Tag Archives: Victory Lap

A priceless Early Retirement

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Billy and Akaisha on Naples, Florida beach

Billy and Akaisha Kaderli

Special to the Financial Independence Hub

Some say it’s impossible.

Others simply dismiss the notion outright even if they are curious. How do we live on less than $30,000 per year while traveling through Thailand, Vietnam, Mexico, Central America and other exotic locations? We don’t give up luxury, nor do we deprive ourselves.

So what is our secret?

Our approach is very simple: We have chosen not to dedicate our time and money to support a complicated infrastructure.

For almost three decades we have wandered the globe living in countless countries. We have purchased new computers and digital gadgets, refreshed our wardrobes many times over, received extensive medical care, and we have biked, hiked, scuba’d, taxi’d, bused, sailed and flown endless miles.

How is this possible?

Downsize the house, car, and Uncle Sam

Our housing expenses include our annual lifestyle fees, maintenance, repairs, and utilities for our home in the States, as well as hotel rooms or apartments we may rent while on the road. To ameliorate this cost, sometimes we house sit. We have been car free for years now, but our transportation costs include airline tickets, visas, passport renewals, taxis, Uber, boats, trains, and tuk-tuks.

If you look at your own expenses, you will see that housing and transportation take a good chunk of your income. Becoming mindful of what goes in to support these two areas of your life will be eye-opening. Take a close and honest evaluation of this state of affairs for yourself. Understand precisely where your money goes and why.

Another area that takes fiscal attention is taxes. Income taxes are something you can control by restructuring your portfolio. Interest from corporate bonds and short-term capital gains are taxed at income rates that are higher than qualified dividends and long-term capital gains [in the U.S.]. This restructuring is something to think about and can save you a significant amount of money yearly.

In most cases, housing, transportation, taxes and food/entertainment are the top areas of cash outlay in a person’s economic life. Modifying any or all of them — which is exactly what we did — will have a significant impact on your annual expenses.

Lunching in Guanajuato, Mexico

High living, low costs

All that being said, we have a great deal of fun living on less than $30,000 per year. Spending wisely, we get the most bang for our buck. For instance, living in a resort location in the States, we have access to a swimming pool, tennis courts, and a workout room without having to lay out cash for their purchase or maintenance. We eat high-quality meats, fish, fruits, and vegetables because we shop at farmer’s markets and watch for the rotating grocery sales to purchase when prices are attractive.

When we visit foreign countries, we live like the locals, eating fresh foods from the open markets, and we rent apartments, house sit or rent hotel rooms by the month. In this way we have maid service, gardeners, Wifi, and no utility expenses.

Walking instead of driving whenever possible, we also choose low-cost entertainment options such as tennis, hiking, biking, swimming, going to museums and art shows, and enjoying local festivals and celebrations. Volunteering for projects wherever we live, this provides us with new learning experiences and a sense of fulfillment. We share time with friends either cooking for them ourselves or going out to lunch instead of opting for higher-priced dinners. And when it’s time to hit the road, we take full advantage of current airline deals and travel packages.

Reaping the benefits of simplicity we place more emphasis on creating a life of meaning rather than a life of “‘stuff.”

Sunset at Naples Beach

What about you?

So you think you can’t make it on $30,000 yearly? How about $60,000 or $100,000 or more? All this means is that your net worth will need to be high enough to maintain these levels of spending.

No matter where you are in this continuum, you can profit from doing any of the following:

Simplify your personal infrastructure

Know where your money is going, and decide whether it’s worth it to you. Do you want to keep up the pace of your current spending? Make your funding priorities reflect your values.

Plan your retirement tax strategy now

Know there is a balance in the exchange of time and money

Do you want more money, or do you want more time? Your choice here will affect your future. Be clear about what you want.

Remember, the best things in life are free

Friendships and connection to society are based more on your attention and time, rather than on your money. Watching the sun set with a loved one — sharing life experiences together — creates memories that will far outlast anything you can purchase.

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website RetireEarlyLifestyle.com,they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstoreor on Amazon.com.

 

GreedyRates.ca: The 5 degrees of Financial Freedom

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Image: GreedyRates.ca/Shutterstock

My first article for GreedyRates.ca ran over the weekend. Click on The 5 Degrees of Financial Freedom for the full article. It talks about how many terms in personal finance are used interchangeably, and often imprecisely: financial security, financial independence, retirement and especially financial freedom.

I suggest that most of us travel through a financial life cycle as predictable as the human life cycle, and there is a corresponding hierarchy of growth stages that we need to keep in mind in order to continually meet and exceed our financial goals. But because the term financial freedom can apply to so many stages, I argue it’s better to use more precise terms to identify the various degrees of Financial Freedom.

From the 5-stage hierarchy below, I argue that the key milestone in our financial lives is Findependence (a contraction of Financial Independence), a turning point that I define as the moment all sources of passive income exceed your monthly living expenses. Note that the full version at GreedyRates.ca contains three key bullet points for each of the stages, for a total of 15. Below, I summarize just the stages themselves.

Stage (Sub) 0: Indebted Wage Slavery

We may start out our financial lives with student debt, credit-card debt or mortgage debt in the early years of forging careers and raising families. Whatever its nature, debt keeps you chained to employment or work of some type.  Since those starting their financial journey in debt haven’t really begun their financial journey at all, I call the preliminary stage Stage 0. As a character in my financial novel, Findependence Day, tells a young Millennial couple still in debt: “You can’t climb the tower of wealth while you’re still mired in the basement of debt.”

Stage 1: Financial Security

The next level to aspire to in the ascending hierarchy is Financial Security. In this stage you have eliminated your debts and have accumulated enough wealth so that your absolutely necessary monthly expenses (rent/mortgage, food, utilities, travel and basic entertainment) are taken care of for the near future.

Stage 2: Financial Vitality

It can take a long time just to establish a modicum of financial security but I argue you need to aim higher than mere financial survival and embrace what Tony Robbins dubs Financial Vitality. You want enough flexibility in your cash flow that, after the necessities are taken care of, you can enjoy little luxuries like new clothing or intangibles like gym or yoga memberships, and attend the occasional sporting or cultural event. It’s the difference between financially surviving and financially thriving.

Continue Reading…

When you retire where do all your friends go?

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This question comes up at presentations I make on Victory Lap Retirement. A strong social network is key to our happiness and longevity. Friendships enrich our lives, so we should always look to build our social network and build relationships with people we care about.

The challenge for all of us is that we are so busy working and nurturing our families, we can sometimes underinvest in our friendships. Our relationships with friends can also suffer when we are stressed out and in some cases pull back from friends; after all, who wants to be a “downer” to our friends?

One of the biggest mistakes you can make is sacrificing your time with friends, just so you can work longer to save for your retirement. The risk is when you finally get there, you may end up wondering where all your friends have gone. We all have times in life where we have to invest time at work, which means not spending time with friends and family. Don’t lose sight of your friends and make it a priority to invest time strengthening your friendships, especially as you get closer to retirement.

Everyone has two groups of friends: work friends, the group you spend a great deal of time with; and your outside or real friends, people that know you warts and all, and accept you for who you really are.

Work Friends

If you take an inventory of your relationships, you may be at risk of a lonely retirement if you find the majority of your social network is from work. Continue Reading…

Where did the Retirement idea come from?

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I was reading an article on retirement in The Atlantic. The article discussed the earliest concept of retirement, dating back to Otto von Bismarck of Prussia in 1881.

The concept was to provide financial support to “older members” of society. The idea was radical because people did not retire: if you were alive you worked. At the time the majority of people were employed in agriculture to feed the masses.

The struggle for payment continued for 8 years and finally with pressure from the socialists, legislation was introduced for the state to take care of those disabled from work. Social security was later introduced for those over 70 years old; however, 70 was well above life expectancy at the time.

Soldiers were paid pensions for years prior to social security; however, virtually all worked after their military service. In the late 1800s pensions were paid to many public servants in major US cities  and in 1875 American Express started to offer pensions,  followed by major industrial companies that started paying pensions in the early 1900s.

US Social Security in 1935

All this culminated with the Social Security Act of 1935, with a retirement age of 65 and a life expectancy of 58. Research at the time suggested mental capacity started to decline at age 60 and it was time to pass work onto the younger generation. In Canada, the Old Age Security Act was passed in 1927.

It is interesting to see the history of retirement,which was designed to not pay or pay very little since no one was supposed to live past the age of qualification. In the 1960s people started to live past Social Security age and had the money/savings to actually retire. This led to the problem we see today, which is the strain to fund payouts from government pension plans.

This problem will need to be addressed before it becomes a problem for our children, but that is a discussion for another day. You might have seen this before on this blog, so here again financial and lifestyle planning are critical to ensuring that you enjoy retirement on your terms: expecting anyone else to take care of you, even the government, is not wise.

People are living longer and want to work longer

Our current reality is that people are living longer and want to work longer. You might say we are going back in time. Continue Reading…

Younger Next Year (& creation of Younger Next Year – 2018 Facebook group)

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Younger Next Year. How’s that for a New Year’s Resolution?

Seriously, as we head into 2018, who wouldn’t want to be younger in 2018 than they were in 2017?

Impossible, you scoff? Clearly, you haven’t read the New York Times bestselling book, Younger Next Year, or its spinoff titles, including Younger Next Year for Women.

The authors are a vibrant 70-year old (at the time of writing) and ex New York litigator Chris Crowley and his personal physician (25 years his junior), named Henry Lodge (Harry in most of the text; I should clarify that this is the late Henry Lodge, since he passed await at age 58  early in 2017 of prostate cancer. Ironic.)

The subtitle says it all: Live Strong, Fit and Sexy — Until You’re 80 and Beyond. I’m grateful to one of my sources — Hub contributor Doug Dahmer of Emeritus Retirement Strategies — both for twigging me to the book’s existence and to supplying me a copy. (He appears to have laid in a good stash of the book).

Take control of your Longevity

And for good reason. The book is all about taking control of your personal longevity, chiefly  through proper nutrition but first and foremost by engaging in daily exercise: aerobic activity at least four days a week and weight training for another two days a week. Week in and week out, for the rest of your life. And the payoff is what is promised in the subtitle.

Apart from daily exercise and “Quit eating crap” (to use the authors’ phrase, one of Harry’s 7 Rules reproduced below) the authors urge readers to “Connect and Commit,” which means staying engaged even after formal retirement. In fact, as we argue in our own book Victory Lap Retirement, there’s a case to be made for never entirely retiring. Leaving the corporate workplace, probably, but semi-retirement and self-employment from home are certainly viable alternatives.

While Younger Next Year only touches on retirement finances, it certainly reinforces the main theme of this web site (FindependenceHub.com). It’s encapsulated in Harry’s 4th Rule: Spend Less Than You Make.

Harry’s Rules

I can see at this point that it’s best to simply list Harry’s 7 Rules, which formally appear in the book’s appendix (page 305 of my copy): Continue Reading…