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USD 1 Million? 2 Million? 5 Million? Or just 200.000? Are you kidding me - how can I *retire* now!?
How shall I finance my retirement? I will need *loads* of Cash, Gold, Insurance or Credit! I need my Hummer, the BMW X3 for the wife, my penthouse for the mistress, the Wanker’s Club Membership and my Arian German Sheppard!
Oh really?
Poor you - because if you’re really thinking of retiring early in your life - the question shouldn’t be: “How much do I need?”.
Better ask yourself: “How little do I need to retire now?”. You would be surprised, what answers you’ll find out. You can even retire in your early 30’s, with a little bit of planning early on and just some kind of discipline.
Do you know that owning a house for yourself and several cars on loans is not a sign of financial strength and wealth, but merely a sign of character weakness, dependence tendencies and bar ego extension (not that you have to be a guy for that one).
Basically you are in bed with the banks every day; tightly tied up. But seriously - it’s only you who get f*cked hard until unconsciousness! 
The globalised economies in the US, Europe, Australia and other developed countries these days are built around the so-called “Rat Race“. You are held to work constantly and consume & purchase endlessly - and pay for it. With your life.
Why?
You basically will buy your whole life stupid things you’d never need, but clever marketing of Multinational Companies tells you to do so. Flat Screen TV’s (what’s wrong with the trusted old ones?), “Body-Workout Machines” to trim your fatty tummy, Gaming Consoles, >USD 200-Branded Jeans, Clown Dresses and other Show-Off-Costumes, Dog&Cat-Trainers, Super-Hyper-Multi-Kitchen-Gadgets, Monster-Gas-Guzzling-Cars, Double-Decker-1.000-sqm-Houses, Mountains of Jewelries for your loved ones and “soon-to-be-ex-loved-ones”. You will need to work more and harder to pay for all that stuff. Divorce rates hover constantly above 50% in those countries, you will pay for your divorce as well - with your money, soul and heart blood. Everyone will suck you dry, until dust and debt is everything what’s left. Are you happy to live like that?
On top of that you spend already USD 5 for a coffee several times a day at obscure experience restaurants named “Star*ucks“, “Coffee Boobs” or “Spineless“. Isn’t that crazy?
Don’t bet on your government to fix this b*llsh*t cycle any time soon within the next 150 years or so. In the times of sky-high defence budgets and exploding taxes - they are not on your side. They even want you to work more and longer!
Why not start learning to live with less? Do you really need more reasons for it?
The Caribbean, Latin and South America, South-East Asia or other low-cost regions are waiting for you! Better weather, pristine beaches, less pollution and a way slower pace of life will do a great deal for your health and your quality of life.
Can you still remember how it feels to get out of your bed in middle of the day, just only when your body - not your alarm - tells you to wake up?
You can live in low-cost countries like a King, from what you have right now and what interest, rent, dividends or other income streams you would earn in the future. You can even save on your Healthcare Bills; by simply getting treatment elsewhere - not in your overpriced home country.
Did you know, that you can
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buy a pair of jeans everywhere in the world for less than USD 15? (If you really need one in constant 100 F-Degrees weather).
-
drink a coffee for less than USD 1?
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have a meal (I don’t talk fast food here) for 2-3 Dollar?
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rent a (western-standard) house for 200 Dollar a month or less?
- fill-up the tank of your bike for less than 4 Dollar a week?
So, what are you waiting for?
Assess your situation, downshift now, sell all your useless sh*t to someone more stupid, invest in active income streams, find out where you want to stay, go travel and leave the other working drones and your cubicle behind!
Your Life is what you make it!
Easy like that? No? Yes!
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You’re absolutely right. Unfortunately, we are often “programmmed” to do it the other way around and realize too late, that we could have enjoyed life much earlier. Then I guess it also takes a bit of courage to believe that it can be done and then to take the decision.
I have a high respect for those who made it happen and planned early.
I like your approach to life and will keep reading you! Wanna trade links?
i agree — for those people that have discovered the ability to telecommute, the possibilities are limitless for where you can work. but even if you can’t make a living from a laptop on the beach, someone could stop buying useless crap at home, move into a smaller house, and cut the junk out of their life, and be able to live on a smaller income.
LoL We gotta meet up some day, most people have not figured out one tenth of what you wrote
even today I was convincing myself that a new car is something I need LOL & I’m off travelling in 18 months thanks for the reminder.
I agree about that. On how much do you live in Bali?
Makes sense and there are people out there aware of the rat race. I’ve been to some of the low cost countries you infer and would love to live there like a king. But two of the biggest challenges are 1. You parents, siblings, and friends are not there so you are going to want to return to your home country frequently (big $$ and then you have to live as a guest in their home while they are still running around in the rat race) and 2. Once you get out of the rat race it is tough to get back in at the same place you got out…
I m one of those people who keeps thinking how much do i need to retire early while running like a mad rat at the same time.
So wat if i win a rat race, i m still a RAT. Wat a knock in the head!
I have been living overseas for years. And so I understand your philosophy. And I telecommute from an olive grove in Marrakech. But not working just doesn’t seem like an option right now.
I agree with dropping the materialism, but Jay is right, family over rides location. You must be single with no kids or pretty selfish, or young. Who is going to take care of your parents when they get old? Most people in advanced countries with kids want them to be well educated in a western university, which generally takes lots of rat-race dollars. Not to mention the fact that the kids don’t want to live in Costa Rica or Bali either.
Then there is the fact that things just work better in advanced countries. Ever been to Etheopia? or India? What a mess! They need a slower pace of life there so that they can have time to deal with all the inefficient BS that goes with screwed up governments and weak infrastructures. There is a reason people generally move from the third world to the advanced economies - because they work better and provide more opportunities.
I read it over and over again, decide to comment later after I can digest all of it. You’re absolutely right, Chris. But for me, an Asian who is living in a third world country where daily living is a constant survival of the fittest, I can’t make it possible by now.
I do agree with your idea. I wish I can do the same. Personally, I also have a few local areas just nearby in my present location which is my prospective retirement place…. soon…. I hope I can make it….
Guys, thanks a lot for the many thoughtful comments!
I agree that this life isn’t for everyone, as Jay and Jameel put it. Sometimes there are circumstances (especially family) which prevent you from living freely without any responsibilities. But then - you are responsible for your own life as well, so everyone has to find its own way somehow.
Some like Maryam don’t even want to stop working, as traveling for work can be rewarding too. It all comes out to personal preference. It has to fit for you!
Dodong has a good point as well. As a citizen from Europe, US, Australia or any other region with higher salaries and cost of living, I have naturally a better chance to save money and plan retirement in a low cost country.
If I live there already, things don’t look so easy. It could be an option to live a few years overseas and work in a high salary country, saving what I can and book the whole episode as life experience. A few places have low unemployment rates and pay well for qualified staff.
(Rhea and Jure, you got mail regarding your questions)
Moved to Thailand in late 1999. Never looked back! Living on 1/5 the costs of back home (America). I visit for two weeks every other year and can’t wait to get back on the plane to Thailand. I believe so much in this concept that I’ve produced a web site to discuss the pro’s and con’s. http://www.whyretireinthailand.com Hope you will visit soon.
Regards,
Jim Styers
My wife, who is Indonesian, and I spent the first 10 years of our life together in and around Indonesia. We returned to the UK only when the schooling of our daughters dictated it. We always said we would return to Indonesia one day. Our daughters are now 29 years and 22 years and its time to get back to our dream. We are in the final stages of selling our flat, when that goes through we are out of here.
Over the past 20 years back in the UK we have managed to save nothing, the bastards just will not let you keep it, so I guess we’ll end up with a £100k or so from the flat sale. We reckon it will be enough to buy a decent house and start a small business, which will do us.
Its scary, we are a lot older now and far more venerable to life’s knocks. And naturally there are all sorts of emotions flying around, but you just cannot have everything perfect in this life. We do love Indonesia, and have been back to visit often over the years. There are some negatives, but I do think it will be a good life. On the other side, I think if I was to grow old and poor in England, I’d slit my wrists.
Our girls already have their first visit planned this year, we are all going to visit Bali together, and I personally cannot wait to feel the sun on my back and the sand between my toes.
Here’s to life and adventure.
Wow! There is a lot to think about here. As I agree with a lot of the concepts that Chris lays out, I have to agree with some of the other comments. At first glance I would love to pick up, sell all my crap, including my life (like some Aussie recently did on ebay, no joke!) and just “go bamboo”. But there is so much more to consider, like family and friends, etc. But I think there is a compromise in all of this. Live as small as possible. Get rid of all the crap you don’t need that just keeps you bogged down in the rat race, pay off those credit cards and never use them again, and use extra money you have to get out there and do the things you love, like traveling. Make room for the stuff you want to come into your life by getting rid of what doesn’t fit anymore.
I have to make some life changes soon, and figure out what I want from life in very specific ways, but I am not sure what they are yet. It was great to come across this blog to continue my line of thinking on this.
Thanks!
Why even retire with money? I am just dropping out at 25.
Ur so right in many things^^ Im now 36, travelled as well a lot 20-33, America, Asia, Caribbeans, Europe..now I got my own house in Switzerland Zurich (from my mom that died). I set a 2nd base of life in Hungary and Bulgaria (great countries), BUT it feels fine 2 have the finance security and health insurance in Europe, in Switzerland. If u live in the countries u r right now, then it might b great. But I dont c wher u mentioned what u do when ur sick, I mean really sick…so travelling is fun, but only if ur on the sunny side of life:-)Why so many ppl of the countries u mention move 2 Europe/America? Coz they have no future at home. Consider this in ur articles plz, would b interesting 2 read about:-)Best regards
Ivan,
regarding the thing with sunny side and insurance - there we just might have different point of views. Most people (not YOU!) use this excuse to never move.
Do you subscribe to the concept of insurance? I don’t. Why? Because in insurances my experience is that the insurance taker or customer never wins. I can’t recall a single case in my last 35 years, where I, my family, relatives or anyone I know got more out of insurance then what one paid in. Still the insurance companies boast huge profits, was there ever one of them going bankrupt?
So why pay in in the first place? Most forced insurances in Europe/America like health, unemployment, retirement securities or insurances don’t work at all and are always at the brink of collapse. Why support a system like that? For instance health: I’m really not the 100% healthy person, but even though; I can survive better without insurance than with. It’s just a matter of calculation and perspective, no? If you feel better with insurances and else, get them! There is nothing wrong with it.
[...] In Real Estate it’s all about location, location, location. Not here! After all I want to live there for a longer time, without ransacking my life savings, plundering my retirement money or working my *ss off in the tourist industry. We are talking Nomadic Lifestyle, here. Streams of income in hard currency, expenses in weak ones, right? [...]
well, good writing is judge by the emotion is stirred and you stirred up quiet a bit of buzz. I really can’t believe you left everything behind to travel. The good thing is you can see honestly the pros and the cons of many things and that is respectable. I think it comes down to comfort and how much are people willing to pay for it. It would sure be nice to have a washer and dryer in my house but you can’t beat 5dollars at the laundry mat. It would be nice to retire to Colombia, but I dislike the government structure and I wonder how safe the little eggs I’ve worked hard to get will be there. Just a thought, thanks for the add. –clau
Work to live - not live to work.
Hi. I am an Argentinian mother of two. I am 40 years old and have been living in the US for the past 34 years. While I am greatful for living in this country because here I have been able to live and save for my retirement at the same time, my plans are to retire in Argentina. I have not have set a date for such retirement. What holds me back is that I have my two kids(ages 9, 4)….so, it is hard because of the schooling issue. But, I must say that I agree with the idea that is westernized countries life is a “rat race”, and mostly due to consumerism. I have always questioned…”do we need so much”. I’m very much a frugal person and have lived a very little(and for me it was not a sacrifice…it was desired). But when my kids came, the spending got somewhat out of control…you know kids…they want more and more. I am slowly starting to help my daughter who is 9 to understand my way of thinking and I think that she being a person like myself in many ways will come to my way of being. I have personal experience on what life is like in another country because I have the chance to go there and actually experience it. I think what is very beneficial in living in a current country is the currency exchange rates. Coming with dollars, puts you at a great advantage. Being the frugal person that I am, I have done comparison analysis on prices of all types of things between prices here in the US and in Argentina. Let me begin by telling you that healthcare is very cheap in comparison to here in the states. My mother for example pays $50(that is US dollars) a month to have an insurance policy that covers everything(except cosmetic procedures). She has access to top notch doctors at top notch hospitals…….yes, the infrastructure is better here…but upper healthcare facilities over there are very very good. And many Argentine doctors are trained here in the US. My brother in-law that live over there with his wife and 3 kids, let me go through his bills….he pays for example $35(US dollars) electric bill a month. Water they pay every two months(about 30 US dollars every two months….for a family of 5 bid you.)……and life is definately much much slower…you see people strolling through parks, friends gather often at each others homes…family, and friendship have time for each other. The country is not perfect of course…and we know something must be not right for so many people from Argentina and from other countries to be leaving for countries like the US, and Europeans countries. Whyyyyyyyyyyyyyy???????? if they have it so good do they leave. And here is the reason….low paying jobs, high unemployment and corrupt politicians. Many many leave…but MOST return…after they saved so that money is no longer an issue. I love the USA because I came here as a little girl, and I am greatful, but as many other I am of the belief that money is and material possessions are not happiness. I think that one idea I’m going to work on when my kids are a bit older is starting a website or ever perhaps some kind of a buisness for native Americans with limited or no Spanish and who need guidance on how to navigate the Argentine system so they could live there. Look up Argentina everyone…it is a beautiful country….many call Buenos Aires the little Paris of Latin America.
I can only agree with what you wrote and probably most of the people around you haven’t got a clue on what you are talking about. They are stuck in the Rat Race and will probably work and consume what the Media tells them until they fall into their grave. But this is the way to go for you and me and for a lot of other persons these days.
Work in Strong-Currency-Countries and spend later in Low-Cost-of-Living-Countries.
I also have to agree with your remark about Buenos Aires - even though I was there only once for 2 days a few years back with a commercial business delegation (before the financial crisis).
It *IS* the little Paris of South America, so many small Cafe’s, the vibes and atmosphere and the lively and friendly people - it’s simply great to be there! The climate would be right for me too. I liked the Salsa/Flamenco Bars as well and still remembered my embarrassment when I was asked by a professional dancer to dance a round with her on one’s stage, even though I couldn’t dance at all. Have you seen the colour of a Lobster in cooking water? Exactly! Have to catch up with my Spanish probably for the next trip.
i am 33 and plan on shifting down at 35. i am a american working in brazil. i am in a unique position of earning a very generous salary getting paid in both dollars and reias. i am saving ever dime and investing in hopes of securing a steady stream of work free income. there will always be a challenge to make the dream life match with the reality. its easy to say forget it all but if you knee or back (i have problems with both) goes out expenses can easily go upwards of $20K. I agree its not fair or right but it is the reality. so my plan is to save it all run the race a bit squeeze what i can out of them and then start of on my own. if you buy the used car instead of the new one the little tv instead of the huge one, you can still have nice things in life with out being to wrapped up in in it all. i am confident i can do it all right by 35 and be comfortable, but the problem is family. one day i would like to get married and have kids. and of course provide for them all they need. also as others have mentioned i have parents that will eventually need my help financially and physically. here are some things to think about: cdb’s (equivalent to cd’s in the usa) earn about 14% a year in brazil!! stocks and mutal funds, more risky, earn even more. a investor visa can be obtained with a $50,000 investment in a brazilian business, could be your buisness. i plan to start a small bed and breakfast live in it maybe make money mabey not. surf all day and drink beers in my hammock. ocassional trips to the city to spice it up. i would love to hear more about visa issues, investment/income ideas, etc from others in other locations. i got two years to figure it all out…
[...] Chris presents How much money do you need to retire? posted at nomad4ever. Do you know that owning a house for yourself and several cars on loans is not a sign of financial strength and wealth, but merely a sign of character weakness, dependence tendencies and bar ego extension (not that you have to be a guy for that one). [...]
very nice article! bravo!
[...] Over at Brave New Traveler, which always has great, original and inspiring write-ups about travel in the 21st century, Jenn DiPiazza wrote a great article about the ‘gatherers instinct’, which is still somehow in most of us. The thing is that we collect more and more ’stuff’ during our life, which makes us more ‘im-mobile’ and fixed to a certain location. You amass a lot of useless things, waste plenty of money and end up needing more and more space for it. She learned an important lesson in life when living for a while with Navajo Indian Americans in the middle of the desert. After that she started to prioritize and to live more with less. That’s how she gained flexibility and the freedom of mind to move on to new shores and to explore the world around her. These are the first steps if you are really planning to travel more or even travel permanently, to get rid of all the ballast in your life, downshift or do and purchase only, what really counts in your life and for your self-development. Who knows, maybe you can even retire early, maybe already in your 30s? [...]
Hi All,
Retiring is really about your personal level of contentment. And that again is a very personal definition. What I call contentment, someone else might call laziness. What they call ambition, I may call Greed!! In the end everyone should do whatever they want without worrying about their peers.
I was lucky enuf to work in New York during the good years of the late 90s…..made a little bit of money, not huge but enuf to come back to my hometown…Bangalore, India. What did I discover when I got here much to my shock?? That ALL my peers on average earned a MINIMUM of $100,000 or MORE!!@# Remember, this is India I am talking about, not the US. The economic boom that India is going thru is evident just from looking at my group of friends who were not more than middle-class when I left India. Now, they think nothing of a trip to Europe or the middle east for a vacation. They think nothing of spending $10-15 on each cocktail drink at any of the city’s many lounges 3 day a week. Each meal in a good restaurant in Bangalore costs about $50 for a couple. But in exchange for all this….they all work very very hard….read 60 to 70 hours a week with tremendous amounts of stress, in order to meet the cost saving targets of their american or european bosses. One look at this and I decided….I will live within my means and do something to just earn enuf to satisfy MY living stardards…to hell with keeping up with the Jones’. And its worked out great for me….the kids see a lot of me as I work from home, I get to fight with the wife all day long as we are constantly in each others faces (LOL), never have to wake up to go to work, and every one and I mean EVERY ONE of my wealthy friends is envious of me because they all want what I have, but dont have the courage to take the radical step of walking away from the rat-race. So what was the point of this long rant? Anyone can retire when they want….but be sure that you can deal with the fact that you will have less money for conspicious consumption compared to all your peers.
cheers
[...] Monday Morning Blues? Read here, or here to learn how to downshift or here to see, how much money you need to retire earlier with less. [...]
[...] Chris presents How much money do you need to retire? posted at nomad4ever. [...]
[...] Best Revenue Earning Post: How much money do you need to retire? [...]
Surprise surprise !!!!
I am not the only one who thinks this way. What a relief.
Some people may think this is some kind of negative thinking, but to me this is the most positive thinking.
I have been a big fan of “living simple life” and to some extent admire Mr. Gandhi (Indian freedom fighter, “Bapu”) who would even make his cloths with his own hands using simple home made tools. No dependencies, live as you like to live and not as your boss or others want you to.
But the fact of the life is, you can certainly leave behind people you don’t know or to whom you are not related, such as your boss, co-workers etc. but you can’t… I repeat you can’t leave your loved ones behind. You will be lucky if all your loved ones will share the same thoughts as you and are willing to get out of the rat race and join you, which I doubt. In your early age of life, early 20s or as a teenager, you don’t care much about the loved ones, but as you grow older, you realize how much you love and need your loved ones such as your parents, just as much they love and need you.
Some times “Life sucks and then you die…”
Hey MM, I read your post and I feel like I am reading my own story.
I was in the US for 7 years, came back lasts year and now started my own IT business and work from home.
I fight with wife, become a child and play and fight with my daughter, never worry about getting up early if I think I need 30 mins more sleep, take weekends off and sometimes even take one or two weekday off as well if I feel like. I do work but at my own pace so I don’t get bored sitting idle and feel like a looser altogether.
I came to this post to find out how much money should I really have to retire comfortably and I have discovered more than needed info reading everyone’s opinion.
MM it will be a pleasure knowing you. I am in Mumbai. NautankiDrama@gmail.com is my email
Cheers.
ST, I sent an e-mail to MM regarding your request, if he might contact you. Please check your mail and I would be really happy, if you could continue your interesting discussion here as well.
San, I partly agree with you - it’s hard to leave other people behind, especially loved ones. But then - you are responsible for your own life as well and both, Gandhi and Mother Theresa died already. Some people, including loved ones don’t even want to be helped or see things completely different than you. So why not fulfill you dreams, while watching out for your loved ones from time to time. Too selfish?
I’m not the one that found a good reason to live in working for a company.
I’m also not the one that can live with the “minimum” like poor people do. If I were that kind of person I can find a half day job here in north Italy and so spend my free time doing things I like more than working for a company (considering that you can do really few things if you don’t have good money in the “west side” of the world).
To buy a 80 square meter apartment for a small family the price in the peripheral of Milan is 300.000,00 Euro and this means it needs to make a mortgage of 30 years with Banks and become their rat race slave.
One of the risk in going to live in a poorest country (because this is the only point that makes the difference) so that your saved money can have more value, is that globalization is alligning every countries to consumerism. This means that in few years what in Argentina costs 1/3 in 10 years will cost like in Europe or North America today! So it’s not possible to stop to work also if I move to a poorest country.
Merrill Lynch has calculated that in Milan a family of 4 people can live fine without working only if it owns at least 2.8 Millions Euro and invests them in good different way. This doesn’t mean have helicopter or other kind of luxury cars etc. Just a good life with private school for children and good vacations. With less money they will finish in some years.
On a different scale the same happens going to live in a poorest country.
You start thinking you are rich compared to the life cost and in few years you can’t live without working, earning less money than I did in my own country.
If in Argentina you can live with 1/4 this means I need at least 800.000,00 Euro (1.17 million $) to live there without working hard and with a Family.
Yes, because having a family (wife, children etc.) it makes a big difference!
Suggestions? :-) Greetings!
I Agree about Robert T. Kiyosaki Theory.. he tell me about “pasive income” theory.. that we must do the money so they can working for us, not we working to get money.. and also he said (as i read from the book), dont decrease the expenses but increase the earning..
So for me is how to get financial freedom, and i can life anywhere not only in country with low currency power but i can life in most highest currency country too..
how much we need money to be a retire men? depend.. when we want to buy something and we doesn’t have to thinking where i can get money to get that? you’re in financial freedom step and ready to retire…
If we now already have business, we must find the next leader so we can do travelling around the world and never worried about our business again because we already have people to take care our business..
dexno
http://www.dexno.com
True if you are from wealthy countries (Europe, US, Australia etc) but what about people just like me who are Indonesian or other developed countries..
I am a nomaden since junior high school, now I work for the government in Jakarta (to earn some money for living…
). I love to live in small city or in the village not big city like Jakarta. For 3 years I am not nomad anymore.
I have live in several Indonesia city like Palembang, Cirebon, Cimahi, Bandung, Sukabumi & Jakarta also have travel to many other city. But is hard for me to live or travel to other country (I hope I can do that in the future).
Andi Vicky - I agree. This article I mostly wrote with my fellow western brethren in mind, who work off their behinds every day in their cubicles and believe that it’s the only way they can go until retirement. It’s actually naturally easier for them to let go and do what they want. But still most of them prefer to run in the hamster wheel, because their whole life is programmed like this, by their parents, teachers, society and politicians.
I admit as well that the whole idea behind retirement is much more difficult for someone from developing (most Asian) countries, as there are other problems, values (especially the whole family support topic), the financial and economical basis.
But as Dexno/Iklan Baris Gratis put it, the same rules apply here too. Just the path is more stony…
[...] following post “How much money do you need to retire” is one of the most successful posts of this blog. It received the most numbers of visitors, [...]
[...] while ago we established a concept, that it doesn’t take you necessarily heaps of money to retire early in your lifetime. If you [...]
By the way, great blog you have here!. It’s no coincidence I found your blog. It’s great to find another like-minded fellow who knows it is POSSIBLE to leave this so called treadmill of useless hardwork to compensate for our materialistic lifestyle. It’s something one can actually realize if one stops and think. We know there is a place out there where we could do this and we already planned on doing so, in the Philippines where I was born. Yes, it is possible to retire in your 30’s, provided that you first free yourself as a slave of your house and car(s) and stuff :-). I just started my blog about this last week.
I’ve lived the nomadic lifestyle for several years - working remotely for IT companies while in Spain (when it was cheaper for US citizens) Colombia and Puerto Rico. I dislike the work and I hate the isolation. I’ve completely burned out on it and can no longer force myself to concentrate. The being burned out and isolation from peers contributes to a feeling of isolation from others in general and starts to be psychologically harmful in the form of increasing doubts and anxieties, so be careful how you structure your remote-work life if that’s the path that you choose. Maybe with a wife and kids at home it’s different. After much reflection, I’ve determined that the life of value to me is a life of purpose, not of retirement and withdrawal to some exotic, cheap location. I’ve seen bad and good expats, and the bad are really bad, troubled, desperate people and the good are doing something that they value and are surrounded by people that they love and have the ability to go back to their home country at will. If travel is your purpose for being free, then more power to you. If you want to sleep in every day and do nothing for a while, let me tell you how old that gets. “Do not squander time, for that is the stuff life is made of.” Nothing truly good is acheived without purpose and dedication, and the whimsical nature of travel doesn’t usually allow for that. Sure with money and freedom you can skirt around the world collecting pleasurable experiences, but if you do it alone you will only share these experiences with transient friends, and you will be unlikely to form lasting relationships, as maintaining them at a distance becomes increasingly difficult as time passes and you don’t visit or have time for adequate correspondence due to focus on your new location. The best life path is having a vocation with clear focus and purpose - to “do what you are” and to grow in ways that you value. Being free is not an end in itself.
mixxy - thanks for the heads up and all the best for your blog! I visited it already a few times and it looks better and better!
Justino - you got a good point there! This life is not for everyone. But then - what life is, if what you do is not what you like and you are locked in your room with few contacts outside your work world. If you can find the right balance though, to do what you like, earn money with/from it and enjoy your life outside work; it might well pay off and work out. I admit it’s not an easy task but once you get to know yourself and find the right way, you would never go back. It took me 14 years and lots of thought, frustration and unhappiness. But finally I realized what I wanted and found the power of just doing it. Never looked back. For me it was more a psychological path towards developing the necessary attitude and confine in myself than anything else. Once you get rid of the fears and worries, it’s easy. You can go out, meet other like-minded people and do your thing, looking back realizing that only your mind played some tricks with you.
Hi–I think you and I have the same idea about life, and not afraid to go out on the limb. Check out my site sometimes. Maybe we could share ideas and experiences. Till next time….
julius p. bantigue, thanks for the heads up! Your site looks very good, plenty of great content and nice interviews and insights. Will read a bit more and yep, maybe we can collaborate on something in the future.
How true!! Got a friend who hadnt changed his mobile phone the last 5 years and still reachable whilst Ive changed a zillion times! I now have a PDA touch screen, MP3 playback, high resolution video recording, 24×7 connected to personal and corporate email - Gosh, the rats have won the plate!
Visiting your blog, I think the cup is still up for grabs.
To help you Chris, for dreams from developing economies such as BRIC (Brazil, Russia, India and China), its a bit tricky - economy inflating faster than my kid could do a ballon. I have a plan though. I spend 1/10th of my affordable income, thanks to IT boom in India, on hiring services - electrician, carpentor, house maid, painter and a chauf driving me to work!! Bit of inspiration from the western world, I guess if I learnt to paint my house, fix some wires, nail the wood, vacumn the house, clean and drive my car, I would save that 10%. No matter how costly it becomes the next 20years, I keep saving 10%. Saving is earning, how easy!
Family and health. Uh god, no idea what I am paying the insurance folks. A little bit of yoga and decent vegetarian diet beat the docs by miles. Age old adage - Prevention better than cure. Besides, alternative medicine is fast catching up and are very inexpensive and affordable.
I planned to early retire at 35 when I was 32. Gave it an extension to 40 and I am running 39 now. I strongly believe my plan would work this time next year. The rats will be shown their place. Cheers.
Sudz, that sounds like you are really on a good track. The laws of attraction work in your favor. When I was a teenage, my initial plan was as well to retire when turning 30, but it took another 4 years. But hey - I didn’t cry about it. So I believe the earlier you start planning and working towards it, the better are your chances.
This is a great blog. I think its really important for people to understand that there is a whole big world outside their own small realities. I am an American who has been living overseas for 7 years. Whenever I go back to the US I am struck by how little awareness there is among my fellow countrymen that its really possible to leave the US and improve your standard of living. One thing that has not been touched on much is the impact of taxes in building up a nest egg. The US is a very high tax place to live when you consider (a) federal income tax; (b) State Income tax; (c) FICA/Social Security tax; (d) real estate taxes; (e) sales tax etc etc.
I’m not sure how many Americans are aware of the fact that they can live and work in zero tax countries and turbo charge their savings rate. True, being American means that (unlike most nationalities) that even if you leave the US you must still file a US tax return. BUT you are entitled to exclude $85,700 from your income (as of the 2007 tax year). This means that if you live in a zero tax country like I do, that your first $85,700 in income is absolutely tax free (or $171,400 if you are a married working couple)!! And since you do not reside in a State, there is no State income tax either. Think about how many years you could save in building your nest egg if you didn’t have to spend the first six months of each year paying Uncle Sam! And the list of zero or low tax countries includes some nice places to live that also have great job opportunities — Think Dubai, Cayman Islands, Monaco, Switzerland (low not zero). Another big consideration for retirees is property tax. Many places in the US have sky high property taxes. I have relatives in NJ who are paying $24K per year even though their house is paid off!! The US has a very screwy idea about funding local tax bases via property taxes. Most countries in the world do not subscribe to this philosophy and charge zero or very low property tax. You can own a house in Central London — one of the most expensive cities in the world and literally pay zero property tax! You can own a little Finca in Spain or a Mas in Provence and pay $100s not $1000s each year in tax. Plus if you establish residency you can get excellent health care for practically nothing. Hmm, nice quality of life, great food, good climate, low taxes, good heallth care. Now what is wrong with that picture. Oh and I’m sure the relatives would all love to come visit too!
RW - thanks for your detailed comment. There is really not much one could add. We can just hope that more and more people realize, what you just said. It’s really a bit sad, that most people think they have to live the lives that their government, enterprises and advertising showing them for the ‘real’ life. But then, everyone should be old enough to make ones conclusions and live the life one want. What else sets us apart from cattle, no?
Great article
I’m 32 and you’ve got me thinking.
I reckon its about time to retire
Great article, (and comments)
). So, there you go. What am i waiting for??? Well i think its going to take some time before i can close everything here and relocate. But the thing is, i have made a decision! Good luck to everyone else who´s thinking in those terms!
I just found it, just coming home from a 3 months trip to asia (most Indonesia and Bali). Since my first travel to Bali in 2000 my mind have being set on early retirement. But its the last years that made me more decisive, earlier it was more of a dream. Very interesting to read all the comments. As i have noticed here (Sweden) many people talk about doing that (leave the rat-race). I was talking to a friend who is also on to move to Indonesia. He keep saying that he need the same income there as here, so he cant go. And i answer him : “ok, maybe you dont want it enough…” I think thats a typical “problem” for people who thinking of make life changes. You want to have the cake and eat it! If you se giving up some (false?) security as a sacrifice, maybe you are not ready? For me, i se more about the higher quality of life. And still be able to live as good as here for a 1/4 of the cost (material standard). This last visit also gave me input for biz in Bali (no not furniture or clothes
[...] Nomad4Ever is written by a German blogger who left the rat race five years ago and has been living, working and traveling in Asia ever since. Chris presents a variety of reflections, including bits on work/life balance. [...]
My answer to how much do you need: probably less than you think. I quit working 3 years ago and as long as I stick to my budget, I will never have to work again. (I am now 42).
How to figure out how much you need? There is no one number that is going to work for everyone. It doesn’t work like that. It depends on your lifestyle. What you need to do is carefully track your expenses and plan a budget. Then, measure that (accounting for inflation and changes in the value of your investements) against how much money you’ve got. It sounds simple, and it is, but the math is complex.
Check out http://personal.fidelity.com/planning/investment
You need to create an account to use the tools but you do NOT need to have money with Fidelity to use the tools.
The retirement income planner will probably take 4-8 hours of work to gather and input all your data. But after that work, you get an incredible 20 page report that tells you the likelihood of your money lasting until you pass into the next world (where presumably we won’t need money, right?).
The tool takes into account a vast array of variables, including estimated lifespan, current value of your assets and liabilities, your optimism/pessimism about the value of your investment over time, your monthly budget, etc, etc, etc.
Literally at the end of this labor you will get a yes/no answer - do you have enough TODAY to quit working. If not, the system will present several options for getting where you need to be, including, among other things, cutting your expenses.
HSBC also has a site devoted to us early retirees living outside our home country. I don’t know how good that site is, but the Fidelity site rocks. And not just because I got the answer I wanted.
Simon, thanks for the positive feedback and best of luck for making up your mind!
CW, don’t wait too long, otherwise it will be just like your colleagues - just kidding! You made your decision already, that’s plenty more than the rest of your friends can ever say of themselves! The next step is simply relentless execution!
Juulchin, thanks for the information about that retirement income planner. Can’t hurt to give that a try!
One thing that we should all also consider is that the concept of “retiring” overseas doesn’t necessarily mean that we will never again earn another penny. One of the things that I have discovered in my several moves around the world — London, Moscow, Dubai is that there are all kinds of incredible people and opportunities awaiting you once you step off the “treadmill”. In fact I have earned much more living overseas than I ever would have had I stayed in my routine in the US! I can now “live like a king” anywhere I choose. If you are open to new opportunities and can see where niches need to be filled, the world is literally your oyster. And then you can fly your family over to visit!
@Chris -
I think I came upon your blog for a reason because for the past few months my husband and I have been contemplating “dropping everything” in the US and moving to Europe. We have hesitated and haven’t jumped into any decisions due to the fact that we have a 5 year old and own a business that keeps us stuck in Denver. We have come a long way since 2006 as that was the year my husband and I stopped participating in the official rat race and started a business. However, now it seems almost the same as a normal “job”. If we can find a solid way to make money online or passively (which is why I started a travel blog), we would make the move in an instant. It wouldn’t even be a second thought if that were the case. We don’t have much money in savings (about $12,000 USD), so we view it as a risky venture unless - like I said..we make online or passive income.
@RW - I am interested in picking your brain about the types of opportunities you speak of and how you made the leap from the US to Europe.
Janet
First congratulations on stepping out of the rat race. Well done. Its funny I have a cousin who lives in Denver named Janet. But no relation.
In terms of how I did it. Well I started doing consulting and later private equity investing overseas when I lived in DC. The firm I was with at the time set up an office in London and I moved over with the group. I then set up my own investment company with the backing of some investors from Europe.
There are obviously different paths for different people and depending on what your particular expertise is I am sure that you can find a way to make it work wherever in the world you want to be. For resources and ideas I would recommend http://www.internationalliving.com or http://www.escapeartist.com Both cater to the expat lifestyle.
There are so many aspects to moving abroad that I would suggest you start blogging with people who have done it, read International Living, and pick up a book or two on the topic and/or attend a conference on the subject. There are now titles available for virtually any country you would want to move to or general titles on being an expat. In a globalized world one of the benefits is that you can shape exactly where and how you want to live. Good luck!!
@RW -
Yes believe me, I’m working on it… I have a couple ideas - one of which I think has a great amount of potential. I am implementing it as we speak.
I view my journey as a series of stepping stones. I have stepped on some of them already: leaving the rat race, starting a business that has made it past the 2 year mark, cleaning up my state of mind… Now on to the others. I’ll make it. I have no doubt. I know this is not something that can be decided or accomplished overnight. I’m 23 and I have lots of time, but I’m glad to be working on it now rather than later.
Thanks for the resources and advice. I will be sure to check out the websites and continue reading. I’ve already done a lot of reading, but there is always more I can do.
Thanks again!
RW, that’s what I’m talking about! A good stepping stone to a successful early retirement could be to make the most buck beforehand in a location with low taxes/higher incomes. For instance in a place like Dubai, Moscow, London, Singapore, Hong Kong etc. It opens new perspectives as well and you’ll see the world with different eyes.
Janet, congrats on your decision and your ideas towards your future! What area in Europe are you planning to move to? Just one thing I would like to mention is that Europe isn’t probably the best spot to settle for an easy life when coming from the US. The Costs of Living are probably even higher and you would need a steady stream of income to support your lifestyle. Your Purchasing Power is lower in Europe as well, as your small base nest egg will be worth less there than back home. So it could be easier, to settle in a cheaper country (which Europe still has as well), but making sure, that you have some income streams which support your move or grow your nest egg further.
@Chris -
We are considering Monaco, Spain or Greece. Another possibility could be China since my husband fluently speaks Chinese as well as Taiwanese and Japanese.
We don’t plan to “retire” at this point since we are still young. With our current income, we could make it nicely anywhere in the world (except California maybe - LOL!) so we need to merely figure out how to convert our sources of income into something mobile. Like I said, I’m working on that one…
I’m seeing a lot of folks head down here to Buenos Aires to escape the “crisis” and for good reason - it’s about a fifth of the cost of living in the US
@Quickroute -
Hmm… Maybe not a bad idea. I want to get our remote/passive sources of income going before I decide though. Fortunately, the economy hasn’t hit us too hard personally (so far) and I’ve been able to pay off over $20,000 in credit card debt over the past 5 months from extra income from our business. Now we’re in saving mode and not “in the hole.”
@Janet - if you could telecommute and be paid in US$ here you’d be on the pigs back!
@Quickroute -
I’m a self-employed IT consultant and I’m required to be on-site at customers’ locations, so telecommuting with what I do currently isn’t possible. To be honest, I plan on completely switching industries. I am also not ruling out real estate investing.
But Janet-
There are IT consulting companies in every major city around the world. Just to name a few that I have lived in: Ulaanbaatar, Mongolia, Hanoi, Vietnam, Bangkok, Thailand, certainly every city in China, Singapore. You can do very, very well in the IT field working overseas. Real estate investment, on the other hand, is general NOT a good idea. It is full of pitfalls for foreigners who don’t know the local language, customs, and laws, and who are often prohibited from owning property, or the land that the property sits on. There are lots of scams out there, too, promising to make you millions on real estate overseas, and lots of people have gone bankrupt this way. Buyer beware.
Quickroute, Janet and Mae, great discussion here! Spain or Greece sound very interesting, about Monaco I have a mixed opinion. Income-wise it could be great, but costs of living are probably a killer. I’ve only been in Argentina once for a week, but it looked like a nice place to me. I just somehow connected more with Asia than South America. Hmmm.
Also I would agree with Mae, that Real Estate in a foreign country can a big trap if you are just getting started there. There are people who know the area way better than you and work/live there forever. I know of some friends in Bali who thought similar and sunk quite some money there.
Other did already so in Spain, Thailand, Philippines or elsewhere. As the foreigner coming to a country with the ambition to work in Real Estate, you would probably have to find a way to find plenty of “stupid foreigners” with more money to cheat them out of it for overpriced projects to make the best (and a good living) out of it. For me that would feel somehow unethical and I wouldn’t be able to sleep at night, if I’d have to frame my fellow country men or anyone else for a living. But just my thoughts, everyone has a different opinion about that and there are surely others who struck the mother load doing so.
@Mae and Chris -
By real estate investing, I mean doing it here in the US while I’m away. Obviously I would get everything set up beforehand and then when I’m ready - leave. Doing it overseas… I wouldn’t even know where to start. I’m confused even thinking about that. I think I wouldn’t be allowed to buy anything in many places. I’m too lazy to research all that.
Yes it’s true there are IT consultant companies everywhere. What I meant, though, was that it would be hard to do the same exact thing I’m doing now with the same business name unless I shut down operations here in Denver and start it up elsewhere. That might not be a bad idea, but I hesitate doing that because what would be the difference? I would still be tied to a location (granted, it might be Spain, etc.) I still wouldn’t be free to travel where and when I want. I want something mobile or online. So I have a lot to do and a lot to think about.
@Chris -
I definitely agree about clicking with the culture you live in. That’s what happened with me and Greece/Spain. I absolutely love it there. I interact well with the people and make friends easily, the scenery inspires me beyond measure, I’m a fan of the food and I can’t think of anywhere else I’d rather be. It truly has always been my dream to live there.
Janet, ahso! Now I understand your background a bit better.
What I see is that you are on the right track to fulfilling your dreams with ease. With your own business (and the skills you possess) you are more independent than many and the ability to move it to another country is maybe just a start to becoming completely location-independent. If that’s what you need some day. But thinking about it and doing the first steps, like you did already obviously, I bet it gave you already a tremendous boost to pursue your dreams even further.
Many thanks for sharing and giving ideas to other people who want to find a similar path through the jungle.
OK, young adventurers, can you think of something you would be willing to do for a couple months a year that could support a fun lifestyle in the off-season? Would you live in a campground and work construction for the summer and take your 5k USD overseas for the other 9 months? It is possible. Lack skills but not work ethic? How about drive a truck? How about Buy a truck and hire a driver? Could you sell just 10 high ticket items on Ebay a month (no touch/ drop ship) to earn 1000USD a month? These are not “get rich” ideas that someone will charge you for, but REAL solutions to having a life. GO FOR IT
@Chris -
I do hope I’ve given some useful ideas to at least *one* person out there. It’s not easy getting what you want, but it’s definitely easier than settling for less or doing nothing. Doing nothing is a choice.
Hopefully by this time next year I’ll be able to come back here and tell you I’m there.
This is a bit off-topic, but what is the plug-in called that you have on the comments that shows our location with a flag? I thought it might be fun to add to my blog.
Kevin (Virginia) and Janet - thanks for the motivating words! That’s right, doing something is better than doing nothing on the way to fulfilling your dreams. And there are so many options to surviving on the road. I’m also sure that there are more than *one* soul out there who is interested in guidance or needs just some encouraging words to start going. So yeah, why not?
Janet - the Plugin is called EasyIP2country. It tries to solve the country by the IP Address range you are using and seems to be fairly accurate.
Hi,
Nice to be touching base with fellow nomads on this blog. I’ve changed my blog address from http://www.philippinevoyager.com to http://www.philippinevoyager.org. Please tune in for more exciting articles on how I live my life as a nomad. Regards.
JPB.
Christian, While I appreciate the spirit behind your intention , I would like to comment on the present state of affairs of the “paradise lost”. I am from an asian country perfectly happy and ease with my life . No great ambitions of becoming a maverick business tycoon or billionaire. But the remedy you have suggested is slowly vanishing from this part of the land.
You know the rent for a good 1500 sq.feet flat was just Rs.5000($100) a few years back in many class 1 cities of India . Now the same apartment cost not less than 15000($300) . This is only an indicator. The education , Food clothing all have undergone a change a change for the worse. The younger generation mostly lured by the IT bubble is moving in limousines and BMWs eating Junk out in “posh” restaurants and speaking in borrowed accent and acting as a foreigner on vacation here.
But the problem lies elsewhere. Like any other European or North American cities, the cities here are getting polluted , crime rates get added and westerrn living is making visible changes in the health and phsique of the individuals here. This is no more a paradise ! I am appreciative of the developed countries since they do not ape ,and the culture they follow is puerly theirs though faulty.
What we require is a global renaissance of values , simple living , respecting ones’ own culture, language, food, clothing and more. We need to be more natural “we”. The economic theory and the fortune of the far east has become a mirage as proved in the recent recession and aftermath.
Let us be natural , simple, indegenous, and make a wonderful world of variety in culture, language and life styles and not a land of apes and jokers. I join you in your pursuit and urge the young to think differently, and also not to bother about early retirement. Work ,earn and live simple . If anything is left, help the neighbour. I am reminded about the old saying” What I saved, I lost, What I gave I gained”
Ravi
Great post. I am an American living in Dubai who loves India. I have traveled and done business there for 15 years and I relate to the changes you describe and it makes me sad. The last thing the world needs is another faux USA. One authentic USA is quite enough. Your words really resonated with me. If the global downturn has a bright side maybe its that it will help people all over the planet reconnect with what is truly important. Lets hope.
Rich
Ravi and Richard, great comments! And very wise words indeed, many thanks! I noticed that development as well. While India for me was before a very spiritual, mystic place - I’m starting to see things different since I’m actually here. Never met so many business/money-oriented (or should I say ‘addicted’) people in my whole life. To everyone you are merely a business opportunity, which is to be pursuit by all means as aggressive, selfish and rude as possible. Capitalism as its worst. Cut-throat competition for your few tourist dollars. Where are the smiles on people’s faces? Where is a simple ‘Thank you!’ or a friendly chit chat? I’m trying to get as much out of the tourist areas as possible, but even in the rural areas things don’t look much better. It’s basically Rip-off-country. But then, what did I expect? People have to survive, they need money for it and India is a very poor country with low living standards. So yeah, maybe understandable. And no, India is not the only culprit here, this development takes place all over Asia with increasing speed.
It’s funny, that us Westerners dream and look for that paradise with friendly, unselfish, non-material people - enjoying a simple, yet peaceful and fulfilled life in a developing country, while the developing countries see their paradise in the West, promised by endless advertising and seen on western TV shows and else. The grass seems always greener in neighbors garden. In the end all will probably average itself out. Meanwhile both sides are ruining their environment, destroying what little paradise it left somewhere. Maybe it is a good idea to not communicate if you found your own paradise somewhere, as others soon will follow and the cycle will start again?
WOW =D>maybe i am the young one of this chat.but CHRIS always well to do it better haha funny.in those blog what you write for retire and living for cost “DO YOU KNOW that you can”is only BALI,INDONESIA the cheapes live and enjoyment.you are talking about retire early sounds so disgusting,i mean you retire in 30 but in the ends you are worry with your money “i must do some income,i must do some income”so you are try to do with website or other blog to support income.what wrong with work you still enjoy around the world in your day.haha dont so FOOL if you can work just enjoy it when the time is over you can relax hoohoo ME, i am 21 i enjoy with my study and small business in indonesia i have boat and one cafe in my hometown lampung,inadonesia and i happy being work the people who said retire early is LAZY,i think just looossserr to want enjoy and in the ends they are look so stupid want to do SOME INCOME, SOME INCOME.so you guys i respect your opinion about retire early but DONT cry when you are old you lose and you need income haha
ryan Zoup, great that you think like that! Nobody will stop you from continue to working and enjoying your life as you grow older.
yes dude,because i still young i must work. =D>
I am 37 years age. Married. Have a 7 years old kid. I live in Mumbai, India. I own 2 BHK apartment at decent locality and also own a car. My monthly expense runs into 40,000+
I hear and see practically so much about inflation etc. recently and the need to save for tomorrow. So how much should I really have in my bank, so that I can live off of bank Fixed Deposit interest payments and also beating inflation and preserving that corpus in bank. I also have to think for my daughter’s higher education and her marriage.
Can someone please help
Nautanki, that will be harder for you and also depends on your demands and lifestyle. It’s definitely more difficult with kids and the older you are. Only relying on fixed banks deposits wouldn’t probably cut it alone, you might want to diversify your savings into other investment forms as well (high dividend stocks, other forms of passive income). You have an apartment already, which could bring you rent as passive income. But if you live in it yourself - fine, you will save on your own rent - but it won’t bring you any income.
I must admit, that the above article was initially written for Westerners, as it would be easier for them to save in their high-salary countries and live off their saving in low cost countries; living off their hard currency income streams as passive income.
For you growing up in a lower cost country it will be naturally more difficult, as where can you likely move to enjoy even lower costs of living? Purchasing Power Parity wise, India is already in the lower 5-10% of the world. Sure, you can move to the countryside or out of Mumbai - but then in India itself the difference in costs isn’t probably that great, than moving from Europe, the US or Australia (from 100-110% Cost of Living areas) here.
Generally Chris makes a good point saying that one should hold his income-generating assets in hard currencies and to spend in weaker currencies. But we seem to be living at a turning point in financial history now.
The US govt is churning out trillion of dollars in paper money to battle against the once-in-a-generation financial crisis. This means that the hardest currency may soon soften. On the other hand, if you are able to keep some money in Chinese yuan in a Chinese bank account, and you do spend some time in China, it might be a good plan to keep some of your money in yuan. And, the hardest currency isn’t US$, but Gold. While paper notes may be churned out, gold can’t be.
So, keep some hard assets like gold (maybe 10-20% of your assets) to safeguard against devaluation of paper currencies and inflation. If you want to travel long-term, it’s also important that you don’t tie too much money into non-income-producing assets like gold.
You need some income in the form of dividends, interests, rental or annuity income to survive. So, ideally, you should have a variety of sources of income, including a property that can be rented out for regular income (providing you can repay the mortgage asap), a diversified portfolio of stocks and bonds (eg. mutual fund or ETF), and a few (2-3 insurers, in at least 2 stable currencies like Swiss Franc, Singapore Dollar, and Japanese Yen which had strong surpluses for years) fixed annuities. I agree that you need passive sources because you can’t need to work for survival when you want to travel globally.
Insurance seems to be left out in your game plan. IMHO, you need Hospitalisation, Critical Illness, Personal Accidents, Long-Term Care and Travel insurance policies. These risks are real. About half the population will suffer LTC after 65. A quarter of us will suffer from cancer, another quarter heart diseases, and another quarter from one of the other critical illnesses. Medical inflation is higher than overall inflation. As a frequent traveler you also are at exposed to risks covered in a typical travel insurance. Having fun is good, but if you don’t plan ahead, you may suffer when some of these events occur.
I allocate my savings for perpetual travel into 3 accounts: Liability Account (for repaying mortgage and loans if any); Insurance Account (for paying insurance premium for the above-mentioned policies) and Income-Generating Account. Let me explain them below.
I am buying a low-cost property which mortgage can be repaid in 5 years after I kick-start my early retirement, solely with the rental income. Since 5 years is not a long period, I can expect that the rental income will flow in smoothly to pay off everything I owe. I reduce my liability by opting for the cheapest roof which can turn into an 100% income-producing asset in 5 years, instead of expensive properties which need longer repayment. I also limit my property holding to just 1 unit, to reduce my aggregate liability, because the future is really hard to predict: we can’t expect the rental market to be as good in 10-20 years as it is today. So, in this Liability Account, the plan is to reduce the aggregate liability, and have a viable plan to clear the loans asap.
Next, the Insurance Account. I opt for limited-premium policies. The concept is the same: I want to reduce my aggregate liability in the future. I won’t know whether I can still afford the premium 20-30 years down the road. So I opt for those that become totally free after I pay the premium for 10-20 years. By so doing, I reduce my risk of losing coverage when I am old as a result of not being able to pay the premium. To do this, it is important not to over-insure. For example, I opt for the most basic coverage for hospitalization (ordinary ward), critical illnesses (with benefits just enough to help me get the treatment and recuperate for 5 years) and travel insurance. This account should have around 3 years worth of premium dollars and be ‘topped-up’ from a reliable income source from the Income-Generating Account (IGA).
IGA should consist of annuities, stocks, bonds, real estate, cash, and commodities. Having a fixed annuity gives you peace of mind because the income is guaranteed and not projected. But too much annuity will eat into your other holdings that offer higher returns in the long run. My annuity holding is 10% of my portfolio in annuities in 2 strong currencies whose issuing-govts have a net surplus instead of deficit. If you retire early, you should have a big proportion in stocks which provide higher returns in the long term. I have 40%. Bonds 10%. Property around 30%. Gold 10%. This is just an illustration of my target allocation but not recommended for anyone else because everyone’s situation is different.
Of these, the property and annuity holdings provide sufficient survival income after the mortgage loan is repaid in years. I spend less during these 5 years by living in low-cost countries like Thailand, China, India and SEA. As you can see, I don’t need the stocks portion to sustain my expenses. I have the time-frame to wait for its recovery.
adventuresaddict, interesting ideas, I’m with you 95%, although we don’t agree on all details. Myself I don’t believe in insurances, but can surely understand why you would like to see that area covered.
After all, personal finance is mainly one thing - personal. Everyone has to find his/her own way to feel good about it and there are many puzzle pieces to consider for financial independence.
You are right: everyone has his own means of getting to the same end. Since I am trained in Finance, I naturally take a more structured route to systematically analyse the components of risk and transfer them.
You may be able to shop around for the cheapest healthcare providers globally (eg. in Goa) and self-insure your medical expenses. But a few things which I see as potential risk to all of us who want to retire early are:
1) terrorist attacks (eg. Bali)
2) Long-Term disability (due to age, accidents or illness)
If you can afford to buy an insurance to cover these, try to. We will all grow old one day anyway.
Hi Chris, I just created a blog at http://halftimeadventurer.blogspot.com/ in which I shall share about the planning aspects for aspiring nomads. My personal view is those who aspire can start by becoming ‘half-time adventurer’ (HTA) and gradually increase their time for traveling as they build up their wealth by systematically building up their financial independence, something which I shall touch on also.
Sunny, sounds to me like a structured approach to long-term travel? Why not. Best of luck with your site - meanwhile I’m waiting for more articles from you.
Sometimes it’s not just about the money….you keep working because you don’t want to stop…and hey if you’re making money while doing it, then why not!
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The question can be simply answered with ‘what do you want in life’ or it can be philosophical. Aristotle asked why we work. We work because we want happiness. And, happiness to him comes from knowledge and development of human potential, doing what you enjoy doing and can best perform. So, it’s really depending on what you enjoy. Some people work because they enjoy doing it and would even do it without being paid. Ask Buffett why he still works when he can never finish using even 1% of his wealth is he retired yesterday. But for most of us, working is not enjoyable, because in most of the developed world most people are in a rat race. We thought that inventing machines and computers would lessen human race’s stress, but the truth is it makes the world more competitive, and we work much more than our ancestors did, and most are under more stress. In fact, there are more people suffering from psychological problems resulting from stress. So, to relieve ourselves from this, most would rather leave the rat race. Of course if you are the lucky few who are not suffering but enjoying working, then you should continue to work till the last day in life.
Sunny - truer words were never spoken! In the end, everyone has to make his/her own decisions. Although, many people have problems even with that…