dividends from the index funds, this covers our expenses, leaving our accounts to grow further.

Robert: Any changes to how you manage your portfolio or your budget these days?

Akaisha and Billy: We continue to track our spending daily, monthly, and annually, giving us the percentage of spending on a daily basis based on our net worth. This tool has given us confidence at times of market turmoil or when we have bigger spending outlays.

In 2008 we took advantage of depressed stock prices and added the iShares Select Dividend ETF (NYSE: DVY) to our portfolio mix, and Vanguard Information Technology ETF (NYSE: VGT) last year. As we have grown older, now 65, we felt it was prudent to protect our core assets and lightened up a bit on equities. Currently we are balanced 50% stocks and 50% bonds/cash, but always looking for opportunities.

Also, as we are approaching 72 with required minimum distributions around the corner and with our low tax bracket, we started drawing down our traditional IRAs, trying to minimize future tax liabilities. We then invest these monies back into the market in our regular accounts using VTI.

Robert: How much does your lifestyle cost a year?

Akaisha and Billy: We have been spending $30,000 or less annually throughout our retirement. As we are aging, and with our net worth growing, we consider spending more.

Robert: If you could do it all over again, is there anything you'd change?

Akaisha and Billy: We would have started investing earlier and more often. Not purchasing our home could have been a giant leap toward financial independence.

Akaisha and Billy in Chiang Mai, Thailand
 

Robert: One strategy you've used is to live abroad in countries with a relatively low cost of living. Where have you been living over the past few years?

Akaisha and Billy: We have been shuffling around Latin America, mostly basing out of Lake Atitlan, Guatemala, and Chapala, Mexico. We have been to the beach four times in the last three months and visited Mexico's gorgeous colonial cities. Living with the ancient culture of the indigenous Maya in Guatemala has been an unforgettable life-changing experience. From these countries, we also visited Panama and the Dominican Republic as well as the U.S.

Robert: We tend to avoid political topics at The Motley Fool, but we're currently living through some interesting times here in the U.S. Has that had any effect on you as Americans traveling and living abroad?

Akaisha and Billy: None whatsoever. We're currently living in Chapala, Mexico, and there is no shortage of locals and expats with opinions on the politics in the U.S. as well as the upcoming Mexican elections. We tend to avoid these divisive conversations and go on living our lives.

One question we always ask ourselves, no matter what administration is in office, is "How can we profit from their policies?"

We don't feel it's our mission to convert anyone to anything and prefer to view ourselves as international goodwill ambassadors. There is so much good going on everywhere, and we choose to focus on that.

Robert: Do you still maintain a home in the U.S.?

Akaisha and Billy: Yes, we have what we call a humble abode in the Southwestern U.S. As an affordable housing solution, it covers all the bases.

Robert: Now that you are eligible for Medicare, how does that factor into your plans for healthcare?

Akaisha and Billy: We both are on Medicare and look at it as a catastrophic insurance plan, hopefully never using it. We still self-insure in these low-cost countries, paying all expenses out of pocket. We have received excellent, affordable care, even for hospital emergencies.

Medicare does not work outside of the U.S. If something serious happened to either of us we could return to the States and use Medicare. Otherwise we pay out of pocket.

In our opinion, the U.S. is missing an opportunity to utilize lower-cost places such as Mexico, Guatemala, and Thailand, which have medical facilities that are as good or better than in the U.S., thus saving Medicare millions of dollars. If Medicare was available to be used at accredited places in such countries as listed above, expats could use them in the countries in which they live, and those who live in the States could venture to countries that give excellent care. Either way, the government would save countless millions of dollars and everyone would benefit.

Robert: The FIRE (financial independence, retire early) movement seems to have grown over the past few years. You two were well ahead of your time! Have you noticed an expanding interest in early retirement?

Akaisha and Billy: Yes, definitely. We have met many of our readers who have used us as a catalyst to map out their own early retirements. It is a humbling experience to meet these people in faraway places and hear personal stories of their journey to financial freedom.

We love the idea that more and more people are becoming educated about finances. We maintain that becoming financially independent is one of the best things you can do for yourself and for the world.

Robert: Many proponents of the FIRE lifestyle actually aren't truly "retired"; they supplement their portfolio income with side businesses or part-time work. Is that your impression? Do you have additional sources of income?

Akaisha and Billy: This used to be a big deal with the "Early Retirement Internet Police" and we have written articles on this topic, explaining the seeming difference between being "retired" and being financially independent. The benefit of financial freedom is that you can do whatever you want, including being a Wal*Mart greeter, and if that includes making some money along the way, so be it.  

In our case, our website does generate a small amount of cash flow, but we were retired 15 years before it was born. We look at maintaining our website as our volunteer time helping others achieve financial independence. If it ended tomorrow, it would not financially affect our lifestyle, but we would miss all of the great people we meet through this venue.
 

Robert: In a recent episode of Motley Fool Answers, we mentioned a New York Times article that discussed the phenomenon of "un-retirement" – that is, people who retire but then go back to work. The article quoted one woman who had this to say about life after retirement: "I felt like I was free-floating, bobbing along on the ocean. I felt very ungrounded." What advice do you have for people to make sure they're ready for the transition to retirement – and the loss of identity and social contacts that sometimes come with it?

Akaisha and Billy: Many people think that retirement is a lifestyle of continuous leisure. While everyone is different, we have always encouraged people to be engaged in their retirement/financial independence.

One must plan for emotional component of life away from the conventional working world.

We suggest to our readers to make a list of all the things they want to do like mentoring, volunteering, learning a new language or a musical instrument, getting involved in your community in some capacity, re-homing abandoned animals, planning a motorcycle trip (or RV trip) cross country, leaving a personally written historical legacy for your grandchildren -- countless things.

When you do this, you will automatically meet new people of common interests, and your own self-description and identity are edified.

If someone moves into "retirement" (we prefer the term financial independence) without a list like that, they absolutely will feel rudderless. Some have even written to us about "early retirement depression," but once they learned to manage their newfound freedom, their depression went away.

We would bet most financial planners do not offer information on the emotional component of this new lifestyle. Their clients may have the money, but without a plan to satisfy self-expression and meaning in their lives, they will flounder. This is something that can be avoided.

Robert: Any parting words of advice?

Akaisha and Billy: People have commented to us that they cannot afford to travel. With all that travel offers, we'd suggest the viewpoint of "Can you afford not to travel?"

We would also suggest that you invest as much as possible as soon as possible and let the market work for you. You too can become financially independent, and it can be a very exciting, meaningful time of your life!

Akaisha and Billy in Antigua, Guatemala

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Retire Early Lifestyle appeals to a different kind of person – the person who prizes their independence, values their time, and who doesn’t want to mindlessly follow the crowd.

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