Early retirement - am I dreaming?

[hartford_renter]

Fauve,

Seems like a great plan. There are a couple of other things you might consider when moving to S. America.

1. You said a lot of the assets were in the house you own and plan on selling. Consider the expense to sell the house and moving expenses to transfer your belongins to wherever you move.

2. If you are looking at drawing from the 550K and then the 500K when you recieve from inheritance. How do you plan on investing this? If you keep your money out of stocks because you are concerned about risk fluctuations consider purchasing a payout annuity. You can get about 5% guaranteed for life. You can simply use this as a buffer to cover your living expenses. It would allow you to invest the remaining balance in more risky assets.

But again its up to you. I would ignore advice that says to only remove 4% of your lump sum. Really you can take out a higher percentage and they adjust your withdrawal amount if your assets take a dive.

[earlyretirement]

Originally Posted by Bob-666

To come back to the OP's question about where to invest: having all your assets in US$ is dangerous. If the US$ suffers hyperinflation or even just moderately high inflation for a number of years, you're dead meat. You need to diversify into other currencies or monetary metals. I would investigate buying gold or silver and possibly storing it offshore. Over the last 40 years, gold has gone from $35/oz to $1200/oz and there is every sign that this meteoric performance will continue. For example, this company has good reviews: Buy Gold Bullion TODAY ▷ Buy Gold Online at LIVE Gold Prices - BullionVault.com

I totally agree it's good to diversify and have some assets outside of the USA. I also think in this day and age it's good to have a 2nd home outside of the USA if it's possible financially.

I'm going to go against the grain and say you don't have enough to retire. And definitely it's wise NOT to count on any potential inheritance. I know several people that did that and it didn't turn out how they had hoped on that front so don't count on that.

Some posters make good comments about budgeting for things like emergencies and also it's best to go move to the country you are thinking of moving to.

I can tell you after living in South America for the past 7 years that it's much different than the USA. Positives and negatives so prepare yourself and go live there for at least a year and see how you like it.

Also, think about inflation as well as that will definitely be a factor with the rate the US government is printing money. I'm also pondering early retirement so I know what you are going through. Good luck!

[modhatter]

I don't want to be a party pooper but I have to agree with Earlyretirement. Your estimated $550,000 is mostly tied up in a house if I read your post correctly. You also said you would eventually purchase a place for between $100,000 to $200,000. So now what have you got left - $$350,000 to $450,000. I disagree with another poster who said you could easily draw down more than 4%. If you do some current reading on Today's economical outlook, that 4% withdrawal has been scaled back to 3% or less. 3% of $400,000 is $12,000 a year or $1,000 a month. Even in Costa Rica, $1,000 a month is not going to afford you a life style you may be hoping for.

Also, since you are so young, you are going to see some significant changes to social security. You probably won't have to wait more than a year to see what that might be.
I do understand the health insurance problem though. Especially if you don't hold jobs that provide health insurance for you and you must purchase your own.
If you had significant health issues and health insurance was not available to your for whatever reason, I would say that is a horse of a different color.

I am not at all opposed to moving to another country for lower cost of living (especially if you can speak the language) and for health insurance, provided you have enough funds to sustain yourself long term. If I were you, I would consider two scenarios. Sell your current home and get out from those high taxes, and buy a cheap $100,000 house somewhere else in the US and try and grow the remaining money over the next ten years while working - even if you make less income - as long as you can cover your expenses and buy high deductible policies.

Or number two: Sell your home. Rent a cheaper place where you think you might want to live in Costa Rica for a year before making any final decisions, and plan on your husband teaching English at a school, and perhaps you earning some money yourself. Then between your earned income there and your very small draw down of your nest egg for the next ten years, you may be able to fully retire if all goes well in the investment arena at that time without so many concerns.

I know what you want to hear, but in all consciousness, I could not advocate you doing what you are contemplating unless you could secure employment there. Then it could make sense. I know $500,000 sounds like a lot of money to some people, but today unfortunately it is not. Not when you don't have social security or a pension to accompany it. And as others have pointed out, it is more than likely we will be seeing some significant inflation in the coming decade.

[earlyretirement]

Originally Posted by modhatter

I don't want to be a party pooper but I have to agree with Earlyretirement. Your estimated $550,000 is mostly tied up in a house if I read your post correctly. You also said you would eventually purchase a place for between $100,000 to $200,000. So now what have you got left - $$350,000 to $450,000. I disagree with another poster who said you could easily draw down more than 4%. If you do some current reading on Today's economical outlook, that 4% withdrawal has been scaled back to 3% or less. 3% of $400,000 is $12,000 a year or $1,000 a month. Even in Costa Rica, $1,000 a month is not going to afford you a life style you may be hoping for.

Also, since you are so young, you are going to see some significant changes to social security. You probably won't have to wait more than a year to see what that might be.
I do understand the health insurance problem though. Especially if you don't hold jobs that provide health insurance for you and you must purchase your own.
If you had significant health issues and health insurance was not available to your for whatever reason, I would say that is a horse of a different color.

I am not at all opposed to moving to another country for lower cost of living (especially if you can speak the language) and for health insurance, provided you have enough funds to sustain yourself long term. If I were you, I would consider two scenarios. Sell your current home and get out from those high taxes, and buy a cheap $100,000 house somewhere else in the US and try and grow the remaining money over the next ten years while working - even if you make less income - as long as you can cover your expenses and buy high deductible policies.

Or number two: Sell your home. Rent a cheaper place where you think you might want to live in Costa Rica for a year before making any final decisions, and plan on your husband teaching English at a school, and perhaps you earning some money yourself. Then between your earned income there and your very small draw down of your nest egg for the next ten years, you may be able to fully retire if all goes well in the investment arena at that time without so many concerns.

I know what you want to hear, but in all consciousness, I could not advocate you doing what you are contemplating unless you could secure employment there. Then it could make sense. I know $500,000 sounds like a lot of money to some people, but today unfortunately it is not. Not when you don't have social security or a pension to accompany it. And as others have pointed out, it is more than likely we will be seeing some significant inflation in the coming decade.

EXCELLENT post. That is exactly along the same lines of what I was thinking. I know people don't like getting their hopes/dreams shot down by other people but I think it's always best to be totally realistic.

And Costa Rica and some of these other countries aren't as cheap as they used to be. Forget what you hear of how much a local can get by for. In the VAST majority of the cases I've seen with Ex-pats...they simply can't "live like a local".

I also totally agree with the point of social security. SS is basically a big ponzi scheme that most likely won't be around (or drastically changed) by the time those of us that are a bit younger hit eligibility.

The other factor to keep in mind is that it's NOT easy for foreigner non-residents to secure employment in many foreign countries. Everyone likes to think that they are highly skilled and can easily make money in other countries but again, most of the ex-pats I see can't make money. The most ideal situation is if you can work over the internet/phone. There are amazing technology with Voip (Vonage), efax, etc. where if you have a business where you can operate via emails/phone, etc. You can still make money and have a local USA # no matter where you are.

I agree with Modhatter. $500,000 might sound like a lot to some on the board but at your age, considering early retirement it's not enough to comfortably retire thinking about any possible emergencies or contingencies.

Also, there are many variables of the situation and you are counting in your cash on hand the house. There isn't any way to know what you would safety net when it's all said and done. I'm not sure where you live but many parts of the country probably will see real estate prices fall some more. Also, I know a few people that had homes for sale for a few years and couldn't sell it so you should factor that in as well, which to your credit you did acknowledge that property values can go down. Just factor in that it could sit on the market a long time.

You talk about having a maid/cook in Costa Rica. I'm not sure how much they are there but I have a maid/cook in Argentina and I pay $500 US a month for that. I do everything legally so I also pay various tax as well for her. It's a HUGE luxury to have someone come and cook/clean every day but on a really limited budget that you have, I'm not sure that will be a reality.

Definitely I'm not saying you should never do it. But probably it makes sense to work several more years and build up your cash savings if you can. I've learned watching others that the easiest time to make money is when you are younger and healthier. It gets increasingly harder with each passing year as you get older. If you think your husband can leave his job in the USA for a year or two and safely get his job back or find work you should go try to live wherever you are planning for a year or 2 and see how you like it.

I've made the move before to a foreign country and I think the best thing is to make a list with the "best case scenario" but also to make a "worst case scenario" list. In the worst case scenario list, think of you not being able to sell your house for as much and it taking longer than you thought, your husband or you not being able to find a job in Costa Rica, you having some major illness and not having friends or family around for support. It's not difficult to burn through money in ANY country with unplanned events. Then think of the end result of burning through much of your savings and having to come back to the USA with a big gap in your work history for many years. What will you do? Where will you work? What about signing up for medical insurance again? Ask yourself the worst case scenario as well.

These boards are great but from what I can see, many are always thinking the best case or positive scenario when often is the case the worst case scenario is totally ignored.

[bluesky55]

Hello. I sugest you go on short periods of vacation in Costa Rica and get to know the areas. I personally like Guanascaste province. I do know of a project that is taking place ther now and the lots in a brand new subdivition are going for $12,000 us; or lot of 3200 sf and a 3/2 house gos for like $55,000. This is very cheap, things will soon start getting very espensive.