Cappuccinos and French
pastry in Antigua, Guatemala
If filling blocks of
free time as you choose sounds exciting, if pulling out maps of the world stirs
wanderlust, or if pursuing a hobby brings a smile to your face, take heart. You
can retire early to spend your time as you want. We did!
Since retiring almost
three decades ago, we have visited dozens of countries, played tennis worldwide, and taken
Thai cooking courses. In a small town in Mexico, we taught English,
built tennis courts, and imported a basketball scoreboard. We have hiked in
Australia, and climbed a volcano in
explored many ruins in
Mexico, biked and bussed in
Vietnam, trekked in
New Zealand, scuba dived in the Caribbean, and made many lifetime friends
along the way.
Because of our
lifestyle, and the freedom to design how we spend our time, we have also been
fortunate enough to provide
end-of-life care for our parents. No paycheck could have bought any of this,
nor given us this gratification.
What does it take to
retire early? Here's how we did it.
When we excluded the
expenses of working (work clothes, restaurant lunches, travel expenses,
parking, dry cleaning), the
expenses of maintaining a large house (gardener,
house repairs, cleaning service), and the cost of stress releasers like
high-priced vacations, shopping sprees, and large parties, we found we could
live on $20,000 (in 1990 dollars) a year. Recently, we did an
on our annual spending and learned that it really hasn't changed that
much over these two-plus decades that we have been retired.
We choose to be heavily
invested in equities using Index ETFs, and we follow a seasonal timing system in
our IRA’s. Our net worth today is higher than when we retired, after expenses
and inflation. We made the decision to take
social security at 62 and between that and dividends we easily cover our
track our spending we know
what percentage of our net
worth we are spending at any time in the year. This allows us to make
adjustments if necessary quickly and not months or years later.
How do we travel to
exotic locations on roughly $2000 per month? We go someplace interesting and rent a
furnished apartment or stay in an inexpensive hotel. Sometimes we
Then we have fun shopping at neighborhood food stores, meeting the locals,
trying their products, and learning where the
bargains are, making a game of it.
Popular guidebooks are excellent sources of information, including hotels and
things to do, most with prices quoted. The longer you stay, the more you'll be
able to spread out your expenses, and soon you'll find you're spending the same
or less than when you were at home.
For example, in Australia and New
Zealand, our daily average was a whopping $80 to $100 for three months. We then
balanced that by staying in Thailand for three to four months, spending just $35
a day. This averages out to be $63 a day, or $23,000 per year. And these figures
include all transportation,
health care, great Australian wines, lamb, brie, apartment rentals, and
Make a List
Part of our
pre-retirement program was to list all the things we wanted to do and learn, the
places we wanted to visit, the books we wanted to read, and so on. This list
is very important.
If and when boredom
strikes, or if you wonder why you took this leap, take that list out and remind
yourself why you wanted to retire. "Oh yes, I wanted to learn how to play
tennis." "I wanted to bike across Europe." "I wanted to see South America." "I
wanted to write a cookbook." This gives you the impetus to overcome inertia and
Take the Leap of
Some have said they
admire what we are doing, but they think it is too risky for them. We say that
life is a risk. There are
no guarantees about anything: health, marriage,
investments, weather, and tragedy. Since we retired, we have survived the bear
market of 2000, The Great Recession, the first Gulf War, a couple of
emergencies and some funny
traveling debacles. We say, if you want a guarantee, buy a Sears battery. But
today, even Sears might not be a guarantee!