If filling blocks of free time as you choose sounds exciting, if pulling out maps of the world stirs a 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 13 years 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, 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.
Determine Your Expenses
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 a poll in a retirement forum, asking those who were already retired their annual expenditures, and the number was $24,000.
Monitor Investments and Withdrawals
We choose to be heavily invested in equities, and still are. In the recent bear market, we reduced exposure, but not enough to escape it. However, our net worth today is higher than when we retired, after expenses and inflation. Our plan is simply reverse dollar-cost averaging, selling shares as needed. We use low-cost, tax-advantaged, no-load mutual funds. The withdrawals could be set up automatically, but we choose to direct it, and it's easy with the Internet available worldwide. The money is then transferred to a money market account, with check-writing and bill-paying capabilities.
How do we travel to exotic locations on only $24,000 a year? We go someplace interesting and rent a furnished apartment or stay in an inexpensive hotel. 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.
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 Thai massages.
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 learn to watercolor." "I wanted to see South America." "I wanted to write a cookbook." This gives you the impetus to overcome inertia and move forward.
Take the Leap of Faith
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, tragedy. Since we retired, we have survived SARS, the Asian Bird Flu, the bear market of 2000, the first Gulf War, and some funny traveling debacles. If you want a guarantee, buy a Sears battery.
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.
About the Authors
Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurerís Guide to Early Retirement and Your Retirement Dream IS Possible.
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