Retirement Plan In Tatters? Here’s The Answer
“Recently, we read a New York Times article by Joe Nocera called My Faith-Based Retirement,” write Retire Overseas Correspondents Billy and Akaisha Kaderli.
“It was a cheerless piece detailing the failure of 401k’s as an investment vehicle, the decline of pensions, the lack of employer-sponsored healthcare benefit plans, and the consequent reduction of Boomer’s retirement expectations. A dreary, rain-drenched, out-in-the-street future was being painted focusing on stark data from the Employee Benefit Research Institute (EBRI) that states: ‘only 22% of workers 55 or older have more than US$250,000 put away for retirement, and 60% of workers in that same age bracket have less than US$100,000 in a retirement account.’
“Working from this premise, you may as well give up. Start on the cat food now.
“So don’t work from that premise. Adopt a different point of view, based on your answers to the following two questions:
“First, how much do you have available to you for retirement…
“And, second, how can you make whatever you’ve got work for the retirement you want?
“When we retired more than 20 years ago, we had no pension and no guaranteed healthcare plan. We were 38 years old, decades away from Social Security. Today, that situation would be described as a crisis. In the wisdom of the current moment, we would be told that retirement is out of the question. Talking heads would paint a bleak picture, emphasizing the necessary drop in our standard of living and the possibility of bankruptcy from eventual medical costs.
“Lucky for us we were able to make our decision for early retirement before today’s ‘wisdom’ took hold.
“Because no one was telling us we couldn’t do it, the idea that we were doing something extraordinary didn’t occur to us. We didn’t have any guarantees that the plan we put together for ourselves would work, and we don’t still today. We’re not looking for guarantees. We’re looking to take advantage of options as they present themselves…to make the most of opportunity as we perceive it.
“You can find support for whatever line of thinking you decide to adopt. We suggest you opt for the upside.
“Boiled down, our plan was (and remains) straightforward. We reduced our spending footprint and increased our lifestyle and our financial longevity by looking beyond the typical for places to spend our retirement years.
“According to the U.S. Government Social Security Website, the average monthly benefit received in 2012 will be US$1,229 per retired worker. That equates to US$14,748 annually. For easy math, let’s call it US$15,000.
“Billy and I just spent six months in Panajachel, Guatemala. Our cost of living was just over US$34 per day. That equates to US$12,550 a year (for the two of us). We ate out, took boat rides across gorgeous Lake Atitlan, sent presents home to family and friends, grabbed beers at a local bar with friends, and enjoyed cappuccinos every afternoon.
“It was not a hardship.
“We met other couples in this thriving expat community doing the same thing–living in beautiful surroundings, with views of volcanoes, the lake, or majestic waterfalls, and paying as little as US$200 per month for rent. When we’d get together, we couldn’t help but chuckle to ourselves over our collective good fortune.
“This is a place where it really is possible to live on your Social Security payment alone. A couple retiring with two Social Security checks coming in would have money to spare.
“Don’t like Guatemala? Try Chapala or San Miguel de Allende, Mexico; Medellin, Colombia; Chiang Mai, Thailand, or any number of exotic, exciting, and easy-to-live locations. Open your mind; open up to your options.
“If you’re uncertain, think about it this way: What’s the alternative? That is, do you really want to keep your current standard of living? How’s that working out for you? If you’re struggling to support a lifestyle that includes a mortgage, car payments, home and car maintenance and repairs, fuel, insurance, credit card debt, etc….we have to ask:
“It may take a while for you to find the overseas lifestyle that suits you. Allow yourself time. You may need to work through the process of letting go of the American Expectation Syndrome, as we refer to it.
“Years ago, before we retired, we lived pretty high. We had a new home and were illustrious members of our community, with all the costs that implies. We had gardening service, house cleaning service, dry cleaning service, and we owned two new cars. Dined in the best places and took high-priced vacations. We expected our lives to go up from here (which meant more spending), and we couldn’t see value in simplicity.
“But the stress was too much. It brought us face-to-face with some significant personal choices. Should we continue on as we were, incurring more spending and more pressure? Or simplify and set ourselves free.
“At the time, the choice seemed difficult. Letting go of the psychological and financial weight of our long-held expectations and facing the judgments of our peers, who couldn’t understand our interest in opting out of their way of life, wasn’t easy.
“Today, we have been retired for 22 years. We have traveled the globe. Our world has gotten bigger, not smaller. Meantime, our friends have continued to work for the last two decades. Now those same people are wondering how they will ever be able to afford retirement…”
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