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Immediate & Sudden Retirement

Outlining A SUDDEN RETIREMENT

You like the title? Kinda grabs you, doesn’t it? I don’t remember where I heard it for the first time, but it immediately (and suddenly) sparked this wave of possibilities in my head. That I could immediately and suddenly retire today, or tomorrow. What would that look like? What would I do with my time? OMG, so many fun things I could do if I didn’t have to report to a job or have any external forces on my free time.

PREREQUISITES TO RETIRING

Retiring doesn’t mean sipping alcohol on the beach, nor does it mean that you would become an unproductive member of society. Retiring means “retiring from a full-time job” into whatever your heart desires.

It’s rare for anyone to retire 100%. Often times, pre-retirees start dabbling in other ventures so as to have something to retire into. The worst situation to end up in is having a ton of free time and not knowing how to structure it.

In order for a person to retire they must be able to have a manageable debt, a source of income to cover expenses and they must replace any work-sponsored benefits such as health insurance or life insurance.

TRADITIONAL RETIREMENT

I am still trying to understand why my view of retirement is so different from those of my friends and colleagues. I view retiring as extremely desirable, it’s how I can gain complete control over my time on this planet and do the work that I enjoy doing.

Traditional retirement means that we maximize our spending on liabilities during our working years, save the least amount needed (generally 15%), then frantically ramp up our savings-rate as we get closer to age 60, start meeting with financial advisers closer to age 65 and either work until we drop or call it quits sometime in our late 60’s.

The problem with this kind of retirement is that there is very little wiggle room. If the economy tanks or if you suddenly burn out or fall severely ill, then you would still have to continue on towards age 60.

DECISION BY PROXIMITY

It’s been shown in behavioral finance that many of us make financial decisions based on what others in our peer-group are doing. If our neighbor, who is a physician, retires at age 50 then we might do the same. If our colleagues in our medical group all retire at age 69 then we are likely to follow suit.

This extends to the kind of vehicles we purchase, the hobbies we have, whether we own or rent our homes, etc. It’s not a weakness of character, it’s done because we look at what “works” around us and emulate it.

The problem with such herd effects is that it can put fear and security on the forefront and push our personal preference way down on the list. This is how people get caught up doing something that isn’t in line with what brings them deep happiness.

CUTTING ON OVERHEAD DRASTICALLY By Relocating

What we are spending has a lot to do with our lifestyles and where we are living. Not just the city, but also which State and even which country we live in.

You may not be willing to leave your neighborhood, much less your city and perhaps never, ever the country you’re living in. But it’s important to perform these mental exercises because there is always something you can learn. And, should shit hit the fan, you know what your options are.

If you were to move from Los Angeles to Cebu in the Philippines, you could cut your lifestyle expenses by 64%. In the screenshot below, that’s going from an average of $5,300/month in LA to $1,905/month in Cebu. 

Changing Your Lifestyle Completely

You could get rid of your homeownership, your vehicles and get rid of anything that requires disposable batteries, you’ll save an incredible amount of money.

Same holds true if you switch from eating out to only preparing your meals at home. Dining out, restaurant bills and cafe expenses can add up, probably much more so if you have kids.

If you commuted to work by bicycle or hoofed it, or on occasion took public transportation then you would have the advantage of having a healthier lifestyle as well as save a ton on commuting expenses.

Buying clothes at a thrift store and getting rid of gadgetry is another big way to save. I completely realize that this is blasphemous to some of you but the title of this post is, after all, immediate & sudden retirement. 

You could save another massive amount of dough by baking your own bread, growing some of your own veggies, making your own soap, making your own deodorant and moisturizer, using only cloth towels instead of paper towels, and replacing all your cleaning supplies with vinegar or baking soda.

 

You could homestead and provide damn near everything you need short of staples such as grains. You definitely wouldn’t be the first person to do it.

You Could Barter For The Rest

Maybe you don’t have to move to Laos to accomplish you immediate & sudden retirement, you could choose a slightly higher cost of living locale. Wherever you end up, don’t underestimate bartering.

You may not have a medical license to practice in Botswana but it doesn’t mean that you don’t have medical expertise. If you can position yourself in a culture open to bartering, you can trade your clinical skills for tangible goods or labor.

There are whole communities built around bartering, even in some of the more fancy cities in the US.

What About Debt?

I think the easiest answer here is to refinance your student loan debt to the lowest rates possible, convert them to the longest period of repayment possible and apply for any deferment or forbearance that you might qualify for.

Mortgage debt can be handled by either renting out the place and writing off any losses or selling the property.

If you are under major debt such as business debt, credit card debt, or upside down on an auto loan, then you could consider filing for bankruptcy to start over again. Be warned, the majority of those who file bankruptcy end up in the same boat a few years later – it’s more of a quick-fix and rarely a fix of your financial problems.

Generating Income While You Retire

There is this idiotic perception that retirement means you cannot generate income. Just hearing that makes me squirm. Social security is income, dividends from investments is an income, royalties from intellectual property is income and if you have a business that’s mostly operating on its own then that’s income as well. Some retirement accounts force you to take distributions based on your age, whether you like it or not.

If I rent a 3-bedroom apartment in Cebu, PI then I would pay maybe $600/month in rent. I could get my groceries for around $100 and I could purchase local health insurance for $80/month. Utilities and internet might set me back another $100/month and that’s about the majority of my major expenses. Total of $880/month.

You can certainly get creative and start your own business wherever you go, or teach a foreign language or a particular skill. You can build something to sell or important an item that you are familiar with in your home country.

More importantly, doctors from the USA have the ability to generate income from various virtual medicine practices. For now, it doesn’t matter where you are located when you perform these services, I expect there will be a major push to limit doctors from “treating” US patients online, while living overseas.

$100,000 can last you nearly 10 years at the above expense rates. I’m sure that in 10 years you would have enough time to find something which you love doing, which might also generate you some income.

 

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