Interesting article about extreme early retirement
JOSE BAILEN
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Can You Afford Extreme Early Retirement?
by Judy Martel
Could retirement before you're even eligible to join AARP be the
quintessential impossible dream? Not if you're consistently
disciplined, focused, driven and don't give a hoot about what the
Joneses think of that beat-up Chevy in the driveway, say experts.
Whether you work to live or live to work is a question increasingly
answered in favor of living by couples who have opted out of the daily
grind before the traditional "early" retirement age of 50-something.
What's more, they're not going quietly, but instead are springing up
on Web sites and in media interviews, telling their stories and
encouraging others to follow suit.
Bankrate found two such couples who were eager to share their tales of
extreme early retirement: Billy and Akaisha Kaderli, and Sandy
Aldridge and partner Dale Lugenbehl. Though their lifestyles are
vastly different, they share many traits. Several Bankrate readers
also shared their early retirement experiences.
The Kaderlis can count themselves as members of a small group of
founders of the extreme early retirement trend among baby boomers. Now
in their 17th year of retirement, the couple ditched their 9-to-5 jobs
when they were 38 years old.
At 55, they say they would have made the same choice again, only
investing sooner and with more confidence. The Kaderlis' initial
$500,000 nest egg has grown steadily, partly because they hung in the
stock market through the '90s boom and the historic bust that
followed, and partly because they've lived on an average of just
$24,000 a year. Initially, they put all their savings in a low-cost
index fund.
Retiring at 38, they say, was an excellent age because they had
accumulated life experiences through their careers: He was a former
restaurant chef and owner, and at one time, the youngest branch
manager at brokerage Dean Witter, while she continued to run the
restaurant.
"We retired with youth, vigor and plenty of enthusiasm to venture out
into traveling the globe. Retiring earlier, we would not have acquired
enough skill or self knowledge about how we are able to interact with
the world," the couple wrote from Thailand.
The Kaderlis sold their home when they retired, and remained homeless
while they explored the world, spending time in the Caribbean island
of Nevis, as well as in Venezuela, Mexico and Thailand. They recently
purchased a small home in an Arizona retirement community, and now
split their time between Chiang Mai, Thailand, and Mesa, Ariz., when
not traveling to other countries.
Their Web site, www.retireearlylifestyle.com, gives them the
opportunity to communicate with other early retirees, as well as
educate the younger generation. Their advice to 20-somethings who want
to follow the same path is simple: Save everything and stay out of
debt.
Out of the mainstream
Extreme early retirement strikes a chord with people now more than in
the past, says MSN personal finance columnist and author Liz Pulliam
Weston. While going against the fearsome icon of the "company man"
used to be part of the '60s counterculture, Weston says she's seeing a
resurgence of the attitude among 20-somethings who are rejecting the
consumerism that began in the 1980s. "They want more than to be
chained to their desks," she says, and they have more desire to
redesign their career to have more personal meaning. Sometimes that
means working until 65, but shifting often to careers that suit their
changing mindset.
Whether today's employees are enchanted with the idea of dropping out
early or not, it's still a small group of people who can make it
happen, according to Weston. "You have to be out of the mainstream to
do this," she says, adding that in her experience, the successful
extreme early retirees are "laser-like, and don't seem to care what
people think."
Aside from an unwavering focus on their goal and an indifferent
attitude toward amassing all the latest stuff, extreme early retirees
can't be lumped into the same category. They run the gamut from young
parents, singles and dual-income couples without children. Weston has
talked to couples with as many as four children who are living in
expensive areas of the country, as well as those who have no family
ties and a cabin in the woods.
They share an excitement about their lives, a desire to spend time in
pursuits that are meaningful to them, and often, an environmental
conscience.
The simple life
All three traits apply to Aldridge and Lugenbehl, who retired more
than a dozen years ago to an eight-acre parcel in Cottage Grove, Ore.,
with a starting nest egg of $135,000 each. They each contributed
$50,000 to buy the land where they built their home, and the remainder
is in CDs. They live on $400 a month, and have a health insurance
policy with a deductible of $7,500.
The money has remained conservatively invested in CDs. "We like to
sleep at night, so it's more important to us to know what's coming in,
rather than to maximize the possible income," says Aldridge. "We've
seen too many folks lose money rather than make money from their
so-called investments."
Aldridge and Lugenbehl, who retired at ages 48 and 47, don't have a
television and rarely eat out. Yet they don't feel like their life is
lacking, says Aldridge. "We are fortunate to have found what is enough
for us. I feel so totally blessed with how much we have that I can't
imagine wanting more. At this point, I'd have to say it's more than
enough to meet our needs and our wants."
Tips for extreme early retirement 'wannabes'
Billy and Akaisha Kaderli, the "grandparents" of the extreme early
retirement movement for baby boomers, share their mantra for those
seeking to follow the same path: Work hard, spend little, save a lot
and spend wisely. Their additional tips include:
• Set spending and investment priorities now for the future
• Stay 100 percent out of debt, except for a mortgage
• Invest in stocks through index and mutual funds
• Use the compounding effect of time by investing early
• Seek a partner with the same financial values
Billy and Akaisha Kaderli at Kata Beach, Thailand
Aldridge acknowledges that the cost of living is lower where they are,
but says they make an art form out of living well on less. They grow
most of their own food, shop for clothes at yard sales, which Aldridge
says is a form of entertainment for her, and find joy in small
construction and gardening projects on their property.
The two cook their own meals from scratch, and volunteer to give
presentations on the environmental impact of food choices, as well as
what Aldridge calls "voluntary simplicity."
"Dale and I would both rather have our time," she says, "even if we
end up choosing to work hard at gardening or building. At least we're
the ones determining what we're going to do with our precious life
energy."
Pursuing passions
Finding passion outside of a career that had become a chore is a theme
among most extreme early retirees. For the Kaderlis, that meant world
travel and a chance to experience diverse cultures.
"We have our youth and spirit of adventure," they wrote. "The
opportunity to travel to exotic locations and meet people from foreign
lands has given us a global view that no amount of money could buy."
Aldridge and Lugenbehl enjoy their day-to-day life so much that the
thought of vacationing elsewhere rarely occurs to them. "We exercise
faithfully three days a week, and usually take a long walk on the
other four," says Aldridge. "My mother lives up here now and we take
care of her. We do all the regular garden and orchard work."
The abundance of time and the freedom to choose how to spend it are
the most satisfying aspects of retirement for Aldridge. "It's being
able to get up each morning and decide for myself what I'm going to be
doing that day. Honestly, I can't think of any downside; at least
there hasn't been one for me."
Surprising reactions
Whether it's the green tinge of envy or an aversion to anyone who
steps off life's predictable treadmill, extreme early retirees often
face unexpected opposition from those around them.
"Back when we left our jobs, we got mostly shock," says Aldridge.
"Dale's mother was a classic. She was sure we were going to go hungry
and be out in the cold. That was about 13 years ago, and it's never
been a problem."
"Some people have expressed envy, but we don't think we did anything
they couldn't do if it really was a priority for them," she adds.
"Most of our work history was part-time, and not all that
highly-paid."
Aldridge says Lugenbehl's mother couldn't imagine how they would fill
their time in retirement. "It was as if she thought we wouldn't be
able to find things to do. My response was to ask her what she did
with her time. Not another word was said because she realized that
she'd never had any trouble in that regard."
The Kaderlis say that when they first retired, people treated them
like they were on an extended vacation and would soon return to work.
"Some thought we were committing social and financial suicide, and
others projected that we were selfish or lazy since we opted out of
the mandatory working world. This included family members, friends and
even strangers. Our choice of early retirement was too far out of the
box for them."
Think like an entrepreneur
Both the Kaderlis and Aldridge say they have always been debt free,
except for the time when they had mortgages, and they avoid debt now
like the plague. They also live below their means, even when their
investments throw off more income.
These two actions are key to the ability to retire early, says Herb
Hopwood, president of Hopwood Financial Services in Great Falls, Va.
"It really comes down to the fact that you can't control what the
markets are going to do, but one thing you can control is your
expenses, and that's probably the biggest thing."
Hopwood likens extreme early retirement to extreme sports. "Extreme
sports are risky and you must be in great physical shape. Early
retirement is risky, because what you're planning is going to be for a
long period of time without income...and you have to be in great
financial shape."
After an initial financial plan is developed, whether informally
penciled on the back of an envelope like the Kaderlis' or more
formally with a financial planner, it has to be monitored and changed.
Setting yourself up to receive the same income no matter how the
markets perform can result in financial disaster, says Hopwood. "The
objective is not to tap the principal."
Once you begin doing that, he says, it's alarming how fast principal
erodes, leaving you with a smaller pot from which to draw income. A
portfolio should remain fairly aggressive in equities, up to 70
percent of the total. But Hopwood cautions against a blanket approach
when it comes to what's considered aggressive. "You can be aggressive
in allocation, and stupid in investments." For instance, he wouldn't
recommend that all the equity allocation be in biotech, or growth
stocks, but in a balanced blend that will return an average of 8
percent over time.
Hopwood recommends that clients seeking a long retirement train
themselves to think like entrepreneurs. The portfolio, rather than a
job, is providing income, and like an entrepreneur, a retiree should
be constantly watching and adjusting the rate of income.
"Too many people adjust their lifestyle to their income. That's a very
dangerous thing to do."
raylopez99
JOSE BAILEN wrote:
> ...a choice I made myself! (well, more accurately, semi-retirement in my case):
>
> =====================================.
cities mentioned in the article...in fact I was in Chang Mai about two
weeks ago (a bit overrated and industrial for my taste, I like another
part of Thailand that I'm not going to mention except to say it's in
the NE part).
RL
JOSE BAILEN
in Brazil. It combines excellent weather all the year around with
beautiful beaches, good communications, good services and low
crime-the state is one of the richest in Brazil- and very cheap real
estate when compared to Europe or the U.S. :
http://www.escapeartist.com/OREQ7/Florianopolis.html
raylopez99
On Dec 1, 3:09 am, "JOSE BAILEN" <jose.bai...@gmail.com> wrote:
> To me, my favorite retirement spot would be the Santa Catarina island,
> in Brazil. It combines excellent weather all the year around with
> beautiful beaches, good communications, good services and low
> crime-the state is one of the richest in Brazil- and very cheap real
> estate when compared to Europe or the U.S. :
>
> http://www.escapeartist.com/OREQ7/Florianopolis.html
the promotional links speak for themselves; indeed, the Santa Catarina
islands look tempting. Trouble with islands are (and they are plenty
here in GR) is that though real estate is cheap, other stuff like
food, sometimes water (a few in GR, though stay away from dry islands
is my advice), medical care (have to take a boat to the mainland) are
more expensive. But it's a thought; sometime to consider. And
learning a new language can be fun. It all depends on finding a
pretty girl to share IMO. Reminds me, I need to start making more
money...got a few irons in the fire and shortly time will
tell...otherwise I have to stay put for now.
Brazilian "Atlantic coast" was once all mangroves and stuff but now
chopped down...another tempting place I saw was the sea town of
"Fortaleza", just north of the "horn" of Brazil...had a nice writeup
and good stats in a promotional website I saw on YouTube. I recall
that you Jose have been there or something.
Hmmm.... I wonder if Portuguese is easier to learn than Thai.
RL
JOSE BAILEN
very close to land. In fact, the main city of the island
-Florianopolis- is connected to the continent through a bridge. With
respect to girls, I've been to Brazil several times and Brazilian
girls are among the most beautiful girls I've seen. I didn't find too
many 200-pound ladies there (as I did in Chicago and Washington)! :)
Portuguese is relatively easy if you already know some Spanish, and in
any case, in South Brazil many people speak fluent Spanish...Northern
Brazil is also beautiful, but it's warmer and more humid, and they are
poorer areas (this means more crime and worse services than in the
South)..
On 12/1/07, raylopez99 <raylo...@yahoo.com> wrote:
>
>
>
raylopez99
Brazil, just as I figured. I'm trying to get myself invited to Brazil
(using MySpace) but no luck so far...don't know anybody down there.
RL
Brazil's North Coast. Brazil may be a developing country, but it has
the strongest economy in Latin America. It's a huge country as well,
which may be one reason its dazzling, sun-washed north coast is just
now being discovered and developed. Fortaleza and the surrounding
coast is ground zero for the Brazilian beachfront boom, yet you can
still buy a downtown apartment with a fantastic sea view for $50,000.
Beachfront lots go for as little as $16,500 while a beachfront condo
starts at less than $67,000.
Southern Italy. According to our Roving Europe Editor, Steenie Harvey,
Europe gets short shrift from International Living as a viable option
for American and Canadian expats. She's made it her mission to correct
that situation, and it's hard to find fault with her reasoning when
you can find restored villas in Borghi Nascosti in Italy's Abruzzo
region (70 miles east of Italy) with prices starting at just $41,711,
including all new wiring, plumbing...even furniture.
In 2008 as we scour the planet for more places where the living is
easy, the prices are cheap, the opportunities are enticing...and where
watching the wild swings of First World economics and politics is more
a spectator sport than an audience-participation fight to the finish.
Yucatan, Mexico. With long, undeveloped stretches of Gulf beaches,
urban centers with excellent infrastructure and services, and prices
unseen for years on the Pacific and Caribbean coasts, foreigners are
starting to get the message about Mexico's Yucatan State. From the
international airport in Merida, direct flights put Houston just two
hours away...Miami less than 90 minutes. Yucatan is so affordable that
it's even getting attention from an increasing number of Mexicans as a
vacation and second-home hotspot. Beachfront lots 40 minutes from
Progreso on the Gulf coast are selling for as little as $35,000
through real estate agencies and can be less through an owner. A
renovated three-bedroom house right on the beach is currently listed
for less than $70,000. And you can still get a tidy little colonial
house in Merida's historic center for under $60,000.
Coastal Ecuador. We've watched Ecuador for years and always found it a
compelling bargain. Right now its Pacific coast offers some of the
best beachfront bargains to be had anywhere. From Salinas to Manta to
Atacamas there are miles of California-type beaches and headlands
simply waiting to be discovered and developed. In San Clemente, just
north of Manta, new beachfront condos are now selling for as low as
$79,000
Uruguay. In many ways, 2007 was the Year of Uruguay at International
Living, due in largepart to Lee Harrison, our Roving Latin America
Editor, taking up residence there. He'll continue watching Uruguay's
evolving opportunities in 2008. Lee doesn't live where he can't get
top value for his dollar, and he's found what he calls the best all-
around value in Latin America in Uruguay...especially in the capital,
Montevideo, and in Uruguay's Atlantic coast beach playground, Punta
del Este. And with the ability to buy properties at auction for
pennies on the dollar (something Lee wrote the book...or rather, the
special report...on), Uruguay's opportunities are well worth special
attention in 2008.
On Dec 1 2007, 4:24 am, raylopez99 <raylope...@yahoo.com> wrote:
> On Dec 1, 3:09 am, "JOSE BAILEN" <jose.bai...@gmail.com> wrote:
>
> > To me, my favorite retirement spot would be the Santa Catarina island,
JOSE BAILEN
The South is richer and provides better services in key areas like
health. If you look at property prices, the South is also very cheap
-although more expensive than the North- but much cheaper than Europe,
for instance.
Safety is a key consideration when you retire, especially if you
retire abroad. Probably the most beautiful area I've been is the
Atitlan lake area, in Guatemala (look at the pictures here --->
http://travel.sulekha.com/blog/2007/02/lake-atitlan-the-most-beautiful-lake-in-the-world.htm?contributor=gerrydeniseaitken).
I visited the place a few places when I was the IMF economist for
Guatemala, and it is like a paradise. Real estate is also extremely
cheap, even cheaper than in Brazil. I would never retire there though,
because of security issues (Guatemala has one of the highest crime
rates in the world).
raylopez99
promising German "Go" player was visiting Guatemala (which has a high
crime rate, I think a president of theirs was a convicted murderer a
few years back, when he held office (!), one reason I never visited
that part of Latin America) and was killed during a robbery at the
lake about seven years ago, despite cooperating with the robbers, who
had police weapons.
Another lake with a bad reputation is "Lake Titicaca" near Bolivia and
Peru. But for retirees, a nice lake is "Lake Chapala" near
Guadalajara, Mexico, where the women are beautiful and the beer is
cold (but the lake, Mexico's largest, sadly is turning brown from too
much irrigation). Too bad my Spanish sounds so bad that people say I
sound like an Indian chief (cacique) when I talk, or I would move
there. That and I can't find a seniorita despite my numerous travels
south of the border, LOL.
As for northern Brazil, I've also heard it's kind of rough--a world
class solo round-the-world sailor met his end near Belim I recall a
few years ago.
Working on visiting the Philippines right now...land of 10000 lakes--
no, that's Minnesota, I meant land of 10000 islands.
And what a day yesterday in the market; goes to show that buy and hold
is safer than day trading.
RL
PS--saw an interesting stat: the best stock market in the world from
1968 to the late 1990s was not Sweden (which was #2) but Spain! Goes
to show, that the paper by Ritter et al (abstract below) is right:
countries with the best prospects are sometimes the worse stock
markets (with the USA being an exception)
PS2--factoid: the homicide rate in Columbia is roughly on par with
the death rate in Iraq (source: http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita;
next go to http://www.iraqbodycount.org/, take the high number for
civilian deaths in Iraq during the war, 88k, divide by five years, and
divide by the population of Iraq, 27 M, to get a yearly rate per 1000
of 0.652, which is about the same as Columbia's 0.6178. Something to
that Maya tradition of human sacrifice in Columbia? Of course Iraq
was very peaceful (albeit unfree) while Saddam was in power, so it's
all relative.
-
Economic growth and equity returns
Jay R. Ritter *
University of Florida, Gainesville FL 32611-7168, United States
Received 1 July 2004; accepted 1 October 2004
Available online 9 August 2005
Abstract
It is widely believed that economic growth is good for stockholders.
However, the cross-country
correlation of real stock returns and per capita GDP growth over 1900-
2002 is negative. Economic
growth occurs from high personal savings rates and increased labor
force participation, and from
technological change. If increases in capital and labor inputs go into
new corporations, these do not
boost the present value of dividends on existing corporations.
Technological change does not
increase profits unless firms have lasting monopolies, a condition
that rarely occurs. Countries with
high growth potential do not offer good equity investment
opportunities unless valuations are low.
D 2005 Elsevier B.V. All rights reserved.
-
On Jan 23, 2:03 pm, "JOSE BAILEN" <jose.bai...@gmail.com> wrote:
> Safety is a key consideration when you retire, especially if you
> retire abroad. Probably the most beautiful area I've been is the
JOSE BAILEN
were in Guatemala in 2002 -we negotiated a Stand-By agreement with
Portillo's government-. Most of the politicians we negotiated with
-Portillo, the head of the ruling party Rios Montt, Finance Minister
Weymann, Vice President Reyes- were arrested or exiled shortly after
they left government.
The high crime rate in Guatemala is really a shame: the country is
really beautiful, with gorgeous Mayan ruins at Tikal, a beautiful
colonial city like Antigua, and Lake Atitlan. For just a visit, I
would recommend it to anyone.
raylopez99
> Yes, the convicted murderer was Alfonso Portillo, we met him when we
> were in Guatemala in 2002 -we negotiated a Stand-By agreement with
> Portillo's government-. Most of the politicians we negotiated with
> -Portillo, the head of the ruling party Rios Montt, Finance Minister
> Weymann, Vice President Reyes- were arrested or exiled shortly after
> they left government.
like your negotiating for your release as a hostage, which maybe
indirectly you were.
Jose if you had less academic respectibility and more Hollywood, you
would write a book like "Confessions of an Economic Hit Man", which I
perused in an airport bookstore a few years ago but I see now (
http://en.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man ) has
taken on a life of its own and became a best seller.
RL
JOSE BAILEN
every country I've worked on when I was at the IMF:
Georgia: the so-called "cigarette importers" that were introduced to
us by the Customs Service Head (they were hit men, dressed in black, I
had the feeling that I was talking to the Godfather's people)
Paraguay: the head manager of the Social Security service who just
"moved" to Switzerland a day before our scheduled appointment ("se fue
con la plata" -"he just left with the money"- said his secretary).
Uruguay: the central bank official woman with Basque last name who
told me "yes, I'm Basque, but I'm not a terrorist!"
Costa Rica: the "fishy business", for a while Costa Rica was a world
power in fish exports, it turned out that they just created a fish
export company to get huge VAT refunds.
Guatemala: the Vice President had been processed a few times for fraud
and corruption; the President was a convicted murder; and the real
strongman of the country at the time, the Head of Congress and the
ruling party, Efrain Rios Montt, has been convicted of genocide by
judge Garzon of Spain
(http://www.moreorless.au.com/killers/montt.html)
Panama: the IMF mission chief was allowed to push the button so a big
Norwegian ship could go through the Canal.
Libya: the "sand" imports invented by the IMF mission chief to close a
huge balance of payments discrepancy.
Iran: the "unclassified expenditures" account in the central
government accounts, which, when investigated, included huge payments
to the North Korean embassy (nuclear stuff) and Syria (Hezbollah's
financing),
and then, I left the IMF...
On 1/25/08, raylopez99 <raylo...@yahoo.com> wrote:
raylopez99
On Jan 24, 11:58 pm, "JOSE BAILEN" <jose.bai...@gmail.com> wrote:
> Yes, I've thought about it a few times. I have anecdotes of almost
> every country I've worked on when I was at the IMF:
you stayed, which would have necessitated either a large cash payment
or worse... Though for all the power they have, thankfully I've not
heard of anything bad happening to IMF people except a few anarchist
student protests.
RL
JOSE BAILEN
members of an IMF mission were injured in Iraq, since then all
missions to Iraq were cancelled (after this happened, the meetings
with the Iraqi authorities took place in Amman). Also, I remember an
incident with an IMF Resident Representative in Sierra Leone (some
guerrillas assaulted his home, and he had to be rescued by UN troops).
But in general, work at the IMF is relatively safe and the authorities
usually treated us really nice...
On 1/25/08, raylopez99 <raylo...@yahoo.com> wrote:
>
>
>