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Do any forum members think this plan below is flawed in anyway? Any input would be greatly appreciated.
Hi Everyone,
I'm approaching 40 in a few years and am planning on moving from North America to a low cost destination to reduce my retirement cost, increase my purchasing power parity and add adventure / adventure travel to my life. In addition, I have a young child and wife, and want to be able to spend more time with my child while he/she is young. (I think travelling / exposure is good for kids, who would be enrolled in international schools with language skills in english, spanish and mandarin).
Another reason I want to / plan to retire at 40 is that I want to be able to be very active and travel and live in maybe 5-6 countries (a few years each) while my body is still very physically capable. I'm currently in pretty decent shape, but don't think I'll be able to under take the above adventure travels if I retired in my 60's (not meant to offend anyone). When I'm in my 60's I don't mind working part-time, 1 or 2 days a week...probably not for the sake of money (only), but to keep my self stimulated. I probably would've gotten the travel expat but out of my system by then.
A bit about myself. I'm well travelled and educated. Been saving for retirement since I was 25 and am past the monetary 7 digit mark about 6 years ago, but am still saving aggressively and debt free. I don't cheat myself out of luxury goods or material items, but those things don't add too much 'happiness' to my life....they typically just make my life more comfortable or complex at times....sorry for digressing.
I expect my money to grow at about 5-7% per year and the cost of living for my family is projected to eat up about 3-3.5% (let's say 30-45k/year), so my nest egg will still be grown, but inflation will still erode my purchasing power over time (as low cost destinations typically have higher inflation rates, money and investments will be diversified across many asset classes and currencies-soft/hard).
Do any forum members think this plan is flawed in anyway? Any input would be greatly appreciated.
health care may be very expensive so make sure you are well educated in future costs. Also a million may sound like alot, but if your going to live for 40 more years with the expenses of 2 people, that is not much. A major factor in the success of your plan is definitely the ability to earn money during this "retirement". And believe it or not retirement without any sort of work may be boring.
Also to be considered it standard of living is not the same as where your from in these countries. Also these international schools can be quite expensive. And as a non citizen, you have many restrictions on you. I think the best thing to do is talk to people who have done what you want to do. Hopefully you find some here.
Not sure all this traveling around is going to be in the kids best interest.
Also if you want to save money all the constant moving around will cost something in relocation costs.
Not sure how you manage to start saving for retirement at 25 and 15 years later you have 7 digit numbers in the bank to live on for the rest of your life,must be a heck of a well paying job..i'll bet once you are retired expenses are going to be a lot higher than you are planning and older people getting jobs can be a frustrating lesson in futility as unless you have some special skill most employers want young people.
If you can make it work, I don't see any problem with it. Lots of retired military do the same. Working like a slave till your 65 doesn't have a lot of appeal to a lot of people. The biggest problem you are likely to face is paying for health insurance, if your going to carry it.
I expect my money to grow at about 5-7% per year...
I think the above part may be unrealistic. The world economy has been in deep trouble for some time now, and it is not at all clear whether historical rates of return on investments will ever be the same again for the foreseeable future. This is a real wild card - so you may turn out to be right.
I am not certain what countries you are considering. If the are very low cost areas like Equator, Panama, Argentina or Uruguay, Thailand, or Philippines, you can make it on $25,000 yr. nicely. But if it's more expensive countries like Europe, your cost projections will be very tight (especially with the moving part) Assuming you have one mil. with a $25,000 withdrawal, you have a chance to at least keep up with inflation with your nest egg. And if both you and your wife will be getting social security at 66 or 68 or 70 (who knows?) you might make it. But I agree with the other poster. Though it might be culturally enlightening for your children, don't expect them to like it. Having friends and acceptance in school is paramount for them.
Living in a country where you do not know the language is VERY difficult. I have done this in Mexico. You will also find when you don't know the language fluently, that you pay "gringo" prices, not native prices. Just some food for thought. Also, some countries offer decent medical insurance and care, and some not so good. I agree this should be your first line in choosing should decide to do it.
Last edited by modhatter; 02-14-2012 at 08:08 AM..
health care may be very expensive so make sure you are well educated in future costs. Also a million may sound like alot, but if your going to live for 40 more years with the expenses of 2 people, that is not much. A major factor in the success of your plan is definitely the ability to earn money during this "retirement". And believe it or not retirement without any sort of work may be boring.
Also to be considered it standard of living is not the same as where your from in these countries. Also these international schools can be quite expensive. And as a non citizen, you have many restrictions on you. I think the best thing to do is talk to people who have done what you want to do. Hopefully you find some here.
I agree that healthcare will be an escalating cost, thus I plan to return to my native country where there is decent government healthcare (Vancover, BC) when I am 65+ (or when I'm done with my early retirement plan).
A million isn't a lot of money these days and will certainly be less in the years to come. To implement my plan I would target about 2.5 million before embarking on such a journey. I'm planning to average 6% via conservative investments and also possibly earn about 2% doing some small business on the side (something that would only take a few hours per week)
The ideal of talking with others who have taken a similar path is an excellent idea.
Not sure all this traveling around is going to be in the kids best interest.
GLOBALIZATION WILL SLOWLY REMOVE GEOPOLITICAL BORDERS TO SOME DEGREE. NORTH AMERICA IS NOT WHAT I USED TO BE, I WANT MY CHILD/CHILDREN TO BE ABLE TO ADAPT TO THE POSSIBLE EMERGENCE OF THE BRIC ECONOMIES.
Also if you want to save money all the constant moving around will cost something in relocation costs.
THIS IS TRUE. I WOULD SET UP A HOMEBASE COUNTRY AND TRAVEL ABOUT 25% WITH FAMILY AND 15-20% OF THE TIME INDEPENDENTLY. MY SPOUSE AND CAREGIVER / NANNY IS UNDERSTANDING AND SUPPORTIVE TO MY ADVENTURE TRAVEL GOALS.
Not sure how you manage to start saving for retirement at 25 and 15 years later you have 7 digit numbers in the bank to live on for the rest of your life,must be a heck of a well paying job..i'll bet once you are retired expenses are going to be a lot higher than you are planning and older people getting jobs can be a frustrating lesson in futility as unless you have some special skill most employers want young people.
I STARTED MY SAVING TRAITS AS A YOUNG ADULT. THESE IDEOLOGIES WERE IMPARTED TO ME BY MY LATE PARENTS. IN ADDITION, I'M FORTUNATE ENOUGH TO HAVE A REWARDING CONSULTING WHICH PAYS AN ABOVE AVERAGE SALARY
At the age of 65+, if I was in decent physical and mental health I would entertain reentering the work force for 1-2 days a week just to keep my sanity and to be connected with society. I have a skill set, that if I worked 1 day could earn me an average of 700-800. However, those skills may become obsolete over the span of 20-25 years.
Sorry about the UPPER CAPS above, not meant to be LOUD, just easier to reply to some post.
I think the above part may be unrealistic. The world economy has been in deep trouble for some time now, and it is not at all clear whether historical rates of return on investments will ever be the same again for the foreseeable future. This is a real wild card - so you may turn out to be right.
I agree that 5-7% annual returns may not be sustainable over time and or would be eaten up by inflation if the central banks of the world continue to monetize our money supply. This is an issue which concerns me; excellent point.
I am not certain what countries you are considering. If the are very low cost areas like Equator, Panama, Argentina or Uruguay, Thailand, or Philippines, you can make it on $25,000 yr. nicely. But if it's more expensive countries like Europe, your cost projections will be very tight (especially with the moving part) Assuming you have one mil. with a $25,000 withdrawal, you have a chance to at least keep up with inflation with your nest egg. And if both you and your wife will be getting social security at 66 or 68 or 70 (who knows?) you might make it. But I agree with the other poster. Though it might be culturally enlightening for your children, don't expect them to like it. Having friends and acceptance in school is paramount for them.
Living in a country where you do not know the language is VERY difficult. I have done this in Mexico. You will also find when you don't know the language fluently, that you pay "gringo" prices, not native prices. Just some food for thought. Also, some countries offer decent medical insurance and care, and some not so good. I agree this should be your first line in choosing should decide to do it.
For sure I would be moving to a developing country which will transition from a under-developed nation to a progressively developed nation. The purchasing power parity should be about 2.5-3x that of the USA (ie. your money goes way further here).
As for social security / government pension....I don't know how useful that will be in the future as my time horizon to the age of 65 would be about 25 years away. Anything could happen and the pension that they give you at that time could be...kinda useless if the demographics and economics of a country are in shambles.
I think the kids will have some aspects of 'not liking it', but being enrolled in international schools (estimated 6-9k per year) many kids will come from various back grounds and the nastiness of some of the north american youth culture will be subdued to some extent. However you bring up a very valid point that needs further examination-thanks! I would also want the kids to return north america for college/university.
If I were to settle in asia, Thailand and the Philippines would be my medical hubs as they offer decent access to healthcare at decent rates.
Initially I expect to be cheated by the locals as I slowly find the grove of the country. In many of these countries, cheating locals is a national past time
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