Semi-retiring in your 30's

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Paladin

Post by Paladin »

jh wrote:If you have the money, retiring now will may work out well. My opinion is that the standard of living in the US is going to be on a steady permanent decline until it reaches parity with poorer countries. So, you may find your assets appreciating a great deal in relation to the cost of living as time goes on.

What you may want to consider doing is moving to a poorer country in the begining and then moving back to the US in a decade or two. Globalisation and the fall of the dollar as the world reserve currency should bring the standard of living and costs way down.

Make sure your assets are as globally diversified as possible.
Maybe however the standard of living in other countries in the last century has declined (I am thinking of developed countries) but it's still nowhere close to the poorer countries.
livesoft
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Post by livesoft »

Paladin wrote:Or not play basketball and run up $20K in medical bills!
Excellent point. :)
But when I travel internationally, I seem to be doing lots more potentially dangerous things than playing ball: skiing, mountain climbing, sailing, safaris, bar-hopping, and riding in taxis. :)
Paladin

Post by Paladin »

livesoft wrote:
Paladin wrote:Or not play basketball and run up $20K in medical bills!
Excellent point. :)
But when I travel internationally, I seem to be doing lots more potentially dangerous things than playing ball: skiing, mountain climbing, sailing, safaris, bar-hopping, and riding in taxis. :)
I hope I am not paying for YOUR medical bills. :lol:
eggs
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Post by eggs »

My dad told me a story about my grandfather that I always think back to on something like this.

Basically, he sold the family farm a year or two before inflation hit back in the 70s. The amount he sold for seemed like a large amount, large enough for him to go part time somewhere / retire.

He ended up with very little when it was all said and done.

It seems likely to me that we're heading towards some pretty big inflation at some point. My opinion, and what my wife and I figure, is that we should just keep our head down and work our butts off through to the other side.
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VictoriaF
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Post by VictoriaF »

eggs wrote:My opinion, and what my wife and I figure, is that we should just keep our head down and work our butts off through to the other side.
I, on the other hand, would rather go to the other side in the livesoft way :)

Victoria
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isleep
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Post by isleep »

mathwhiz wrote: The key is minimizing expenses. Owning a small home or condo free and clear with low maintenance charges. Living in a no state income tax state and low cost of living area. That makes the $30,000/year feel like a lot more.
If I had $30K/year of interest income today I could live like a king for the rest of my life, without even owning any property. I'd use about $15K/year to live on and reinvest the rest. I'd live in a small travel trailer or large self-converted van, following the sun and seasons to stay in good weather, boodocking in BLM or national forests to enjoy the peace as well as save money (no camping fees).

He can do that, since he's single and has enough funds. I don't have nearly as much money, but I'm going to do that for a year at least. Then I'll see if I can somehow manage to work remotely (telecommute, etc.) in order to stay away from the cities as much as possible.
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avalpert
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Post by avalpert »

isleep wrote:
mathwhiz wrote: The key is minimizing expenses. Owning a small home or condo free and clear with low maintenance charges. Living in a no state income tax state and low cost of living area. That makes the $30,000/year feel like a lot more.
If I had $30K/year of interest income today I could live like a king for the rest of my life, without even owning any property. I'd use about $15K/year to live on and reinvest the rest. I'd live in a small travel trailer or large self-converted van, following the sun and seasons to stay in good weather, boodocking in BLM or national forests to enjoy the peace as well as save money (no camping fees).
I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
isleep
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Post by isleep »

avalpert wrote: I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
Yeah, for me like a king means always having good healthy food to eat, not being tied down to a place or job, not having to answer to a boss or customers, etc. I don't need or want servants or lots of useless possessions, just some good quality essentials will do. Some people could get along great with as little as a backpack's worth of stuff, but I require a little more. Expert survivalists might need even less. As the saying goes, "the more you know, the less you carry".
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avalpert
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Post by avalpert »

isleep wrote:
avalpert wrote: I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
Yeah, for me like a king means always having good healthy food to eat, not being tied down to a place or job, not having to answer to a boss or customers, etc. I don't need or want servants or lots of useless possessions, just some good quality essentials will do. Some people could get along great with as little as a backpack's worth of stuff, but I require a little more. Expert survivalists might need even less. As the saying goes, "the more you know, the less you carry".
I don't need stuff, I bacpacked around the world with less than 20 pounds on my back. But what can I say, I appreciate splurging on meals from the best chefs in the world, I like to go diving frequently among other costly adventures, I like the ability to fly on a whim to Honk Kong for a weekend of fun... I'd probably be fine without any of it, but why bother to find out?
btenny
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Post by btenny »

Try reading Paul Terhorsts' book (out of print but used ones are available) about very early retirement and then read some of his insight on what he does with his time and how he has lived for the last 20+ years of retirement. He has dozens of hobbies and has developed friends all over the globe. He retired at 35 with the similar goals as you.

See his story here http://www.retireearlylifestyle.com/pau ... erview.htm

He made extra money by writing books and now he sells his story to the Retirement web sites. He has a home now in Argentina I think. He has never owned a house in the US since he retired. He uses foreign medical insurance and facilites.

Bill


PS. NZ is wonderful. I spent 4 days (part of a business trip) there back in the 90s and my daughter spent 3 weeks there. It is clean, uncrowded and fun. Lots of nice small cites and wonderful country side and green farms and deserted beaches. Trees grow there almost as fast as the Amazon. The south island has good snow skiing and back packing and river rafting. Wellington is a lot like San Francisco. It is built on the coast with lots of hills and overlooks and has similar climate and geography. Also earthquakes.
Paladin

Post by Paladin »

btenny wrote:Try reading Paul Terhorsts' book (out of print but used ones are available) about very early retirement and then read some of his insight on what he does with his time and how he has lived for the last 20+ years of retirement. He has dozens of hobbies and has developed friends all over the globe. He retired at 35 with the similar goals as you.

See his story here http://www.retireearlylifestyle.com/pau ... erview.htm

He made extra money by writing books and now he sells his story to the Retirement web sites. He has a home now in Argentina I think. He has never owned a house in the US since he retired. He uses foreign medical insurance and facilites.

Bill
PS. NZ is wonderful. I spent 4 days (part of a business trip) there back in the 90s and my daughter spent 3 weeks there. It is clean, uncrowded and fun. Lots of nice small cites and wonderful country side and green farms and deserted beaches. Trees grow there almost as fast as the Amazon. The south island has good snow skiing and back packing and river rafting. Wellington is a lot like San Francisco. It is built on the coast with lots of hills and overlooks and has similar climate and geography. Also earthquakes.
We abandoned the CD strategy when rates fell. Now we're 95% stocks, with about half of those natural resource stocks.

:shock:
btenny
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Post by btenny »

Paul Terhorst did retire early and write a book about his experiences. The book and related web sites are worth the read for the information about how he uses his time and how he handles medical expenses. But his approach to investing and how he managed his money was very bad as shown by his quote on CDs and 90% equities investing. Better that he should come to the Boghlehead web site and learn more. Fortunitely he seems to do OK by writting about his experiences.....

As others have said, there are many ways to retire succesfully....

Bill
yobria
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Post by yobria »

MossySF wrote:Overseas, it's pretty easy to retire on less than 1M. I've in in China for the past few weeks looking around (southeast area 50 miles outside of Guangzhou) and it's pretty damn cheap. I could see myself easily retired/semi-retired here.
For living in China I'd pick Yunnan hands down though. Better climate, better air, stunning scenery, and maybe 25% the cost of living of GZ, maybe half the price of rural Canton. Restaurants in GZ cost as much as SF (as of last month when I was there).

Nick
Valuethinker
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Post by Valuethinker »

btenny wrote: He made extra money by writing books and now he sells his story to the Retirement web sites. He has a home now in Argentina I think. He has never owned a house in the US since he retired. He uses foreign medical insurance and facilites.

Bill


PS. NZ is wonderful. I spent 4 days (part of a business trip) there back in the 90s and my daughter spent 3 weeks there. It is clean, uncrowded and fun. Lots of nice small cites and wonderful country side and green farms and deserted beaches. Trees grow there almost as fast as the Amazon. The south island has good snow skiing and back packing and river rafting. Wellington is a lot like San Francisco. It is built on the coast with lots of hills and overlooks and has similar climate and geography. Also earthquakes.

Argentina is a basket case though. Middle class Argentines keep Swiss bank accounts, or at least Uruguayan ones. Hold their assets in dollars.

The country has experienced collapsing public services and soaring crime rates. Despite this, the government pursues insane policies which are politically popular: energy prices held well below world levels, export taxes (yes, taxing exports) on beef and other farm exports.

I have an Argentine friend. He says it is a country where you make money by buying during the periodic crises, and then ship it out of the country when you can.

I wouldn't trust Argentine healthcare. Not in an environment like that.

On NZ, it is a great place. Perhaps too 'socialist' for many Americans (massive free market reforms a couple of decades ago, under the name 'Rogernomics' (google it), but still fundamentally like Britain rather than America). Some issues with aging population, pensions, healthcare etc. a la all other developed countries.

However it is:

- a very long way from anywhere else. I mean really. Probably the most isolated developed country in the world. You go there, you will lose touch with friends and family elsewhere.

- it is a small place, and can be claustrophobic for that. thhere's a reason so many Kiwis seek their fortune in Oz or in Britain.

- some bad social problems. c. ?25%? of the population is Maori/ Polynesian islander immigrant, and they have serious pathologies with violence, substance abuse, family breakdown etc. They are a rising share of the population and this is a long term threat to the social stability of the country.

- strong dependence on a few commodities like wheat, wool, forestry. Despite efforts to diversify, NZ's standard of living still flexes with these commodities.

- it rains all the time in a lot of places.

Balanced against that:

- maybe they can balance off the social problems-- I am not up to date

- great people (yes, even the said same Maoris and islanders!), great culture

- if it ever does really hit the fan in the way it could well do, NZ is probably one of the few places you want to be, because they can control any refugee problem-- if environmental or nuclear issues get out of control, for example

- long history of stable government, rule by law, law and order etc.
avalpert
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Post by avalpert »

Valuethinker wrote:
Balanced against that:

- maybe they can balance off the social problems-- I am not up to date

- great people (yes, even the said same Maoris and islanders!), great culture

- if it ever does really hit the fan in the way it could well do, NZ is probably one of the few places you want to be, because they can control any refugee problem-- if environmental or nuclear issues get out of control, for example

- long history of stable government, rule by law, law and order etc.
I would add to that list some of the most extraordinary landscapes anywhere in the world (which is why it is popular for movies). Particularly, for me at least, the west side of the South Island. Not to mention some phenomenal wines and cheeses.
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MossySF
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Post by MossySF »

yobria wrote:
MossySF wrote:Overseas, it's pretty easy to retire on less than 1M. I've in in China for the past few weeks looking around (southeast area 50 miles outside of Guangzhou) and it's pretty damn cheap. I could see myself easily retired/semi-retired here.
For living in China I'd pick Yunnan hands down though. Better climate, better air, stunning scenery, and maybe 25% the cost of living of GZ, maybe half the price of rural Canton. Restaurants in GZ cost as much as SF (as of last month when I was there).

Nick
There's a big difference in the satellite cities around GZ (Jiangmen, Kaiping, Taishan, Zhongshan, etc) and GZ. And then there's a big difference between expat/tourist/foreigner GZ and local GZ.

I'm sure Yunnan is cheaper still. However, sometimes cheap enough is good enough instead of cheapest as I'd definitely want to avoid earthquake active areas with too many old buildings constructed before any safety codes.
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Post by btenny »

Well I guess we are high jacking this thread. Yes NZ sure is a long way from anything. The world globe fools people into thinking NZ is close to Australia until you go there and learn that it is 3 hours or so by plane to the closest Aussie land. Maybe 1500 miles or more. Same for the south sea islands to the north, maybe 3-4 hours by plane to the closest island. Very remote.

The indigenous people of NZ, the Maoris are very interesting. They look like our Hawaii island people but bigger. I mean they are large. Think 6 feet 2 inches or more for the men and maybe 250 pounds. Big bodies. And some of these Maori men have large tatoos covering much of their cheeks and face in tribal script. It sure makes for a startling person when you first meet them. Plus unlike the USA the Maori did not lose the war for land nor completely settle their disputes for land and control over things when NZ was settled. So all over NZ they have lots of structures and land and laws that regulate the Maori all mixed up in the country....

Interesting place...

Bill
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kramer
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Post by kramer »

Just a few comments:

The Terrhorsts had a lot in stocks, but they knew that they can almost live on their social security checks at retirement age. Same for the Kaderli's (the web site on which they were interviewed). I don't recommend that strategy, but that was the thinking -- that their "bonds" are those inflation-adjusted social security checks. Many may scoff at living off of social security if times were bad, but these people have developed skills at living on a budget in developing countries and are familiar with many locations.

On living in China, I don't think this is much of an alternative for most early retirees unless you already have a grasp of the language. According to the US state department language stats, it takes a native English speaker about 4 times longer to reach fluency in Chinese than a Romance language. Paul Terrhorst visited Kunming and wrote about it and said it would be an interesting place to retire if you actually want to learn the language. I have also been there and thought it was an interesting city. But you can hardly talk with anyone if you can't speak Chinese. Most menus are all chinese writing with no pictures or no menu at all.

Also, the Chinese government is absolutely autocratic, more so than any place that I have visited, including Myanmar and Vietnam. Partly because it actually has the resources to restrict freedom, unlike poorer countries. And as a foreigner there you will be viewed as absolutely inferior, more so than any other place that I have visited. When someone grows up in an environment of total government control of media and education, it is natural that this sort of thinking takes hold, although it is deeper than that. These more subtle things I would not have realized on my journey, except that I was traveling with a local who was explaining and interpreting along the way (and in fact she, a US citizen for over 20 years, feels exactly the same way I found out). In fact, as near as I can tell, most Chinese support their government and its autocratic policies, it was not at all like I thought before going.

Kramer (posted from Medellín, Colombia)
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mathwhiz
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Post by mathwhiz »

It's my understanding that unless you are an Australian or NZ citizen, you can't retire in NZ. You may only visit for up to 6 months at a time, even if you own property.

It's exceptionally hard to gain citizenship unless you are willing to start a business and invest millions or you are a worker under age 55 with a sponsor or you are married to a kiwi.

NZ is interesting. Everyone I know from the US that has visited loves the place but kiwis I know who actually have lived and grown up there hate it. They say it's very boring to live their full time and most young people can't wait to escape to Australia or the US.
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Post by Shawn »

avalpert wrote:I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
I live in the San Francisco Bay Area, which is one of the most expensive places in the US. Not counting my mortgage (which I could easily pay off) or gifts to charity, I live on about $12K/yr. I'll probably be under $10K at the end of this year. That's for everything ... property taxes, utilities, auto and home insurance, gas, food, medical/veterinary, recreation, misc. I live like a king, or so I feel. It's not difficult to live inexpensively, even in high cost areas.
Paladin

Post by Paladin »

avalpert wrote:
Valuethinker wrote:
Balanced against that:

- maybe they can balance off the social problems-- I am not up to date

- great people (yes, even the said same Maoris and islanders!), great culture

- if it ever does really hit the fan in the way it could well do, NZ is probably one of the few places you want to be, because they can control any refugee problem-- if environmental or nuclear issues get out of control, for example

- long history of stable government, rule by law, law and order etc.
I would add to that list some of the most extraordinary landscapes anywhere in the world (which is why it is popular for movies). Particularly, for me at least, the west side of the South Island. Not to mention some phenomenal wines and cheeses.
Malborough Sauvignon Blanc!! Nuff said. :D
avalpert
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Post by avalpert »

Shawn wrote:
avalpert wrote:I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
I live in the San Francisco Bay Area, which is one of the most expensive places in the US. Not counting my mortgage (which I could easily pay off) or gifts to charity, I live on about $12K/yr. I'll probably be under $10K at the end of this year. That's for everything ... property taxes, utilities, auto and home insurance, gas, food, medical/veterinary, recreation, misc. I live like a king, or so I feel. It's not difficult to live inexpensively, even in high cost areas.
See and if I lived in teh bay area I'd probably go to Shushi Sam's once a week for the Omakase - for me and my wife that alone takes half of the $12, and that's before we hit the wineries in Sonoma...
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Post by yobria »

MossySF wrote:There's a big difference in the satellite cities around GZ (Jiangmen, Kaiping, Taishan, Zhongshan, etc) and GZ. And then there's a big difference between expat/tourist/foreigner GZ and local GZ.

I'm sure Yunnan is cheaper still. However, sometimes cheap enough is good enough instead of cheapest as I'd definitely want to avoid earthquake active areas with too many old buildings constructed before any safety codes.
Yeah I was talking local prices, which is what I pay ;). I could live in Taishan, for $30K you can get a nice, newly built 4BR townhouse. Lots of great restaurants and tea houses built w/in the last few years, and nice people. Of course, you'd be the only Westerner living in Taishan.

Nick
ramsfan
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Post by ramsfan »

Shawn wrote:
avalpert wrote:I guess everyone has their own visio of how a king lives. On 30,000 yo can live very nicely in many places (even under a more typical definition of how a king lives) but the U.S. isn't really one of them... I'd reccomend Vientienne, Laos or Kuching, Malaysia myself among others.
I live in the San Francisco Bay Area, which is one of the most expensive places in the US. Not counting my mortgage (which I could easily pay off) or gifts to charity, I live on about $12K/yr. I'll probably be under $10K at the end of this year. That's for everything ... property taxes, utilities, auto and home insurance, gas, food, medical/veterinary, recreation, misc. I live like a king, or so I feel. It's not difficult to live inexpensively, even in high cost areas.
This is interesting, as I view San Fran as one of the highest cost of living cities in the States.

How do you pull this off? Even in lower cost areas (Midwest for example), I could estimate the following:

Property tax $400 per month
Utilities $300 per month
insurance $100 per month
gas $80 per month
food $300 per month
Misc/rec etc... $300 per month

Well over $12k per year....

This considers family costs, maybe you are single....

Just wondering if you have any great ideas to share, because if I could live on $12k per year, game over.....
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MossySF
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Post by MossySF »

ramsfan wrote: How do you pull this off? Even in lower cost areas (Midwest for example), I could estimate the following:

Property tax $400 per month
Utilities $300 per month
insurance $100 per month
gas $80 per month
food $300 per month
Misc/rec etc... $300 per month
Property tax? Prop 13 -- if you bought 30 years ago, you would be paying $150/mo in property tax. Or better yet, long-time renters have cheap rent due to rent control.

No way anybody pays $300/mo for utilities in San Francisco unless they water a huge lawn everyday (which only the super rich has since everybody has tiny small plots of land for their houses). Due to the mild mediterranean climate, nobody uses heat or A/C. I can count the number of times I turned on heat on 1 hand in the past 5 years.

Gas? San Francisco is a great walking city. Despite local complaints about the state of public transportation, it's better than most metro areas other than New York City. And when you need wheels, Zip Car and Flex Car are everywhere.

Food? Plenty of ethnic supermarkets and farmers markets where you can buy fresh fruits, meats & fish cheap.

Now, it's pretty easy to blow your budget if you like head up to Yountville for the weekend to dine at French Laundry. It all depends on what your preconceptions are on the necessities. But if being semi-retired is more important, then HCOLA places like San Francisco and New York City actually have more options for those who want to live cheap.
Finder
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Post by Finder »

btenny wrote:... Also earthquakes.
unfortunately, they just had one:
http://news.yahoo.com/s/ap/as_new_zealand_earthquake


gladly no damage or injuries
New Zealand sits above an area of the Earth's crust where the Pacific and Australian tectonic plates collide and records more than 14,000 earthquakes a year, though only about 150 are felt by residents. Fewer than 10 temblors a year do any damage.
.
Shawn
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Post by Shawn »

ramsfan wrote: Just wondering if you have any great ideas to share, because if I could live on $12k per year, game over.....
In a typical year it's usually something like this ...

Property Tax: $3K/yr (lived in house for 11 years)
Utilities: $1.5K/yr (gas/electric, water, trash, phone, cable TV)
Home/Auto Insurance: $1K/yr ($500 each, 29 yr old car - liability only)
Gas: $0.5K/yr (bicycle to work)
Food: $2K/yr
Other: $4K/yr

I live in an inland valley, where the temperature is more extreme than in San Francisco itself. It will drop below freezing for a few days in the winter. It will get over 100 for a few days in the summer. However, I don't use or have air conditioning, which saves a bundle, and rarely turn on my gas heat. I open and close windows/doors to cool the house in the summer. I wear a sweater or sweatshirt in my house in the winter.

This year, mostly out of curiosity, I'm seeing if I can live on less than $1000 for food (half the food stamp budget). I was at $455 at the end of June. It's starting to get pretty boring, but it hasn't been difficult. My "other" expenses will be way down too, assuming nothing unexpected comes up. Most of my interests are outdoor activities (e.g., running, bicycling, hiking, backpacking), which don't cost very much. Adding another person to the household wouldn't add too much expense ($4K/yr ?), since many of the above costs are fixed or mostly fixed. Of course, this assumes that they live frugally too.

So it is not very difficult to live inexpensively. This helps a lot in terms of the ability to retire early (the subject of the thread), which I'll do sometime in the next 0-3 years (I could do so now, but there are some upcoming financial milestones). This freedom and the elimination of stress at work will be worth a fortune.
Valuethinker
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Post by Valuethinker »

saturn wrote:
btenny wrote:... Also earthquakes.
unfortunately, they just had one:
http://news.yahoo.com/s/ap/as_new_zealand_earthquake


gladly no damage or injuries
New Zealand sits above an area of the Earth's crust where the Pacific and Australian tectonic plates collide and records more than 14,000 earthquakes a year, though only about 150 are felt by residents. Fewer than 10 temblors a year do any damage.
.
From memory, the art deco gem, the city of Napier, on the east coast, was created when an earthquake levelled the town in the 1920s.

The rebuild was entirely done in the art deco style. In the last 20 years art deco has become deeply in fashion, and Napier is one of the most famous places for it.
Finder
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Post by Finder »

Valuethinker wrote:
From memory, the art deco gem, the city of Napier, on the east coast, was created when an earthquake levelled the town in the 1920s.

The rebuild was entirely done in the art deco style. In the last 20 years art deco has become deeply in fashion, and Napier is one of the most famous places for it.
Didn't know that, good for them, testament of their resiliency, something good coming out of sad event.

.
biasion
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Post by biasion »

Shawn wrote:
ramsfan wrote: Just wondering if you have any great ideas to share, because if I could live on $12k per year, game over.....
In a typical year it's usually something like this ...

Property Tax: $3K/yr (lived in house for 11 years)
Utilities: $1.5K/yr (gas/electric, water, trash, phone, cable TV)
Home/Auto Insurance: $1K/yr ($500 each, 29 yr old car - liability only)
Gas: $0.5K/yr (bicycle to work)
Food: $2K/yr
Other: $4K/yr

I live in an inland valley, where the temperature is more extreme than in San Francisco itself. It will drop below freezing for a few days in the winter. It will get over 100 for a few days in the summer. However, I don't use or have air conditioning, which saves a bundle, and rarely turn on my gas heat. I open and close windows/doors to cool the house in the summer. I wear a sweater or sweatshirt in my house in the winter.

This year, mostly out of curiosity, I'm seeing if I can live on less than $1000 for food (half the food stamp budget). I was at $455 at the end of June. It's starting to get pretty boring, but it hasn't been difficult. My "other" expenses will be way down too, assuming nothing unexpected comes up. Most of my interests are outdoor activities (e.g., running, bicycling, hiking, backpacking), which don't cost very much. Adding another person to the household wouldn't add too much expense ($4K/yr ?), since many of the above costs are fixed or mostly fixed. Of course, this assumes that they live frugally too.

So it is not very difficult to live inexpensively. This helps a lot in terms of the ability to retire early (the subject of the thread), which I'll do sometime in the next 0-3 years (I could do so now, but there are some upcoming financial milestones). This freedom and the elimination of stress at work will be worth a fortune.
Not to be flippant or disrespectfu, but surely you're not eating prosciutto or going to Italy every year.

What I mean is this, and it is the centerpiece of the discussion: would you rather pinch pennies or deal with your job. It is a very personal decision.

I used to live in the way above.... then I started making good money and discovered life. I wouldn't go back!

The other thing is that I did suffer from hunger as a child, and more importantly, I was really happy and relatively well off as a young child in Europe. Then we moved to the US and we were so broke that things we had that I really liked, even food, we either couldn't find at any price, or it was far beyond our reach. I hated being told by mom and dad we couldn't afford it when a year earlier we were buying it in bulk back in Italy (good food was so cheap in Italy 30 years ago!!! :D )

I was stuck eating hamburger, sub-quality meat and Uncle Ben's rice which would flake and not absorb the risotto juices when I was used to much nicer fare. Seriously, the first year I was in the US the food sucked so much I never ate it and was always not eating and sick that my parents thought I had another ( I already had one) horrible disease. Never again!

That doesn't take into account that I also like my job and consider it almost as fun as a hobby (most of the time), which is another plus.

And it also boils down to what makes you feel more independent. Again, I feel a lot more independent WITH my job (but I am also self employed... and I answer to no one which means a lot) than without. I don't know how independent I would feel with such a limited cash flow and having to on purpose choose everything because it costs as low as possible. In some aspects, chosing the cheapest thing can be good (like index funds), but to ALWAYS have to be stuck there because you can't take more than 12k a year in income when you're otherwise able bodied feels like a severe limitation of independence to me. That is my personal opinion, but it bears consideration because you have to know what you want more or what upsets you more.

In essence, there are various ways to financial independence but having money set aside AND still having your job while generally living below your income will mean that you can either buy the 10 dollar item, or the 1000 dollar item just as easily based on what you currently want or need without thinking a second time about your precious cash flow. Giving up your job early in life puts a big dent in that!
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snodog
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Post by snodog »

biasion wrote:
What I mean is this, and it is the centerpiece of the discussion: would you rather pinch pennies or deal with your job. It is a very personal decision.
Thats easy. Pinch pennies!!
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Post by yobria »

snodog wrote:
biasion wrote:
What I mean is this, and it is the centerpiece of the discussion: would you rather pinch pennies or deal with your job. It is a very personal decision.
Thats easy. Pinch pennies!!
I'd rather find a job I enjoy. Being unhappy during work, and having a dull b/c you have to pinch pennies outside of it, doesn't seem the best way to go through life.

Nick
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AThiker
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Post by AThiker »

OP: I think it's admirable to have the desire to live a 'different' kind of life from the majority. Enhancing one's appreciation of nature, family, being human, all the simple things, is a perfectly respectable life goal. In fact, it goes hand in hand with making the world a better place, IMO. And for many of us, work (in the traditional meaning) will always be a 4-letter word.

I'm early 30s with a wife and one child. It won't kill me to work until I'm 40, at which time I'll likely have enough money (from saving and investing and other assets--all told maybe 200K) to be able begin drawing half of the $$ needed to live from interest and half from part-time work. Like you say, a year on, a year off, whatever works. Meanwhile, I continue developing my interests (hiking, painting, writing, cooking, playing, reading) and think of ways any of these might possibly become sources of income to supply some or all of the needed part-time w-o-r-k income. Like you, I feel life is to be lived. But I also want to support my family as best I can--which to me means not just feeding them money but also being present (in all senses of the word).

If you haven't checked it out yet, the Retirement Income Planner (RIP) at Fidelity is a useful tool for playing with variables like savings, part-time income, expenses, etc. You have to sign in, but you don't need to have any money at Fidelity.

AThiker
Ron
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Post by Ron »

AThiker wrote:If you haven't checked it out yet, the Retirement Income Planner (RIP) at Fidelity is a useful tool for playing with variables like savings, part-time income, expenses, etc. You have to sign in, but you don't need to have any money at Fidelity.
Just a note on the Fidelity planner; there is a "myPlan Retirement Quick Check" which is more easy to use (e.g. not as much detail entry) but does not provide all the detail that RIP uses. Just don't look at both planners and think they are interchangable.

Additionally, using the detail budget sheet on RIP, you can account for items that change over time. An example is that my wife/me have a budget line item for our travel. However, at age 75, I've reduced it with the assumption that we will cut back (not eliminate) travel. I reduce the amount by a percentage all the way to age 100 (our plan end date).

It is a great tool, and if you are retired (and a customer of Fidelity), it works great with their Income Management Account to track your burn rate and see if you keep on track in your income/expenses; all online.

- Ron
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snodog
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Post by snodog »

yobria wrote:
snodog wrote:
biasion wrote:
What I mean is this, and it is the centerpiece of the discussion: would you rather pinch pennies or deal with your job. It is a very personal decision.
Thats easy. Pinch pennies!!
I'd rather find a job I enjoy. Being unhappy during work, and having a dull b/c you have to pinch pennies outside of it, doesn't seem the best way to go through life.

Nick
Well most people are not lucky enough to have a j*b they enjoy. I've been in the w*rkforce over 25 years and held numerous jobs and have yet to find one that I even remotely enjoy.
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Post by mathwhiz »

Well most people are not lucky enough to have a j*b they enjoy. I've been in the w*rkforce over 25 years and held numerous jobs and have yet to find one that I even remotely enjoy.
That's life.

Not everyone is going to be a millionaire.

Not everyone is going to find their soulmate.

Not everyone is going to find a job they love.

Those who do should consider themselves very very lucky.
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Post by AThiker »

Thanks for that tip, Ron!
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Post by yobria »

snodog wrote:Well most people are not lucky enough to have a j*b they enjoy. I've been in the w*rkforce over 25 years and held numerous jobs and have yet to find one that I even remotely enjoy.
I think that's unusual - while some parts of any job are no fun (it's not a vacation after all), most educated people can find some type of likeable work. They like their corworkers, or the work itself, or the purpose of the organization. If your work hasn't a single redeeming property, pick a new career!

Nick
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Post by mithrandir »

yobria wrote:
snodog wrote:Well most people are not lucky enough to have a j*b they enjoy. I've been in the w*rkforce over 25 years and held numerous jobs and have yet to find one that I even remotely enjoy.
I think that's unusual - while some parts of any job are no fun (it's not a vacation after all), most educated people can find some type of likeable work. They like their corworkers, or the work itself, or the purpose of the organization. If your work hasn't a single redeeming property, pick a new career!
At the moment, if there was one negative thing about work that I could eliminate it would be overtime or the pressure to work overtime.

Overtime (unpaid since I'm salaried) is objectionable to me because it is a symptom of a larger problem (unrealistic demands, understaffed conditions, petty politics, bad management, etc) and making people work more hours is the "easy way out". Extra hours spent in the office are lost forever and it is especially painful to lose them while you are young, healthy and capable and desire to do a lot in life besides drudge away at the Job.
Paladin

Post by Paladin »

yobria
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Post by yobria »

mithrandir wrote:At the moment, if there was one negative thing about work that I could eliminate it would be overtime or the pressure to work overtime.

Overtime (unpaid since I'm salaried) is objectionable to me because it is a symptom of a larger problem (unrealistic demands, understaffed conditions, petty politics, bad management, etc) and making people work more hours is the "easy way out". Extra hours spent in the office are lost forever and it is especially painful to lose them while you are young, healthy and capable and desire to do a lot in life besides drudge away at the Job.
Well, just continue to skill build, make yourself invaluable and wait till the economy turns around and the labor market tightens. At that point you'll have the upper hand and can "clarify the terms of your employment", which will likely include a nice raise, fewer hours, and whatever else you want.

Nick
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preserve
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Re: Semi-retiring in your 30's

Post by preserve »

mathwhiz wrote: $1 million at 35 using a conservative 2.5% withdrawl rate would give about $25,000/year. If you can get that much in income with the part-time work, that's $50k. Plenty of money to live on if you have no mortgage and move to a low cost of living part of the country.
It depends what your part-time job is.

Are you developing skills and networks that will add value to your employ-ability? Ie. If you choose to go full time anytime during your retirement, will there be work for you? In that case, the decision is slam dunk.

I wouldn't develop a plan around the assumption that your assets are going to be worth something 30 years from now. It is a little too optimistic. Use your assets as a weapon to do your job the way you want to do it.
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Post by Valuethinker »

mithrandir wrote:
yobria wrote:
snodog wrote:Well most people are not lucky enough to have a j*b they enjoy. I've been in the w*rkforce over 25 years and held numerous jobs and have yet to find one that I even remotely enjoy.
I think that's unusual - while some parts of any job are no fun (it's not a vacation after all), most educated people can find some type of likeable work. They like their corworkers, or the work itself, or the purpose of the organization. If your work hasn't a single redeeming property, pick a new career!
At the moment, if there was one negative thing about work that I could eliminate it would be overtime or the pressure to work overtime.

Overtime (unpaid since I'm salaried) is objectionable to me because it is a symptom of a larger problem (unrealistic demands, understaffed conditions, petty politics, bad management, etc) and making people work more hours is the "easy way out". Extra hours spent in the office are lost forever and it is especially painful to lose them while you are young, healthy and capable and desire to do a lot in life besides drudge away at the Job.
Another factor going on there is to maximize profitability (or minimize costs, eg in government) you want fewer people doing more, for the same money.

Given current unemployment trends this is not hard to engineer.

I would say, compared to 20 years ago, most people I know (salaried) government or private sector (or higher education) are working more hours.
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Post by VictoriaF »

btenny wrote:Try reading Paul Terhorsts' book (out of print but used ones are available) about very early retirement and then read some of his insight on what he does with his time and how he has lived for the last 20+ years of retirement. He has dozens of hobbies and has developed friends all over the globe. He retired at 35 with the similar goals as you.

See his story here http://www.retireearlylifestyle.com/pau ... erview.htm

He made extra money by writing books and now he sells his story to the Retirement web sites. He has a home now in Argentina I think. He has never owned a house in the US since he retired. He uses foreign medical insurance and facilites.

Bill


PS. NZ is wonderful. I spent 4 days (part of a business trip) there back in the 90s and my daughter spent 3 weeks there. It is clean, uncrowded and fun. Lots of nice small cites and wonderful country side and green farms and deserted beaches. Trees grow there almost as fast as the Amazon. The south island has good snow skiing and back packing and river rafting. Wellington is a lot like San Francisco. It is built on the coast with lots of hills and overlooks and has similar climate and geography. Also earthquakes.
I ordered Paul Terhorst's book (used) and started reading it. Here are some observations from the first two chapters I have read so far:

1. The approach primarily targets people in their middle-thirties who have high net-worth either due to high professional salaries (business executives, physicians, lawyers) or business success (e.g., dot-com).

2. Terhorst states that one can live well on $50/day. However, that is in the 1984 dollars. In the past 25 years, the amount would have quadrupled to $200/day, or $73k/year.

3. Terhorst states that one can retire comfortably with the net worth of $500k. In the 2009, this is something like $2M. In fact, with 4% withdrawal rate, this would provide $80k income, which checks with #2. And having this level of assets in one's 30s does require a high-paying job or very successful business, consistently with #1.

4. I have not gotten to the detailed discussion of the Terhorst's financial planning for retirement, but some of his statements in earlier chapters are just not realistic today. For example, he recommends to "sacrifice" with a conservative 8% earning rate, instead of trying for 16%. This may have been a legitimate approach in the middle 1980s when CDs were bringing double-digit income, but one cannot plan sixty years of one's life (from the age of 35 to to the age of 95) based on that assumption.

5. The discussion of children (as far as I have read) is in the context of the need for additional assets and the value of the parents at home. However, there are aspects of good school districts, the need to have a permanent home, etc., that greatly limit parents' flexibility (or children's opportunities).

6. I agree with Terhorst in principle that when one has achieved high asset values, it is appropriate to reevaluate one's life and consider quitting the rat race.

7. I also appreciated the insights of developing a list of things to do in retirement well before the retirement, and settling in the area with no jobs.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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Post by btenny »

Other things I found out from reading Terhorst book back in 1988ish.

1. The key to retirement is more than money. It's finding things you enjoy doing like learning to play the guitar. Learning a foreign language. Taking 2-3 long "vacations" per year. Learning to really meet people and find out who they are, etc...

2. People can move offshore and live much better on less money rather than stay in America and stay in the rat race.

3. Many DINK couples can earn and save "enough" to retire by the end of their 30ies if they plan it that way and do not over spend on luxury items along the way.

4. You can also very early retire with kids, it's just harder and the end results may be different. ie. Not as much annual vacation traveling around, etc. But the returns may be better because you have more time with your kids and so forth...

I found it a very enlighting book for those of us who entered the rat race very young and had lots of responsibility before we could blink. It showed us an alternate way to live and maybe get more enjoyment out of life....

Bill
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Post by kramer »

VictoriaF wrote: 2. Terhorst states that one can live well on $50/day. However, that is in the 1984 dollars. In the past 25 years, the amount would have quadrupled to $200/day, or $73k/year.

3. Terhorst states that one can retire comfortably with the net worth of $500k. In the 2009, this is something like $2M. In fact, with 4% withdrawal rate, this would provide $80k income, which checks with #2. And having this level of assets in one's 30s does require a high-paying job or very successful business, consistently with #1.
Hi Victoria, according to Tom's inflation calculator the inflation adjusted number for $500K in 1984 is $1,080,000 and the inflation adjusted number for $50 per day is $108 per day.

I would not take the investing advice in the book too seriously. You already know more about investing than they did at that time. The book is more of an inspiration and to get people to think out of the box about what they can do with their life. I have met the Terhorsts and they practice what they preach in their daily lifestyle.

It is possible to live inexpensively and to have some adventures abroad. I just rented a large room with all amenities in a nice condo in Medellín, Colombia for $300/month, including all utilities, wash/dry/iron, twice weekly maid, extended cable TV, WiFi, etc. I think it is a nicer condo than any place I lived in in the USA before and a nicer neighborhood.

I am involved in the lives of a number of Colombians here, and I have been here for less than 3 weeks, since the day this thread started. I had a wonderful evening tonight with Colombian friends at a restaurant in the plaza and before that was with a Colombian friend for the afternoon. An American expat I met on my previous 2 week visit here last year returns in a week and we plan to hang out a lot. I have Spanish lessons 5 days per week and will start dance lessons soon -- I just have not had the time yet.

Yes, it really is possible, but I had to think outside the box to get to this point in my life. There was definitely a learning curve and some fear at first.

Kramer
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Post by VictoriaF »

Hi Kramer,

Thanks for the comments. I made an assumption of money doubling every 12 years, or two times since 1984. Your reference to "Tom's inflation calculator" is probably more accurate and includes the 2008 downturn.

I agree that it is possible to live very well and very cheaply in Columbia, Argentina, Peru, and other places. I experienced it first hand when my total expenses during the 24 hours I spent on the Taquile island in the lake Titicaca where $3 -- including lodging and food.

However, when planning for retirement, I consider additional expenses based on special interests or emergencies. For instance, the Terhorsts were coming to Boston to take courses, they attended some expensive occasions, ate in upscale restaurants, etc. And so, as I am reading Paul Terhorst's book, I am also trying to compare their total budget to mine, beyond the basics.

And, of course, the book has to be viewed in the historical context. It must have been really revolutionary in the late 1980s. Today, the web, the discussion forums like Bogleheads and early retirement ones, the higher incidence of people retiring at a younger age and moving abroad -- all these factors somewhat reduce the book's novelty. But it is still inspiring.

While reading it I picked up some other good advice.
- Be prepared to a negative reaction to one's early retirement by family members and friends.
- Do not try to dramatically change the lifestyle during the first few months upon retirement. Use this time to get some rest and get the thoughts together before, e.g., moving to another country, engaging in prolonged travel, dramatically redesigning your life, etc.

How was it for you? Did you read Paul Terhorst's book before you decided to retire?

I found two Paul Terhorst's web sites: this one is newest and this one is more complete. It is interesting to follow their lives over the past 25 years.

One more question. Terhorst has references to publications "International Living" and liveandinvestoverseas.com . At the first glance they seem more commercial than informative. Have you had any experience with these sites? Do you recommend any expatriate publications?

Thanks a lot!

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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Post by kramer »

Victoria,

Yes, I read the Terhorst's book before retiring but I read several others, as well.

I agree that forums are the best source of information, especially once you have developed a foundation on knowledge on which to build. I was an active forum participant on ER boards and financial boards for years before retiring.

I agree that one has to plan for more than minimal expenses. In fact, I think I spend more than many expats and I could only spend half as much per year but it would not be nearly as comfortable. It would actually be cheaper for me to live in one place in the USA but life would not be nearly as interesting. I try to spend less than 3% of my current portfolio, and this includes my HSA contributions; my thought is that this gives me plenty of flexibility for emergencies or increased spending.

When I retired, I was probably better prepared than most. I embarked on my first travel journey, a 1-way ticket to SE Asia, about 4.5 months after retiring. I was quite busy downsizing, moving, changing some investments, preparing for my first extended trip and also helping relatives in those early months.

Before embarking, I had no idea whether living abroad would be for me. I have learned so much since then. I remember thinking to myself, when the stock market was at its nadir, whether I would have traded my experiences since ER for just keeping working and staying safe and getting richer, and my honest answer was no.

I didn't experience much negative reaction to my ER. To be honest, now many of my friends and family want to join me whenever they can. Two cousins just wrote me this week that they are joining me for a month next time I am in Asia, they are waiting for me to return there.

Kramer
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Post by savermike »

VictoriaF wrote:- Be prepared to a negative reaction to one's early retirement by family members and friends.
Something that I believe I read here a while ago: when retiring early, the answer to "what do you do" is "I'm an investor".

Mike
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mathwhiz
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Post by mathwhiz »

Something that I believe I read here a while ago: when retiring early, the answer to "what do you do" is "I'm an investor".
Actually, I think that would be interesting. To retire and then whether part-time or full-time play the markets. Keep 90% of assets in passive long-term investments and consider the other 10% "fun" money to try any active strategy you want. Day trading is a fool's errand but fundamental investing for the intermediate and long term isn't nearly as speculative. There were lots of really great companies selling at huge discounts at various times during the last 12 months.
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