In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 3rd decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
A fascinating couple, with
world-wide experience both in their previous careers and in travel, Kevin and
Erin Knox give thoughtful answers to the many questions we asked about their
early retirement. Newly arrived to full-time living in Chapala, Mexico, The
Knoxes contribute on many levels to the community in which they live.
Join us in reading this interview with Kevin and Erin. We know you will gain
from their wisdom and insight.
Billy and Akaisha Kaderli
Kevin and Erin, for the benefit of our readers, could you briefly tell us a
little about yourselves? Where you are from, and what lines of work did you do
before you retired?
Kevin: I am a veteran of the specialty coffee and tea industry, beginning my
career at Boulder, Colorado's Allegro Coffee Company in 1980. Later I moved to
Seattle where I worked for Starbucks Coffee Company as their Coffee Specialist,
and founded its newsletter. Becoming disenchanted with Starbucks' direction as
it grew in size, I returned to Boulder to rejoin Allegro as its senior vice
president. I published a highly-regarded book, Coffee Basics in
1997, and now work as a coffee and tea consultant for companies who share the
passionate commitment to quality that has been the driving force of my career.
Erin enjoying their freedom
Erin: I'm originally from Washington State. My parents were educators in
international schools when I was little, so we lived in Yaounde, Cameroon and Jakarta,
Indonesia when I was growing up. I think this really instilled in me a
love of travel and appreciation of other languages and cultures. After college I
spent a year in Europe working in London as a Silver Service waitress and
temporary secretary, and then in the south of France as an au pair. Back in the
U.S., I worked in human resources for many years, and then briefly as a program
coordinator for a cross cultural training company (preparing business people and
their families for life overseas). In 2000, with Kevin's support, I was
fortunate to be able to attend one of the best massage schools in the country --
Boulder College of Massage Therapy -- and so made another career change. I speak
French almost fluently and am working on learning Spanish to the same degree of
How long have you
been retired? What was your biggest motivating factor, and what has been your
We perhaps optimistically consider ourselves semi-retired, since 2002 when I
left Allegro Coffee/Whole Foods. I've done some consulting since then and would
like to do more with coffee and tea, which I retain much passion for, but the
economy has not been kind to such "luxury" products. Erin continues to do
massage for friends and family.
The biggest motivating factors have been the desire to spend more time in
spiritual practice and developing community. Probably the biggest challenge has
been being out-of-synch with the priorities and activities of most of our
friends from the working world.
What has been the greatest surprise you have encountered so far in this
How compatible we have been being together 24/7 after spending most of our time
apart when we were both working long hours. You hear the horror stories and we
feel blessed that this has worked, most of the time!
How much capital is enough? How will someone know when they are ready to
The fact of the matter is we worry about not having enough, and my exit from the
corporate world was anything but graceful. Internal politics and personnel
changes made my position at Allegro Coffee untenable, and subsequent changes in
that industry have limited employment prospects.
Erin holds a
HUGE South Indian Dosai (crepe). Let's eat!
How much is enough? As you emphasize wisely and repeatedly at
Retire Early Lifestyle,
there are no guarantees in life. At the end of the day I'm a believer in the
recommended so long ago: take a look at your assets if you liquidated all you
owned and ask yourself if you can live on 4% of that, perhaps supplemented by
part-time work and, when the time comes, social security.
Have these latest market gyrations affected your retirement in any way? Do
you have any regrets? Would you have done something differently?
Absolutely. I had done a great deal of reading about investment over the past 7
years: dozens of books and countless hours talking to financial professionals
and researching on the internet. We were invested very broadly across stocks and
bonds, both domestic and foreign, using the back-tested formulas in Bob Clyatt's
book, Work Less, Live More. With 45% in fixed income, 40% in
equities and 15% in commodities, REITS and the like. We thought we had designed
a conservative portfolio that would return ~8-9% forever, with few negative
years. Essentially this is the same approach used by endowments such as
Harvard's and Yale's, and we count ourselves lucky that we only had a paper loss
of 23% in 2008. Still, that was life-changing, and certainly made the decision
for us to move to Mexico full-time in hopes of riding things out.
As far as regrets, we had a sophisticated slice-and-dice portfolio based on tons
of research and still lost a lot, but we had lots of company, including the best
and brightest minds in the world of Modern Portfolio Theory. Since the crash we
have been introduced to Harry Browne's Permanent Portfolio, and
our only real regret is not knowing about it before last fall!
If you had twice your net worth, would it change your life?
Yes, it would, mostly in terms of having a huge buffer that would keep huge
drops in the markets from being so wrenching. And we would do a lot more travel
and charitable giving.
How do you figure the dollar amount to spend each year? Do you feel you
must watch your expenses closely or do you live luxuriously?
a piña, at Tequila Cofradia, in Tequila, Mexico
We set the maximum draw (including set-asides for taxes and investment expenses)
at 4% of assets but are currently trying to keep it closer to 3% in hopes of
seeing some recovery in our portfolio. We watch our expenses closely, writing
down every Peso and Dollar we spend and taking a careful look each month to make
sure our expenditures are in alignment with our values. Compared to most gringos
here we live frugally, but we have only to look at the struggles of Mexicans we
meet every day to know that comparatively we live lives of ease, and know next
to nothing about how to really be frugal!
Could you describe your investment strategy? How do you fund your
retirement? How do you manage your finances while not in the States?
We are nearly
fully transitioned to what is called the Permanent Portfolio, a 4
asset allocation strategy that has out-performed the S&P 500 from
1972-2009 with a quarter of the volatility. You can join the
Permanent Portfolio Discussion forum by
We saved like crazy during
my peak earning years, and that, plus a modest gain on selling our house, funded
our semi-retirement. Without going into specifics inappropriately, I do want to
say we pulled the plug on full-time work with way under $1M in assets, and have
not regretted the decision.
Share with us your best money-saving secret.
Buy nothing at the supermarket with more than five ingredients in it. If you
like European cuisine, as we do, cook that at home and when you go out to eat
choose only inexpensive ethnic cuisine cooked by and served to mostly people of
the nationality in question (e.g. go to a taqueria and eat real Mexican).
Where do you call home these days?
We live in a rented casita (small house) in the village of Ajijic, on the shores
of Lake Chapala, Mexico's largest freshwater lake. It's the largest expat
retirement community in the world, well-known and thoroughly "discovered." We
chose it as an easy way to ease into expat life - friends call it "Mexico with
training wheels." As our Spanish improves we will have many more options for
places to live in Mexico and other parts of Latin America, most with far lower
costs than here.
What is the comparative costs of living in Mexico versus in your previous
home town in Colorado? Are there massive savings or simply trade offs?
We've lived in several lower-cost retirement havens in the U.S.: Port Angeles,
Washington (on the Olympic Peninsula); Silver City, NM and most recently Cañon
City, Colorado. Rents in Ajijic, at least for places that most gringos would
find acceptable, are about on par with the aforementioned places. Due to the
lack of need for heating or air conditioning utilities are less than half as
much, but the biggest savings are on food, which costs less than 1/3 as much for
infinitely better and fresher year-round choices, and medical care, which I
would estimate is about 20 cents on the dollar vs. U.S. out-of-pocket prices.
At the Museo
de las Culturas de Oaxaca in Oaxaca, Mexico
We get by on less than $2000 a month including our rent of $650, some travel in
Mexico and a lengthy trip home each summer to see friends and family and attend
retreats. That amount would work out to a bare bones existence in
our old hometown, with no travel and the constant threat of a major
accident or diagnosis sending us here to Mexico or perhaps Thailand
to get the care we can no longer afford in the U.S.
What are the positive and negative aspects of living in Mexico? What do
you miss about the States that you cannot get in Mexico?
Positives: incredible weather, being amidst 5000 years of rich culture and
amazing food, the warmth and joy-in-the-moment of the Mexican people and a far
more diverse and lively gringo community than we have found in the conservative
small towns we've been able to afford in the U.S.
Negatives: high noise levels; corruption and bureaucracy; distance from friends
Things we miss: in a broad sense, the simple ease of being where you know how
things work and speak the language. Netflix and easy access to English books and
publications. Great hiking trails (Colorado spoiled us).
Are there hardships being an Ex-Pat? If you had to name the single biggest
challenge, what would it be? If someone wanted to retire here in Mexico what
would be your advice?
Of course there are challenges but I don't think more so than dealing with the
speed and stress of everyday life back home. Perhaps the biggest challenge is
also the biggest plus: it is way different than things back home. Most gringos
have only experienced Mexico on brief visits to places like Tijuana or perhaps
an all-inclusive stay at one of the beach resorts, so they don't realize that
the real Mexico, outside of such bubbles, is closer to Thailand than it is to
any U.S. city. They let the geographical proximity fool them into thinking there
is cultural similarity and that just isn't the case.
Our biggest piece of advice for anyone considering retiring here is to take lots
of time and completely forget about buying property here, even if you're among
the lucky few who could, for at least the first 3 years. There are a lot of
great places to live here that have sufficiently sizable gringo populations to
provide familiarity. Pick a place, such as Lake Chapala, San Miguel de Allende
or Oaxaca city, dive in, take Spanish classes, and then get out and travel and
Do you ever consider returning to the States to live?
Sure, and certainly if we had the money we'd love to have a U.S. home base and
be able to divide our expat time between Mexico and Asia, as we are in many ways
more drawn to those cultures. We both have aging parents and being a short
flight away from them figured prominently into our decision to be based here
rather than, say, Thailand, which we also love.
What advice would you give to someone considering early retirement today?
Do you have any words of wisdom for our readers?
In terms of learning from
our mistakes, take a hard look at your "human capital" - the friendships and
salable skills you have today. Have a plan B and a plan C that includes ways to
generate income, to live on less.
With respect to investing, assume that your allocation to stocks could drop
suddenly by 50% at any time and remain there for the rest of your lifetime, and
adjust your % accordingly.
organic tea estate in Sri Lanka
Do you rent or own your residence? Plusses and minuses?
We rent here and intend to do so forever. We've bought and sold 8 houses and
also been renters. Americans don't realize they are unique in thinking that
owning real estate is always a good investment - the rest of
the world, including Europe, doesn't think that way. As we get
older, we so appreciate having our assets liquid and working for us,
rather than tied up in a place that requires constant maintenance,
high property taxes, insurance and so on. Not to say we don't miss
the security of being able to paint the walls anytime we want to,
but for us this time of life is about learning and exploring, and
the less stuff we're responsible for the more freedom and joy we
How do you work out visits with family and how do you keep in touch? Do
you have children?
We fly home once a year and see friends and family then. Email and free phone
calls on Skype have made a huge difference in being able to be in touch with
folks back home and we can't imagine doing this without them. We do not have
What do you do about transportation? Do you own a car or use public
We drove down in our little Ford Focus hatchback, mostly because we were
strongly attached to having our English books, which are hard to come by and
expensive down here. We've found that quality of life whether here or Stateside
increases dramatically when we choose to be biking or busing distance from the
things we do every day, and here in Ajijic we walk everywhere and put so few
miles on our car that we often don't fill the tank in a month. Just walking into
the village to classes, strolling the lakeside and grocery shopping often
involves a couple of hours of walking including a final uphill stretch laden
with groceries. It's wonderful to get most of the exercise we need just going
about our business, without the need for costly gym memberships and the like to
compensate for car-crazy life in the U.S. We are seriously looking at selling
our car. There's great public transportation here.
In the States we read about gang shootings and kidnapping in Mexico. How
about personal safety where you are in Chapala?
Clearly the crime level in the border cities and Mexico City is scary, but this
area is very different. There is a lot of petty theft here and everywhere in
Mexico, but the same is true in most of the U.S. Violent crime against people in
this area is much less, and everyone we know feels safer here than they do back
home. Here as there you need to use common sense: keep a modest profile, get to
know your neighbors, and so on. Crime is a reality here and doubtless is getting
somewhat worse due to the economic crisis, but you simply don't have the gun
culture that leads to so much death and destruction back home.
Where do you get your news? How do you stay abreast of
current issues? Do you have to speak and read Spanish to live in
We rely on the internet for international news, trying to access as wide a
variety of sources and opinion as possible. Am also signed up for several
macroeconomic and investing newsletters. There's an excellent English daily out
of Mexico city (The News) we buy occasionally, and one weekly and two monthly
newspapers for the English-speaking community that focus on local events.
You can get by with "restaurant Spanish" - enough to say please and thank you,
order food and figure out how to get somewhere on a bus - for a long time here,
and the fact of the matter is many gringos who've been here for years know less
than that and still survive. That said, we are taking classes and are determined
to be able to carry on more substantive conversations, though we are realistic
enough to not have any plans to discuss the finer points of existentialism with
local intellectuals anytime soon. It is also critically important to have some
Spanish if you ever plan to travel outside of gringo enclaves such as this.
What will you not compromise on?
Healthy, locally-grown food. A comfortable bed. Having at least a handful of
deep friendships where one can discuss life and death and our deepest
aspirations. Love, fun and laughter.
In being you, what is your biggest contradiction?
We are connoisseurs of sense pleasures with strong renunciant streaks.
brew in Chiang Mai, Thailand
Who are your heroes?
Jesus, Buddha, Patanjali, Father Thomas Keating, Martin Luther King, Jr., Aung
San Suu Kyi, Joseph Goldstein, Ken Wilber, Michael Pollan, Ajahn Chah, Sarah
How do you contribute to the world?
We volunteer locally (Kevin leads a meditation group, Erin at the local expat
library) and aspire to do more volunteering as we get rooted in the community. I
also do periodic coffee and tea classes as benefits for the local organic
Do you have a valuable travel tip you could share?
Spend serious money on 3 pairs of Patagonia or other fancy capilene socks and
undies. Those and smart packing will let you travel anywhere in the world for as
long as you want with a sub 25 lb. backpack, and you'll be glad you did.
What about a cell phone. Do you have one and does it work worldwide?
Gave it up. They are cheap to buy here but minutes are expensive. Phone cards
and public phones that use them are cheap and ubiquitous. We love the simplicity
- and really love not being available 244/7!
Our readers always ask us about health care. What is your approach in this
Health care is what you do to take care of yourself everyday. We walk or hike
5-6 days a week, play tennis 1-2 times a week and do yoga every day. We eat
simple local food in season and don't buy processed foods.
Currently we pay out of pocket for all medical care and have found the doctors
and dentists available here to be very caring and competent - far more so than
even the very good doctors we had back home. We are applying for catastrophic
coverage through IMSS, the Mexican national system, but it will take over 2
years for full coverage. We dropped our high deductible U.S. coverage when we
moved down here, and are now spending about half of what we paid just in
premiums (with nothing left over for actual preventive care) catching up on
dental cleanings, physicals and the like. Access to affordable medical care was
second only to overall cost of living in our decision to move down here and the
broken U.S. system is the biggest disincentive to us ever moving back home, much
to our regret.
In one sentence, what is your philosophy on life, or your motto?
Kevin: a quote from a Western Buddhist teacher I admire, Leigh Brasington:
"He is no fool who gives up what he cannot keep, to gain what he cannot
Erin: from Shakespeare:
"There are more things in heaven and earth than can be dreamt of in your
We'd like to thank
both Kevin and Erin for their time and generosity in answering so many questions
about their early retirement, and for sharing their opinions and personal views.
To learn more about Kevin and Erin's wisdom and travels, go to their blog: Caffeinated Calm
To read their
comparisons of the Lake Chapala area to San Miguel de Allende as retirement
locations, see below:
To read Part I, click here,
To read Part II, click here,
To read Part III, click here
right around the corner and you're ready to
go someplace where the weather suits your
clothes. Spring-type temperatures year
'round, Chapala, Mexico is a dream come true
and the place for you!
looking to stay in chain hotels or for a
lifestyle that is just like the States then
Read more click here.
To read more
interviews with Expats, Early Retirees and Interesting Characters,
About the Authors
Billy and Akaisha Kaderli are
recognized retirement experts and internationally published authors on
topics of finance, medical tourism and world travel. With the wealth of
information they share on their award winning website RetireEarlyLifestyle.com,
they have been helping people achieve their own retirement dreams since
1991. They wrote the popular books, The
Adventurer’s Guide to Early Retirement and Your
Retirement Dream IS Possible available on their website
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.