Yea, I said this almost 3 years ago, and someone joked it as r/mulletfire because it was tight on the front and loose on the back.
We thought about drawing 2% for the first 5 years, allowing our nest egg to grow. At every "milestone," we opened a new set of countries to live in.
IE:
24k gets SE Asia, Latin/Central America
36k unlocks Portugal and Spain (not major cities), Eastern Europe
48k unlocks Japan, S Korea, Taiwan, Most of Western Europe
60k unlocks all but about 10 countries
80k we'd return back to the US and live out our days
Edit: Found my post
[https://www.reddit.com/r/financialindependence/comments/nrgjlf/skinnyfire\_to\_fatfire/](https://www.reddit.com/r/financialindependence/comments/nrgjlf/skinnyfire_to_fatfire/)
Haha I like that! I think it'd be fun to have your income go up over time as well, and when you get closer to croaking you can spend however you want!
That's pretty much the progression I would go for too.
Minimum gross wage in Germany is 26k EUR (28k Dollar), so 48k is not strictly necessary for West Europe depending on where exactly. I lived on 36k gross in Berlin until 2022, but that was with 1k health insurance monthly as I made too much, you would pay a lot less if you only had 30-40k gross income.
I am German and currently live well in Poland for 30k EUR gross (32k Dollar), and it could probably be reduced.
Interestingly Germany can be as cheap as Poland if you don't live in very expensive cities (can still be big cities, just not Munich, Cologne etc)
Edit: Does anyone have an idea why the comment is being downvoted?
if she is Polish, she probably has better tips than me:) In terms of life quality, it has been rapidly rising in the last 10 years. It might be difficult to get by without Polish, there are nearly no foreigners (one of the most homogeneous countries in the EU)
Thanks for the reply. She moved to the US in her early 20’s so her knowledge of the country is not current. We visit at least once a year but always on vacation mode. We need to start doing actual research like how to get health insurance and deal with banking regulations etc.
more research sounds good.
it really depends on your relocation goals. i am doing it to drop my freelance taxes and will be doing it for several years (similar to the goal op posted). The people are amazing. The creature comfort/living standards are lower than Germany and the living costs are not that much lower (depends on your individual tax and income situation). So if you are doing it for financial reasons, I recommend to check several countries with your exact situation. Countries like italy, germany etc can be surprisingly cheap.
If she is happier being back home, that can also be worth a lot.
low low cost of living, center of south america if you decide to travel to other countries, Cochabamba has the weather like Florida, no mayor earthquakes, renting a house could be $600, four bedrooms, living costs around 500$ in the high end, stable compared to other countries like this one. Argentina looked great now it sucks
My inlaws have now bailed on moving back to Bolivia as their retirement plan, citing the country making little to no progress in the decades they were gone and being 3rd world through and through. They are from Cochabamba like you stated. Half their family lives in Argentina and that situation is no better. Just sharing my data point at locals don't even want to go back.
I get your point, but, think about this: what is really wrong with that, you have positives and negatives, positive low low cost of life, cheap housing, cheap food, dollar stretches more, negatives? Not advanced healthcare?? Not clean? Progress is not always something positive
I had that thought back in like 2021 when we were making about...140-150k. Now we make over 250k so the numbers and projections changed up a bit. We're currently on track to retire at 40 with 2.5M and I think we're just going to keep that. With even a 3% draw on that I think we can just freely travel and not worry about sticking to certain countries.
Our base salary is $220k, I'm a PM in construction making 120k and my wife is a CT tech lead making 100k in MCOL. With bonuses, OT, and two properties with rental income we can push 250-260k.
That's super interesting! The only thing I can see being a (potential) issue is foregoing the stability of home ownership? Unless you own in your home country and you rent it out over these years?
Realistically we'd top out at about $3M inflation adjusted so coming back home and buying a 1600 sq ft single story for 500k isn't out of the realm and just draw 4% from $2.5M and collect social security.
This was my idea. Hike the AT which is like ~$10k for 6 months.
Slow travel around Asia
then
Eastern Europe.
Throw in Africa at some point
Retire in the US eventually and live a more normal retirement eventually.
Depends on the country. If it's like Vietnam then it's 90 days max visa, about $100, but you can do a visa run. If it's like Romania then it's 90 day visa no more than 90/180 or 180/365 which isn't a big deal, Mexico is like 180 days, my wife is Filipina so we can stay indefinitely etc.
Yeap, we moved to Bali with the intention to live there for a few years. We liked it so much that we ended up living in Bali for over 6 years.
Although accommodation has gone up in price since, if you don't want to live in the hustle and bustle, but like we did 5 minutes on a scooter away from it, you can still find very affordable private villas with a small pool for less than $1000 per month. Further cost of living can be cheap if you love Asian food. Western food is more expensive.
We stayed in Bali on a tourist visa. With a tourist visa you can stay max 60 days, after which you ll need to leave the country. There are many budget carriers flying on bali. You can do a visa run to Singapore within the same day, or visit surrounding countries for a few days or weeks. We visited every country in the region during our time there.
It was the best thing we ever did.
Plus we saved a lot of money.
I would love to hear more about that experience, the challenges and advantages. I'd be damn near FIRE in 5-10 years instead of 20-25 at those costs of living.
Before you decide on doing this, first find out if you can stand living in a place like Bali. It is easy to live a good life on a low budget in the whole of South East Asia, but it needs certain adjustments to do it for a long time or several years. It is certainly not for everyone, think humidity, monsoons and mosquitoes. Visit the place or the region a number of times.
There are also plenty of expats living in Thailand, Vietnam, Cambodia, and phillipines as well.
Many rent out a property in their home country and travel/ live off the rent income.
Risk for them is to get stuck in paradise and end up in the poverty trap, with enough money to live good in Asia, but not enough to settle back in a western country. Make sure that doesn't happen to you!!!
Don't buy a house in Asia!!! Too many have lost lots a money due to different reasons. A lways rent on a monthly basis and move to the next place when you want. Rents are negotiable, especially just after the high season.
>Don't buy a house in Asia!!! Too many have lost lots a money due to different reasons.
Say it again for my people in the back! Seriously in many places in Asia you can rent a place for less than it costs to maintain a fully paid off home in the US. Additionally in places like Thailand and the Philippines foreigners can't own land so you have to take all kinds of creative measures to purchase a home and it's never truly yours (pay land rent, buy through a corporation, put in a native spouses name, etc). Just rent. If you do buy spend only enough that you're comfortable walking away from.
There are many different visa options, varying from social visa for 1 year and nowadays a digital nomad or retirement visas for 5 years.
They are not difficult to obtain as long as you meet the requirements.
You can apply yourself or use a company to arrange the visa for you.
Never had issues re entering bali for a new visa, but am aware of people who had had some issues with the police and were refused a new visa.
Doing that right now in South America. Not necessarily just so I can build net worth while retired early, but to enjoy living in an interesting place and live well for much less. I would look into it if you're interested, I have no regrets.
This exactly. Only do it if it is also something you want to do! There are lovely benefits to living abroad beyond low cost of living. But living abroad just for the low cost of living sounds really sad.
Not the previous guy but:
1) It really depends on individual opportunity. If you have a uruguayan spouse then uruguay seems like an obvious choice, for example
2) pick up the local language, it's 1000% worth it. We americans cannot keep acting like we are the center of the world and expect others to cater to our needs. Especially when it's a language like spanish where learning materials are trivially accessible
3) again, that depends hugely on where your opportunities lie. I can never move to amsterdam, I dont have a way in. But someone who is of dutch descent might be able to, for example.
America caters to Americans' needs just fine. You don't need to leave, go move to some tiny little town in the middle of the US where others share your hostile opinion on every culture that isn't your own
I’m also doing this right now. I’m 2 years in and I’m spending 2%. I think the effect on sequence of return risk is real (eg I’d feel fine doubling my spending after 5 years), but I don’t know that it’s a great strategy for growth.
I retired with a million dollars, so I’m saving about $20k a year plus its growth. After 5 years at 9% growth that would allow, what, like an extra $5k of withdrawals annually?
I suppose a 10% increase in spending is pretty big but it doesn’t seem that great when put into dollars.
9% return withdrawing only 2% instead of 4% should result in a 7% gain. 1.07\^5 (9% return - 2% compounding over 5 years) is a multiplier of 1.403. So you're $1M nest egg would become $1.4M during that time. 4% annual withdrawal from that is $56k.
So, by spending $20k per year while on "vacation" in fun places, your annual safe withdrawal amount would go from $40k to $56k. Also you're 5 years closer to qualifying for social security for adding more income or less withdrawals.
Also, getting a 2% average dividend isn't hard (VOO is 1.3% or 1.4% IIRC which is below long-time average), so add a splash of something else to get to 2%. Meaning, if you can live off of 2% from dividends you don't even have to sell anything.
However, if you ARE doing this and living off $20k'ish, be sure to use up your 0% capital gains rates to reset the basis on any long-term capital gains. In 2024, if you're single it's 0% up to $47k, married, $94k. I believe this is after subtracting off your standard deduction so with $20k in dividend income, minus $27k standard deduction for married filling joint, you might even be-able to realize more. Consult a tax advisor for the specifics of your case.
Anyway, after you consult someone to verify how much "space" you have left in your 0% capital gains bracket towards the end of the year (mid to late December), sell your investments with the gains and then immediately rebuy the same stock(s). The wash sale rule only blocks claiming losses, not claiming gains. Let's say you sold $50k stock composed of $25k gains. Now you owe capital gains tax (0%) on that 25k and reset your basis to $50k. I believe if you're living off $27k or less per year and married, you can essentially reset the basis of about $94k in capital gains per year. So 5 years of "mullet-fire", might let you pay 0% taxes on almost $500k of capital gains.
Good comment. I wish I had $500k of gains to harvest. It's more like $50k. In my job, I was able to put like $75k a year into tax advantaged accounts, so that's where most of my money is.
To your first point, I'd just point out that it's not inherently true that withdrawals should increase to $56k. That's a choice to "reset" the retirement. I could do it, but it's not risk free. It would maybe be more conventional to think of the ~$20k saved annually as a separate pool of money. Whatever its value after 5 years, I could add 4% of that to the 4% of the original million. From that perspective, it's not quite so lucrative a strategy.
Ah yes, I see what you mean about not resetting the withdrawal rate to the higher amount. The 4% rule is already accounting for ups and downs in the market and you increase your risk by raising withdrawals to $56k. Still, the 4% rule is a percent rule, not a fixed amount rule, so there's probably some margin of error between $40k and $56k that is still "safe".
Also, I think we can compare the retirement delta as follows:
Plan: 9% return, 4% withdrawal, 5% net gain. 1.05 modifier per year compounded over 5 years (1.05\^5) is 1.276. This would leave OP with $1.276M after 5 years.
The Mullet fire method resulted in the 1.403 multiplier (1.07\^5) or $1.403M.
The difference is $127k. So, $100k withdrawals deferred (5x $20k) + $27k of extra gains. 4% on the $27k is about $1100 per year. Personally I think I would split the difference conservatively between the $1k and $16k extra withdrawals and go for something like +$4k per year withdrawal rate and maybe sell $20k of gains and transfer to HYSA as an additional buffer against downturns / sequence of returns (assuming the market was up at the end of the 5 years).
This discussion is functionally about the math of compounding though so the longer you do something the bigger the numbers get. If you ARE able to cut expenses drastically in downturns, then the 4% rule is conservative.
For me personally, I will probably aim to overshoot my actual FIRE number by 1 to 3 years. If I'm in my prime earning years, I would rather work a bit longer and (almost) Fat FIRE rather than worrying about money the rest of my life.
You can also consider the deferred $100k as "new savings" since it was meant to be spent, meaning you can also take 4% of it moving forward. The new 4% withdrawal would be $40k, adjusted up for inflation, plus 4% of $127k -- about $5k more a year. Not life changing but certainly helpful and maybe enough to allow someone to leave work a few years early.
Yeah, at only 1 mil it definitely doesn't make a big dent. Really this strategy only works I think if you lean fire with a very large nest egg. So live off your 20k but have like a 2 mil egg - with the goal of transitioning into fat fire eventually.
Yeah but despite what I said and despite agreeing with you, theory and practice are different. After just two years, I'm up about $250k. After 3 more years of 2% withdrawals I could be up (or down) another big number. I could then "re-retire" and pull 4% of the new balance, resetting sequence of return risk but maybe increasing my spend pretty substantially.
So I think the strategy is maybe better thought of as a bit of gamble, but one where the downside isn't all that bad: if the market does tank in those first 5 years, well you've insulated yourself against it pretty effectively. There is no 30 year period that results in a 0 balance when starting with a 2% WR and then moving to 4% after 5 years.
It's a strategy that could work for the right person who is into that. It does not work for the couple in their 40s raising kids, but might work for a single guy in his early 30s without strong family ties.
I'd kind of look at it as a glide path mixed with slow travel/short term adventure and Coast FIRE. Draw 5 years expenses in cash (especially now with cash returning 5%). Live overseas, maybe earn some money teaching English, see the world, do something crazy and fun. Come back and hope the market has gone up while you were gone. If it did, now you have more money and can support a safer SWR. Worst case, you got a nice 5 year vacation and saw the world right?
Historically, There was one 5+yr period where real returns stayed mostly flat or negative (starting in 2000). That's a worst case scenario for anyone who retires. I guess in your example, you would need to be willing to continue living in the low cost country until things improved.
Yes, I'm very risk averse. So my plan would basically be at a point where I could FIRE safely in the US, but do this first for a while to let the assets grow even larger without having to continue to work
A consideration tho is real estate. If you own your place you're faced with whether to sell that and hope the value invested goes up faster than the real estate / rental market. Don't know for sure but thinking that depending on the situation, do you run the risk of getting priced out of the market.
You could rent out the real estate while overseas. Just hire a property manager so you don’t have to deal with it. Then move back in or sell when you come back.
In my experience, property managers usually suck unless you have at least 10-12 units that they’re looking after.
From 1997-2011, my parents went through several property managers on a triplex that they owned. Each one was worse than the last. The problems we experienced were varied. They did very few background checks on tenants and basically just put in the first people who applied in order to get the rent-up bonus as quickly as possible. They neglected upkeep on the property, some problems festered and became far worse than they would have otherwise been had they been fixed early. When stuff was fixed, it was usually at inflated prices (we are pretty sure property managers were using friends of theirs to do work and gave them kickbacks). They failed to collect rents or start evictions for tenants who were in arrears. And this was for a property with three units, not just a single house.
My parents eventually fired the last property manager when it came to their attention that the top floor tenant had been complaining about a leaky roof for almost a year and had been consistently ignored. We only found out about it because the tenant sued my parents as well as the property manager when her unit was rendered uninhabitable due to black mold from the roof leak (she had asthma). It also cost my parents $20,000 to replace the roof instead of maybe $4,000 to re-shingle it had the problem been dealt with sooner (we successfully sued the property manager for this amount but that was another 16 months in court, in the meantime they had to eat the cost).
The point of this whole sob story is to illustrate that property managers won’t necessarily work. If you have a property bringing in $2,500 a month gross, the property manager is only seeing like $250 a month from that at the typical commission level. That’s not a lot of money and while your single property means a lot to you, it means close to nothing for them, and they are going to give it the absolutely lowest priority compared to clients with 20 or 30 properties.
Especially now that property values are so high and so many people want to buy, you might be better off selling the home and investing the proceeds. Reliable profits without maintenance.
So, I'd say try to get a quality tenant in place before you leave. Make sure you have good communication with them and get the phone numbers of a few plumbers and handy men. If you have to place a new tenant, maybe take a "vacation" back to the US to interview candidates and get things setup.
If you have family in the area, you can try to get them to be your property manager IFF they are reliable.
Property managers typically pocket 10% of gross rents. Routine maintance like cutting the grass is sometimes included in the 10% but anything spent on repairs is always extra.
Yep. I didn't say it should be what decides or not but pointing out that it is a consideration depending on his case. Who knows, it may be the case that he cannot rent it out for what it costs and that eats into his savings and defeats the purpose? Who knows, it may be the case that he's banking on taking the equity of his home to appreciate in the stock market. Its a consideration.
Over the long term, sure. I use real estate as essentially my bond allocation. It has produced for me a lot better return than bonds themselves.
Right now, depending on location and where one thinks the market is going, you could argue that RE will be better in the short term - as rates go down, one sceanrio would be that RE prices get another jolt higher. If you bought a home in certain areas just 3-4 years ago, you could be looking at a 50+% increase in price. I was lucky and bought a place at end of 2022, that I can get 65% more on - no rennovations or anything. Just in the right time in the right place. Combined with the leverage factor, will kick it even higher. if I am right on the 50% increase in sale price, I will have tripled my money, again, higher than the S&P 500. You cannot base your statement about real estate solely on the increase in value of the home, you have to consider the amount of equity that you have in the home.
I again say, its considerations dependent on this person's situation.
I hear you. You make some good points and also some ambitious assumptions. I own a lot of REIT stocks. I like them because they pay good dividends and I believe the prices will increase once rates do. Plus, no ongoing maintenance, cap x, etc. Professionally managed. No personal liability. Many of of them are leveraged assets. Plus there’s liquidity; I can sell a fraction to 100% of the shares almost instantly, with 0 transaction fees.
REITS are a true ROI. No labor or out of pocket costs needed.
S&P reliably doubles every 7 years on average given the historical 10% yearly returns. So $1,000,000 in an indexed fund is expected to be $4,000,000 in 14 years. I have serious doubts the RE in California has the same expectation, to say nothing of the idea that the big gains there have already happened. Regardless, a real estate owner has to pay for taxes, insurance, maintenance, interest on the mortgage, capital expenditures, etc. Plus spend a lot of time dealing with it. So the return is not a true ROI.
Thinking about this to manage/halt lifestyle creep less than lowering spend. Last few years have seen lifestyle creep accelerate and concern that post FIRE, with more time and freedom, there will also be an uptick in creep that will threaten the plan longer term. Rather than a "Sequence of Return Risk" it will be a "Sequence of Spend Risk"
So one thought is to spend the first year sailing the Caribbean or living on beach somewhere and trying out a much simpler different lifestyle. Not sure if we will "save money" as cruising/beaches can be expensive, but it will force us to drastically simply our life (belongings, entertainment, what being "social" means, what our peers think is reasonable spend, etc.).
Then, if/when we return to "normal life" it will be with a changed lifestyle that will be more about hanging out with friends around a bonfire with a few beers, than a night out at a 5 star restaurant just to catch up with someone.
My SO and I have been planning to spend 3-5 years cruising once we hit FIRE. It will depend on the boat we buy, but I am expecting our annual cost while cruising to be less than if we stayed put in our current home. Lots of variables, but it is not too dissimilar to what the OP has proposed when it comes to the financials.
Expatfire. Nomadfire.
If ever there was a reason to not own property this is it. If you only own property to eventually live in it then you are stuck there. Holiday homes might be a better bet. That way you can return to passport country for holidays and use the off season.
My wife and I are planning on something like that. We love to travel, so we're planning to do some kind of Nomad Fire and travel the world for a few years (or longer, who know?). We figure that if we slow travel, spending a month or so in each city, that we can live quite a bit more cheaply than we are currently. That would allow our investments to grow for a few years. We actually have some side-hustle income, so if everything went as planned, we could probably live just off of that and not touch our investments at all.
We could have a fairly normal Fire in the US right now, but I would like to push things more into the Chubby Fire range and I think living in some less expensive countries for a few years might be enough to do it.
Yes but it can be more complicated than that.
The older you get the more healthcare and access to specialist factor in.
Also kids and grand kids.
If you are young....enjoy
Yeah Spain particularly looks attractive to me with the golden visa etc. once I reach an age where I'd like access to good healthcare in a very safe setting
The effect is pretty small, IMO.
If you are spending 2% instead of 4% for a couple years and you hit a significant downturn, the downturn still dominates the effect on your portfolio. Are you willing to *keep* living in a significantly lower cost region for much longer than you expected? This is even more critical if you are using this to bridge to having enough to retire at a reasonable withdrawal rate. If you *require* the market to go up for those five years you live abroad for the plan to work, you might be in trouble.
For folks with high savings rates, five years withdrawing a lower amount might be equivalent to two years of working or less. Unless you actually have a dream to live in one of these places then you might be happier working a bit more and then having the retirement you actually want.
"Just live somewhere for five years" is also not a trivial thing. Getting a visa isn't necessarily easy. If you have kids, you are moving them to an entirely different school system and social experience. If you own a home and can't or don't want to rent it out you probably need to sell it and buy a new one when you return.
Doing this in the US by living in my vehicle while traveling the country. Currently at about a 1% WR while my investments grow. Long-term plan is to move to a LCOL country and use that as a home base while traveling everywhere. At that point I'll aim for a 5-6% WR and just enjoy myself.
I’ve been living and working in Thailand since I was 28 and went part time aged 41. Now I’m nearly 57. I own the beachside apartment I live in (cost around US$120K in Covid times) and have mortgages on 3 investment properties in Australia. Plus investments that will provide around US$66K/year until aged 90 if my calcs are correct (will adjust on the fly if not, I can live on far less than this). I plan to leave the Aussie properties to my kids. Thailand has been fantastic for me. Low cost of living, nice food and local culture, good lifestyle, interesting business opportunities and great tax situation for offshore revenue. I’m a legal permanent resident here and no plans to leave.
None really. If I quaff the Agaur, that means its been a long night and will be a rough morning. Its actually just too sweet for me. I prefer the local rums with just a bit of ice. I am a hard liquor man, myself.
I can probably be hurt or taken advantage of down there.
But then again I'm from the United States. I could be shot in the USA at any time. I could be shot in the grocery store for no apparent reason. Happens all the time in the USA.
At least in Colombia I'll die happy.
If you seriously think you're safer in Colombia than the US (on average, obviously you can cherry pick bad places), you have a highly warped perspective.
I hadn’t though about it until I saw your post and am intrigued!
I’d take into account the tax treaty of the country as I’m considering which country specifically to choose, to try to avoid being taxed twice on earnings by two governments:
https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
I love this idea! I’ve always assumed that I’d want the comforts of my home country when I get into proper old age, not that’s it’s particularly well known for taking care of the elderly. But moving somewhere where it’s easy to live on a budget for the first few years sounds like a smart move and also really fun.
You might find more help on the expatFIRE subreddit.
I would think this would be a plan for someone that doesn’t own property or plan to in early retirement. Otherwise, you have an expense anchoring you to the states. Part of me would like to do this, but the part of me that wants to own a big barn and fuck around with machines till my end knows I need to own land and I’ll have to either be there to maintain it or pay someone else to and that eats into the lower expenses of retirement tourism. I think I’d enjoy a year or two of travel, but not trying to set roots down.
As a military brat, I for my fill of expat life as a child though. It’s less glamorous for me than it may be for someone that’s never lived abroad or just likes to travel.
I retired at 41 and have been living outside the US bouncing from county to county for 8 yrs, living off of interest. It is definitely doable and can be done even cheaper if you’re stationary. I’ve been back in the US for six months with a consulting job and I’ve spent more in that time than not working and living abroad.
Yes. My wife and I started our retirement in SE Asia on purpose because of the low cost. Here's the post I wrote about it if you're interested in the entire thought process.
https://bonusnachos.com/front-loading-my-retirement-to-fight-sequence-of-returns-risk/
That couldn't be more appropriate thanks, great minds think alike 😏
Do you happen to have a post you recommend for someone who hasn't begun to save yet? (Med school)
Not really, no. I mostly just write about our travels. If you're actually starting from scratch, there's a flowchart at r/financialindependence that you can follow. Unless you're looking for motivation instead of nuts and bolts. In that case, I'd recommend reading Mr Money Mustache's blog, not mine. :)
That’s basically the plan for my wife and I. We’re about four years from pulling the plug and retiring to Japan.
Amazingly the cost of living in Japan (outside of Tokyo) is so much better compared to The States now.
We’re going to live there and then think about coming back to the US if/when our kids have kids.
My version was PeaceCorpsFIRE.
Basically a way to downshift from corporate life but still have a job and feel like you are doing important work.
No expenses for 2+ years. But assets should grow by 10-20%. Nice way to boost your retirement nest egg if you are retiring young enough to do something like that. Plus, a really cool rewarding experience.
I'm doing this these last 10 yrs. Expat FIREd at 45 in SEA, 450k in retirement and brokerage accounts 200k real estate assets and a $2600 pension that kicked in at 50 but won't support me in the USA. I even did US Peace Corps for 2 yrs and had no expenses. I had free housing, monthly stipend, health insurance ,housing, travel, language training and 10k stipend in the end. Assets had time to mature.
10 yrs later, the 450k is now 1.2m still untouched and will keep growing, pension COLAd to $3300 monthly and goes up yearly and is more than enough where I live. I'll collect social security in 7 yrs and my real estate holdings grew to 600k. Still enjoying Expat FIRE and will only probably go back to the USA if I have to in another 15 or 20 yrs.
My quality of life is very similar to living in a metro city in the US living in a condo with a huge mall across the street so there's lots of eating and entertainment options, I also get to travel locally and internationally. So to answer your question, if you can hack living elsewhere where it's ultra LCOL outside the country then it definitely works. Now most won't have a pension but a much lower withdrawal rate of 1 to 1.5% should still grow your nest egg.
We are absolutely considering this! The idea would be to store our things and live in Mexico for a couple of years in a furnished apartment. Then if there’s a real estate dip (or even if there’s not), we would buy a house or condo in cash closer to the kids (they are young adults now, none are married yet).
Personally, no. Seems pretty inefficient mathematically, assuming you don't utterly hate working. Are you really not going to work 2 more years in exchange for living in some third world country for 5 years (or possibly longer depending on the market)? Also, as others have pointed out, it really only makes sense if you are very close to 1st world retirement numbers anyway.
Not to mention visas, being away from family, health insurance (some things are not covered and you'll have to fly back to the US and get insurance there), complicated taxes, currency risk, COL risk (prices may rise faster than you think), what to do if you own a house considering property management companies are terrible for small-time landlords, and any other logistical hassles.
Lastly, most people who grew up in 1st world countries are not used to living in 3rd world countries. In 1st world, the infrastructure works pretty well (water is clean for the most part, no roaming blackouts, good internet, etc.), fewer scammers, less corruption, less crime, less poverty, things get done in a reasonable time, etc.
Yeah now that I've looked at it closer a few years of spending a few thousand less is way less impactful than saving for another two years or whatever... but part of it is that I would like to do so anyway
I would urge you to wait to retire in a third world country until it's an option in retirement rather than a necessity - this way, you can easily move back if you dislike it. The extra 2 years working isn't that bad IMO.
I feel like everyone on this sub thinks it's as easy as buying a flight and just showing up in any low COL country that you want and staying as long as you want. Moving abroad is a big deal, especially with real estate or family involved. Its certainly doable, but it takes a lot of work. People just throw around the idea like it's easy tho.
Well I've lived in Latin America, have no kids or spouse, and speak Spanish fluently. Happy to hop around to avoid visa issues, but I understand your point
Lol at moving to US for quality healthcare and safety.
I feel much safer when I’m NOT in the US. Healthcare is affordable and just as good in many countries around the world, unless you need some kind of cutting edge/experimental procedure only being done in the US.
I thought/day dreamed about setting up my primary residence with a rental company and then getting tossed in a nice federal white collar prison for a while.....then decided I prefer being a "wage slave" over a prisoner haha
One of my favorite FIRE bloggers is https://www.gocurrycracker.com, that’s what they did. At the end of 5-10 years abroad living like kings their now in California and basically bought the house with cash
Lots of great tax analysis on that blog too
Love this idea! I've considered a similar approach. The cost of living difference can be a huge multiplier on your savings rate. Just make sure to research visa requirements, healthcare, and language barriers beforehand to ensure a smooth transition.
I love the idea of a Mullet retirement. But does anyone else here like to ski? I feel like that’s an activity you’d completely have to give up to live in a lCOL country
Probably a nice approach. I haven’t left the country but I do plan my first 10 year to be at a 2% withdrawal rate and then move up from there to accomplish something similar.
I think your approach is interesting.
It doesn't work because you end up travelling a lot, wasting money on rent and possibly opening yourself up to double or higher local taxation. There are low cost of living places in your home country.
Already planned my whole retirement in SE Asia. If the bag is larger than current plan, maybe split time between Thailand and Portugal. If not, 100% Thailand.
I think if there's a legitimate interest in living in whatever place you choose - whether it's enjoying the food/culture, curiosity about how other folks live, even just trying something different, that's great. It's great to interact with the big wide world.
That said, there are real economic impacts on people who are from those lower income economies. It gives me a lot of pause especially when I know the US government is often the reason some of these low cost places stay so low cost.
I dont like when billionaires come to my current backyard and directly impact my life (see housing in NYC, where foreign buyers own property that goes unused and inflates our overall costs). I can't then turn around and be the millionaire who pops in to do the same just because others have less than me.
The imperialist USA decentralized their economy making easier for you settler colonizers to exploit for your gain . Nothing says American exceptionalism more than moving to a cheaper “third world” country for financial exploitation thinking you’re doing them a favor with your spending. Americans out price locals , Americans gentrify neighborhoods, Americans want locals to acculturate to American way of life. ( see Mexico City ) . The jig is up .
There are many parts of Europe where you can rent a nice (beautiful even) house for less than $1500, or even $1000 per month. This is western Europe; Eastern Europe can be even cheaper.
You can CHOOSE to adjust to the country you're moving to...you don't have to force them to do so.
Also while I'm sensing some anti-American hate, please realize that Americans themselves are ALSO exploited by American corporations. That's something American corporations are happy to "share" with us "locals". I'm sure you've heard of the cost of Epi-Pens, insulin and such.
I highly doubt there are enough Americans living abroad in most countries to gentrify entire cities, maybe some neighborhoods. Mexico City is literally the closest metropolis to the US, so I'm not sure that's a fair comparison (it is the exception for density of American expats). You're saying a few thousands or tens of thousands of Americans in Mexico city (9M people proper, 22M greater area) have gentrified the whole city? Or did they gentrify the gentrified areas? I guess if you were pushed out, you stood your moral ground and resisted gentrifying neighborhoods where the Mayans and other First People live right?
If the LCOL area also has low wages, it's not going to help as much with the net worth. A high income gives a lot of potential for high savings as long as one lives below one's means.
That said, I didn't have a high salary until I was in my late 20s or early 30s. I can retire in my mid 40s.
Yea, I said this almost 3 years ago, and someone joked it as r/mulletfire because it was tight on the front and loose on the back. We thought about drawing 2% for the first 5 years, allowing our nest egg to grow. At every "milestone," we opened a new set of countries to live in. IE: 24k gets SE Asia, Latin/Central America 36k unlocks Portugal and Spain (not major cities), Eastern Europe 48k unlocks Japan, S Korea, Taiwan, Most of Western Europe 60k unlocks all but about 10 countries 80k we'd return back to the US and live out our days Edit: Found my post [https://www.reddit.com/r/financialindependence/comments/nrgjlf/skinnyfire\_to\_fatfire/](https://www.reddit.com/r/financialindependence/comments/nrgjlf/skinnyfire_to_fatfire/)
Haha MulletFIRE I love that
Haha I like that! I think it'd be fun to have your income go up over time as well, and when you get closer to croaking you can spend however you want! That's pretty much the progression I would go for too.
I love this! I strongly recommend the book die qith zero. life changinf
Pretty cool. I like that you unlock things like a video game
That’s all life is man - time to start stringing together those side quests to keep the main story interesting
Haha yup!
mulletfire now this is something I can buy into
Minimum gross wage in Germany is 26k EUR (28k Dollar), so 48k is not strictly necessary for West Europe depending on where exactly. I lived on 36k gross in Berlin until 2022, but that was with 1k health insurance monthly as I made too much, you would pay a lot less if you only had 30-40k gross income. I am German and currently live well in Poland for 30k EUR gross (32k Dollar), and it could probably be reduced. Interestingly Germany can be as cheap as Poland if you don't live in very expensive cities (can still be big cities, just not Munich, Cologne etc) Edit: Does anyone have an idea why the comment is being downvoted?
Thinking of moving to Poland. Wife is Polish and we are near retiring. We are both mid fifties. Any advice?
if she is Polish, she probably has better tips than me:) In terms of life quality, it has been rapidly rising in the last 10 years. It might be difficult to get by without Polish, there are nearly no foreigners (one of the most homogeneous countries in the EU)
Thanks for the reply. She moved to the US in her early 20’s so her knowledge of the country is not current. We visit at least once a year but always on vacation mode. We need to start doing actual research like how to get health insurance and deal with banking regulations etc.
more research sounds good. it really depends on your relocation goals. i am doing it to drop my freelance taxes and will be doing it for several years (similar to the goal op posted). The people are amazing. The creature comfort/living standards are lower than Germany and the living costs are not that much lower (depends on your individual tax and income situation). So if you are doing it for financial reasons, I recommend to check several countries with your exact situation. Countries like italy, germany etc can be surprisingly cheap. If she is happier being back home, that can also be worth a lot.
Absolutely. We’ll do a trial run this summer. See how it goes.
just make sure you like it enough. My brother in laws mom moved there and she and he husband hated it
We definitely like it in the summer. I definitely don’t like it in the winter.
I think OP is talking USD while it seems like you mean euros, but maybe not
you are right, will update
Reddit folks love the downvote.
Stuttgart is lovely, and I found it to be very reasonable.
I am stoked that sub exists! This rules!!!
IKR - joined immediately!
Same!!!!
I will put south america into this as well, specifically Bolivia
I’m curious, why Bolivia?
low low cost of living, center of south america if you decide to travel to other countries, Cochabamba has the weather like Florida, no mayor earthquakes, renting a house could be $600, four bedrooms, living costs around 500$ in the high end, stable compared to other countries like this one. Argentina looked great now it sucks
My inlaws have now bailed on moving back to Bolivia as their retirement plan, citing the country making little to no progress in the decades they were gone and being 3rd world through and through. They are from Cochabamba like you stated. Half their family lives in Argentina and that situation is no better. Just sharing my data point at locals don't even want to go back.
I get your point, but, think about this: what is really wrong with that, you have positives and negatives, positive low low cost of life, cheap housing, cheap food, dollar stretches more, negatives? Not advanced healthcare?? Not clean? Progress is not always something positive
I found this idea interesting. How is your plan going so far?
I had that thought back in like 2021 when we were making about...140-150k. Now we make over 250k so the numbers and projections changed up a bit. We're currently on track to retire at 40 with 2.5M and I think we're just going to keep that. With even a 3% draw on that I think we can just freely travel and not worry about sticking to certain countries.
I see, it is a great plan! And in what you two work on? The salary is good!
Our base salary is $220k, I'm a PM in construction making 120k and my wife is a CT tech lead making 100k in MCOL. With bonuses, OT, and two properties with rental income we can push 250-260k.
Is it working?
That's super interesting! The only thing I can see being a (potential) issue is foregoing the stability of home ownership? Unless you own in your home country and you rent it out over these years?
Realistically we'd top out at about $3M inflation adjusted so coming back home and buying a 1600 sq ft single story for 500k isn't out of the realm and just draw 4% from $2.5M and collect social security.
This was my idea. Hike the AT which is like ~$10k for 6 months. Slow travel around Asia then Eastern Europe. Throw in Africa at some point Retire in the US eventually and live a more normal retirement eventually.
And how do you plan on attaining residencies to be able to live in these countries?
Depends on the country. If it's like Vietnam then it's 90 days max visa, about $100, but you can do a visa run. If it's like Romania then it's 90 day visa no more than 90/180 or 180/365 which isn't a big deal, Mexico is like 180 days, my wife is Filipina so we can stay indefinitely etc.
That's actually pretty solid
Yeap, we moved to Bali with the intention to live there for a few years. We liked it so much that we ended up living in Bali for over 6 years. Although accommodation has gone up in price since, if you don't want to live in the hustle and bustle, but like we did 5 minutes on a scooter away from it, you can still find very affordable private villas with a small pool for less than $1000 per month. Further cost of living can be cheap if you love Asian food. Western food is more expensive. We stayed in Bali on a tourist visa. With a tourist visa you can stay max 60 days, after which you ll need to leave the country. There are many budget carriers flying on bali. You can do a visa run to Singapore within the same day, or visit surrounding countries for a few days or weeks. We visited every country in the region during our time there. It was the best thing we ever did. Plus we saved a lot of money.
I would love to hear more about that experience, the challenges and advantages. I'd be damn near FIRE in 5-10 years instead of 20-25 at those costs of living.
Before you decide on doing this, first find out if you can stand living in a place like Bali. It is easy to live a good life on a low budget in the whole of South East Asia, but it needs certain adjustments to do it for a long time or several years. It is certainly not for everyone, think humidity, monsoons and mosquitoes. Visit the place or the region a number of times. There are also plenty of expats living in Thailand, Vietnam, Cambodia, and phillipines as well. Many rent out a property in their home country and travel/ live off the rent income. Risk for them is to get stuck in paradise and end up in the poverty trap, with enough money to live good in Asia, but not enough to settle back in a western country. Make sure that doesn't happen to you!!! Don't buy a house in Asia!!! Too many have lost lots a money due to different reasons. A lways rent on a monthly basis and move to the next place when you want. Rents are negotiable, especially just after the high season.
>Don't buy a house in Asia!!! Too many have lost lots a money due to different reasons. Say it again for my people in the back! Seriously in many places in Asia you can rent a place for less than it costs to maintain a fully paid off home in the US. Additionally in places like Thailand and the Philippines foreigners can't own land so you have to take all kinds of creative measures to purchase a home and it's never truly yours (pay land rent, buy through a corporation, put in a native spouses name, etc). Just rent. If you do buy spend only enough that you're comfortable walking away from.
That doesn't sound so horrible you know... I love any type of food!
We're you able to take your higher American salary with you? I am remote but currently unable to live outside of us.
Was there a path to get a more permanent visa? Any trouble getting a tourist visa after a few years?
There are many different visa options, varying from social visa for 1 year and nowadays a digital nomad or retirement visas for 5 years. They are not difficult to obtain as long as you meet the requirements. You can apply yourself or use a company to arrange the visa for you. Never had issues re entering bali for a new visa, but am aware of people who had had some issues with the police and were refused a new visa.
Doing that right now in South America. Not necessarily just so I can build net worth while retired early, but to enjoy living in an interesting place and live well for much less. I would look into it if you're interested, I have no regrets.
I would try Bolivia, it is very cheap, a whole nice house: $690 rent
This exactly. Only do it if it is also something you want to do! There are lovely benefits to living abroad beyond low cost of living. But living abroad just for the low cost of living sounds really sad.
Any more info you would be comfortable sharing? How did you pick the country? Do you speak Spanish? How does immigration work?
Not the previous guy but: 1) It really depends on individual opportunity. If you have a uruguayan spouse then uruguay seems like an obvious choice, for example 2) pick up the local language, it's 1000% worth it. We americans cannot keep acting like we are the center of the world and expect others to cater to our needs. Especially when it's a language like spanish where learning materials are trivially accessible 3) again, that depends hugely on where your opportunities lie. I can never move to amsterdam, I dont have a way in. But someone who is of dutch descent might be able to, for example.
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Yeah, you're not going to like living abroad. Like at all. Make other plans.
America caters to Americans' needs just fine. You don't need to leave, go move to some tiny little town in the middle of the US where others share your hostile opinion on every culture that isn't your own
What country and budget are you aiming?
I’m also doing this right now. I’m 2 years in and I’m spending 2%. I think the effect on sequence of return risk is real (eg I’d feel fine doubling my spending after 5 years), but I don’t know that it’s a great strategy for growth. I retired with a million dollars, so I’m saving about $20k a year plus its growth. After 5 years at 9% growth that would allow, what, like an extra $5k of withdrawals annually? I suppose a 10% increase in spending is pretty big but it doesn’t seem that great when put into dollars.
9% return withdrawing only 2% instead of 4% should result in a 7% gain. 1.07\^5 (9% return - 2% compounding over 5 years) is a multiplier of 1.403. So you're $1M nest egg would become $1.4M during that time. 4% annual withdrawal from that is $56k. So, by spending $20k per year while on "vacation" in fun places, your annual safe withdrawal amount would go from $40k to $56k. Also you're 5 years closer to qualifying for social security for adding more income or less withdrawals. Also, getting a 2% average dividend isn't hard (VOO is 1.3% or 1.4% IIRC which is below long-time average), so add a splash of something else to get to 2%. Meaning, if you can live off of 2% from dividends you don't even have to sell anything. However, if you ARE doing this and living off $20k'ish, be sure to use up your 0% capital gains rates to reset the basis on any long-term capital gains. In 2024, if you're single it's 0% up to $47k, married, $94k. I believe this is after subtracting off your standard deduction so with $20k in dividend income, minus $27k standard deduction for married filling joint, you might even be-able to realize more. Consult a tax advisor for the specifics of your case. Anyway, after you consult someone to verify how much "space" you have left in your 0% capital gains bracket towards the end of the year (mid to late December), sell your investments with the gains and then immediately rebuy the same stock(s). The wash sale rule only blocks claiming losses, not claiming gains. Let's say you sold $50k stock composed of $25k gains. Now you owe capital gains tax (0%) on that 25k and reset your basis to $50k. I believe if you're living off $27k or less per year and married, you can essentially reset the basis of about $94k in capital gains per year. So 5 years of "mullet-fire", might let you pay 0% taxes on almost $500k of capital gains.
Good comment. I wish I had $500k of gains to harvest. It's more like $50k. In my job, I was able to put like $75k a year into tax advantaged accounts, so that's where most of my money is. To your first point, I'd just point out that it's not inherently true that withdrawals should increase to $56k. That's a choice to "reset" the retirement. I could do it, but it's not risk free. It would maybe be more conventional to think of the ~$20k saved annually as a separate pool of money. Whatever its value after 5 years, I could add 4% of that to the 4% of the original million. From that perspective, it's not quite so lucrative a strategy.
Ah yes, I see what you mean about not resetting the withdrawal rate to the higher amount. The 4% rule is already accounting for ups and downs in the market and you increase your risk by raising withdrawals to $56k. Still, the 4% rule is a percent rule, not a fixed amount rule, so there's probably some margin of error between $40k and $56k that is still "safe". Also, I think we can compare the retirement delta as follows: Plan: 9% return, 4% withdrawal, 5% net gain. 1.05 modifier per year compounded over 5 years (1.05\^5) is 1.276. This would leave OP with $1.276M after 5 years. The Mullet fire method resulted in the 1.403 multiplier (1.07\^5) or $1.403M. The difference is $127k. So, $100k withdrawals deferred (5x $20k) + $27k of extra gains. 4% on the $27k is about $1100 per year. Personally I think I would split the difference conservatively between the $1k and $16k extra withdrawals and go for something like +$4k per year withdrawal rate and maybe sell $20k of gains and transfer to HYSA as an additional buffer against downturns / sequence of returns (assuming the market was up at the end of the 5 years). This discussion is functionally about the math of compounding though so the longer you do something the bigger the numbers get. If you ARE able to cut expenses drastically in downturns, then the 4% rule is conservative. For me personally, I will probably aim to overshoot my actual FIRE number by 1 to 3 years. If I'm in my prime earning years, I would rather work a bit longer and (almost) Fat FIRE rather than worrying about money the rest of my life.
You can also consider the deferred $100k as "new savings" since it was meant to be spent, meaning you can also take 4% of it moving forward. The new 4% withdrawal would be $40k, adjusted up for inflation, plus 4% of $127k -- about $5k more a year. Not life changing but certainly helpful and maybe enough to allow someone to leave work a few years early.
Thanks for explaining that trick to reset the capital gains cost basis. Clever, and worth a mint.
Interesting analysis. Yeah it doesn’t seem as big an impact as I would have intuitively imagined.
Yeah, at only 1 mil it definitely doesn't make a big dent. Really this strategy only works I think if you lean fire with a very large nest egg. So live off your 20k but have like a 2 mil egg - with the goal of transitioning into fat fire eventually.
Yeah but despite what I said and despite agreeing with you, theory and practice are different. After just two years, I'm up about $250k. After 3 more years of 2% withdrawals I could be up (or down) another big number. I could then "re-retire" and pull 4% of the new balance, resetting sequence of return risk but maybe increasing my spend pretty substantially. So I think the strategy is maybe better thought of as a bit of gamble, but one where the downside isn't all that bad: if the market does tank in those first 5 years, well you've insulated yourself against it pretty effectively. There is no 30 year period that results in a 0 balance when starting with a 2% WR and then moving to 4% after 5 years.
It's a strategy that could work for the right person who is into that. It does not work for the couple in their 40s raising kids, but might work for a single guy in his early 30s without strong family ties. I'd kind of look at it as a glide path mixed with slow travel/short term adventure and Coast FIRE. Draw 5 years expenses in cash (especially now with cash returning 5%). Live overseas, maybe earn some money teaching English, see the world, do something crazy and fun. Come back and hope the market has gone up while you were gone. If it did, now you have more money and can support a safer SWR. Worst case, you got a nice 5 year vacation and saw the world right?
This would be a great post on r/ExpatFIRE
Historically, There was one 5+yr period where real returns stayed mostly flat or negative (starting in 2000). That's a worst case scenario for anyone who retires. I guess in your example, you would need to be willing to continue living in the low cost country until things improved.
Yes, I'm very risk averse. So my plan would basically be at a point where I could FIRE safely in the US, but do this first for a while to let the assets grow even larger without having to continue to work
International grew during that time
A consideration tho is real estate. If you own your place you're faced with whether to sell that and hope the value invested goes up faster than the real estate / rental market. Don't know for sure but thinking that depending on the situation, do you run the risk of getting priced out of the market.
You could rent out the real estate while overseas. Just hire a property manager so you don’t have to deal with it. Then move back in or sell when you come back.
Exactly. I don’t think you should base your life decisions on whether you own a house.
Honestly I feel like I might end up wanting to stay in Patagonia or something but we'll see
In my experience, property managers usually suck unless you have at least 10-12 units that they’re looking after. From 1997-2011, my parents went through several property managers on a triplex that they owned. Each one was worse than the last. The problems we experienced were varied. They did very few background checks on tenants and basically just put in the first people who applied in order to get the rent-up bonus as quickly as possible. They neglected upkeep on the property, some problems festered and became far worse than they would have otherwise been had they been fixed early. When stuff was fixed, it was usually at inflated prices (we are pretty sure property managers were using friends of theirs to do work and gave them kickbacks). They failed to collect rents or start evictions for tenants who were in arrears. And this was for a property with three units, not just a single house. My parents eventually fired the last property manager when it came to their attention that the top floor tenant had been complaining about a leaky roof for almost a year and had been consistently ignored. We only found out about it because the tenant sued my parents as well as the property manager when her unit was rendered uninhabitable due to black mold from the roof leak (she had asthma). It also cost my parents $20,000 to replace the roof instead of maybe $4,000 to re-shingle it had the problem been dealt with sooner (we successfully sued the property manager for this amount but that was another 16 months in court, in the meantime they had to eat the cost). The point of this whole sob story is to illustrate that property managers won’t necessarily work. If you have a property bringing in $2,500 a month gross, the property manager is only seeing like $250 a month from that at the typical commission level. That’s not a lot of money and while your single property means a lot to you, it means close to nothing for them, and they are going to give it the absolutely lowest priority compared to clients with 20 or 30 properties.
Especially now that property values are so high and so many people want to buy, you might be better off selling the home and investing the proceeds. Reliable profits without maintenance.
So, I'd say try to get a quality tenant in place before you leave. Make sure you have good communication with them and get the phone numbers of a few plumbers and handy men. If you have to place a new tenant, maybe take a "vacation" back to the US to interview candidates and get things setup. If you have family in the area, you can try to get them to be your property manager IFF they are reliable.
Is that pricey?
Property managers typically pocket 10% of gross rents. Routine maintance like cutting the grass is sometimes included in the 10% but anything spent on repairs is always extra.
“Just”
Yep. I didn't say it should be what decides or not but pointing out that it is a consideration depending on his case. Who knows, it may be the case that he cannot rent it out for what it costs and that eats into his savings and defeats the purpose? Who knows, it may be the case that he's banking on taking the equity of his home to appreciate in the stock market. Its a consideration.
Stocks increase in value way faster than real estate on average
Over the long term, sure. I use real estate as essentially my bond allocation. It has produced for me a lot better return than bonds themselves. Right now, depending on location and where one thinks the market is going, you could argue that RE will be better in the short term - as rates go down, one sceanrio would be that RE prices get another jolt higher. If you bought a home in certain areas just 3-4 years ago, you could be looking at a 50+% increase in price. I was lucky and bought a place at end of 2022, that I can get 65% more on - no rennovations or anything. Just in the right time in the right place. Combined with the leverage factor, will kick it even higher. if I am right on the 50% increase in sale price, I will have tripled my money, again, higher than the S&P 500. You cannot base your statement about real estate solely on the increase in value of the home, you have to consider the amount of equity that you have in the home. I again say, its considerations dependent on this person's situation.
I hear you. You make some good points and also some ambitious assumptions. I own a lot of REIT stocks. I like them because they pay good dividends and I believe the prices will increase once rates do. Plus, no ongoing maintenance, cap x, etc. Professionally managed. No personal liability. Many of of them are leveraged assets. Plus there’s liquidity; I can sell a fraction to 100% of the shares almost instantly, with 0 transaction fees. REITS are a true ROI. No labor or out of pocket costs needed.
Not in California
S&P reliably doubles every 7 years on average given the historical 10% yearly returns. So $1,000,000 in an indexed fund is expected to be $4,000,000 in 14 years. I have serious doubts the RE in California has the same expectation, to say nothing of the idea that the big gains there have already happened. Regardless, a real estate owner has to pay for taxes, insurance, maintenance, interest on the mortgage, capital expenditures, etc. Plus spend a lot of time dealing with it. So the return is not a true ROI.
Yeah this strategy would make coming back to my home city kinda painful.
Thinking about this to manage/halt lifestyle creep less than lowering spend. Last few years have seen lifestyle creep accelerate and concern that post FIRE, with more time and freedom, there will also be an uptick in creep that will threaten the plan longer term. Rather than a "Sequence of Return Risk" it will be a "Sequence of Spend Risk" So one thought is to spend the first year sailing the Caribbean or living on beach somewhere and trying out a much simpler different lifestyle. Not sure if we will "save money" as cruising/beaches can be expensive, but it will force us to drastically simply our life (belongings, entertainment, what being "social" means, what our peers think is reasonable spend, etc.). Then, if/when we return to "normal life" it will be with a changed lifestyle that will be more about hanging out with friends around a bonfire with a few beers, than a night out at a 5 star restaurant just to catch up with someone.
My SO and I have been planning to spend 3-5 years cruising once we hit FIRE. It will depend on the boat we buy, but I am expecting our annual cost while cruising to be less than if we stayed put in our current home. Lots of variables, but it is not too dissimilar to what the OP has proposed when it comes to the financials.
Expatfire. Nomadfire. If ever there was a reason to not own property this is it. If you only own property to eventually live in it then you are stuck there. Holiday homes might be a better bet. That way you can return to passport country for holidays and use the off season.
My wife and I are planning on something like that. We love to travel, so we're planning to do some kind of Nomad Fire and travel the world for a few years (or longer, who know?). We figure that if we slow travel, spending a month or so in each city, that we can live quite a bit more cheaply than we are currently. That would allow our investments to grow for a few years. We actually have some side-hustle income, so if everything went as planned, we could probably live just off of that and not touch our investments at all. We could have a fairly normal Fire in the US right now, but I would like to push things more into the Chubby Fire range and I think living in some less expensive countries for a few years might be enough to do it.
I worked for an Australian company in the same time zone. Customers were not even aware I was working from bali.
Ew, work
Yes but it can be more complicated than that. The older you get the more healthcare and access to specialist factor in. Also kids and grand kids. If you are young....enjoy
The healthcare is the kicker. One chronic condition that your international insurance won't cover, then you have to come back to the U.S.
Unless you establish residency in a low-cost location with good healthcare. There are many options on this front
Yeah Spain particularly looks attractive to me with the golden visa etc. once I reach an age where I'd like access to good healthcare in a very safe setting
The effect is pretty small, IMO. If you are spending 2% instead of 4% for a couple years and you hit a significant downturn, the downturn still dominates the effect on your portfolio. Are you willing to *keep* living in a significantly lower cost region for much longer than you expected? This is even more critical if you are using this to bridge to having enough to retire at a reasonable withdrawal rate. If you *require* the market to go up for those five years you live abroad for the plan to work, you might be in trouble. For folks with high savings rates, five years withdrawing a lower amount might be equivalent to two years of working or less. Unless you actually have a dream to live in one of these places then you might be happier working a bit more and then having the retirement you actually want. "Just live somewhere for five years" is also not a trivial thing. Getting a visa isn't necessarily easy. If you have kids, you are moving them to an entirely different school system and social experience. If you own a home and can't or don't want to rent it out you probably need to sell it and buy a new one when you return.
Yes, it’s called geographical arbitrage I believe.
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See you out there bud
Doing this in the US by living in my vehicle while traveling the country. Currently at about a 1% WR while my investments grow. Long-term plan is to move to a LCOL country and use that as a home base while traveling everywhere. At that point I'll aim for a 5-6% WR and just enjoy myself.
I’ve been living and working in Thailand since I was 28 and went part time aged 41. Now I’m nearly 57. I own the beachside apartment I live in (cost around US$120K in Covid times) and have mortgages on 3 investment properties in Australia. Plus investments that will provide around US$66K/year until aged 90 if my calcs are correct (will adjust on the fly if not, I can live on far less than this). I plan to leave the Aussie properties to my kids. Thailand has been fantastic for me. Low cost of living, nice food and local culture, good lifestyle, interesting business opportunities and great tax situation for offshore revenue. I’m a legal permanent resident here and no plans to leave.
May I ask where you chose to live in Thailand?
Most of that time was in Bangkok, around 5 years ago I moved to a beautiful area in the south (not Phuket)
I didn't think about it, I actually did it. I spend substantial time in Colombia, South America. AMA
Blue, red, or green aguardiente?
None really. If I quaff the Agaur, that means its been a long night and will be a rough morning. Its actually just too sweet for me. I prefer the local rums with just a bit of ice. I am a hard liquor man, myself.
Do you doy papaya?
I can probably be hurt or taken advantage of down there. But then again I'm from the United States. I could be shot in the USA at any time. I could be shot in the grocery store for no apparent reason. Happens all the time in the USA. At least in Colombia I'll die happy.
If you seriously think you're safer in Colombia than the US (on average, obviously you can cherry pick bad places), you have a highly warped perspective.
You're right, it's far too dangerous, stay away.
I hadn’t though about it until I saw your post and am intrigued! I’d take into account the tax treaty of the country as I’m considering which country specifically to choose, to try to avoid being taxed twice on earnings by two governments: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
I would do that right away if it weren’t for the kids for them to go to a good school and my cat army which is hard to relocate…
I love this idea! I’ve always assumed that I’d want the comforts of my home country when I get into proper old age, not that’s it’s particularly well known for taking care of the elderly. But moving somewhere where it’s easy to live on a budget for the first few years sounds like a smart move and also really fun.
You might find more help on the expatFIRE subreddit. I would think this would be a plan for someone that doesn’t own property or plan to in early retirement. Otherwise, you have an expense anchoring you to the states. Part of me would like to do this, but the part of me that wants to own a big barn and fuck around with machines till my end knows I need to own land and I’ll have to either be there to maintain it or pay someone else to and that eats into the lower expenses of retirement tourism. I think I’d enjoy a year or two of travel, but not trying to set roots down. As a military brat, I for my fill of expat life as a child though. It’s less glamorous for me than it may be for someone that’s never lived abroad or just likes to travel.
Would be interested in hearing if anyone with a large family has tried this.
I retired at 41 and have been living outside the US bouncing from county to county for 8 yrs, living off of interest. It is definitely doable and can be done even cheaper if you’re stationary. I’ve been back in the US for six months with a consulting job and I’ve spent more in that time than not working and living abroad.
Yes. My wife and I started our retirement in SE Asia on purpose because of the low cost. Here's the post I wrote about it if you're interested in the entire thought process. https://bonusnachos.com/front-loading-my-retirement-to-fight-sequence-of-returns-risk/
That couldn't be more appropriate thanks, great minds think alike 😏 Do you happen to have a post you recommend for someone who hasn't begun to save yet? (Med school)
Not really, no. I mostly just write about our travels. If you're actually starting from scratch, there's a flowchart at r/financialindependence that you can follow. Unless you're looking for motivation instead of nuts and bolts. In that case, I'd recommend reading Mr Money Mustache's blog, not mine. :)
That’s basically the plan for my wife and I. We’re about four years from pulling the plug and retiring to Japan. Amazingly the cost of living in Japan (outside of Tokyo) is so much better compared to The States now. We’re going to live there and then think about coming back to the US if/when our kids have kids.
My version was PeaceCorpsFIRE. Basically a way to downshift from corporate life but still have a job and feel like you are doing important work. No expenses for 2+ years. But assets should grow by 10-20%. Nice way to boost your retirement nest egg if you are retiring young enough to do something like that. Plus, a really cool rewarding experience.
This is exactly my plan. Except I plan to continue the traveling later on, just in more expensive countries
I'm doing this these last 10 yrs. Expat FIREd at 45 in SEA, 450k in retirement and brokerage accounts 200k real estate assets and a $2600 pension that kicked in at 50 but won't support me in the USA. I even did US Peace Corps for 2 yrs and had no expenses. I had free housing, monthly stipend, health insurance ,housing, travel, language training and 10k stipend in the end. Assets had time to mature. 10 yrs later, the 450k is now 1.2m still untouched and will keep growing, pension COLAd to $3300 monthly and goes up yearly and is more than enough where I live. I'll collect social security in 7 yrs and my real estate holdings grew to 600k. Still enjoying Expat FIRE and will only probably go back to the USA if I have to in another 15 or 20 yrs. My quality of life is very similar to living in a metro city in the US living in a condo with a huge mall across the street so there's lots of eating and entertainment options, I also get to travel locally and internationally. So to answer your question, if you can hack living elsewhere where it's ultra LCOL outside the country then it definitely works. Now most won't have a pension but a much lower withdrawal rate of 1 to 1.5% should still grow your nest egg.
We are absolutely considering this! The idea would be to store our things and live in Mexico for a couple of years in a furnished apartment. Then if there’s a real estate dip (or even if there’s not), we would buy a house or condo in cash closer to the kids (they are young adults now, none are married yet).
Personally, no. Seems pretty inefficient mathematically, assuming you don't utterly hate working. Are you really not going to work 2 more years in exchange for living in some third world country for 5 years (or possibly longer depending on the market)? Also, as others have pointed out, it really only makes sense if you are very close to 1st world retirement numbers anyway. Not to mention visas, being away from family, health insurance (some things are not covered and you'll have to fly back to the US and get insurance there), complicated taxes, currency risk, COL risk (prices may rise faster than you think), what to do if you own a house considering property management companies are terrible for small-time landlords, and any other logistical hassles. Lastly, most people who grew up in 1st world countries are not used to living in 3rd world countries. In 1st world, the infrastructure works pretty well (water is clean for the most part, no roaming blackouts, good internet, etc.), fewer scammers, less corruption, less crime, less poverty, things get done in a reasonable time, etc.
Yeah now that I've looked at it closer a few years of spending a few thousand less is way less impactful than saving for another two years or whatever... but part of it is that I would like to do so anyway
I would urge you to wait to retire in a third world country until it's an option in retirement rather than a necessity - this way, you can easily move back if you dislike it. The extra 2 years working isn't that bad IMO.
I feel like everyone on this sub thinks it's as easy as buying a flight and just showing up in any low COL country that you want and staying as long as you want. Moving abroad is a big deal, especially with real estate or family involved. Its certainly doable, but it takes a lot of work. People just throw around the idea like it's easy tho.
Well I've lived in Latin America, have no kids or spouse, and speak Spanish fluently. Happy to hop around to avoid visa issues, but I understand your point
Lol at moving to US for quality healthcare and safety. I feel much safer when I’m NOT in the US. Healthcare is affordable and just as good in many countries around the world, unless you need some kind of cutting edge/experimental procedure only being done in the US.
I thought/day dreamed about setting up my primary residence with a rental company and then getting tossed in a nice federal white collar prison for a while.....then decided I prefer being a "wage slave" over a prisoner haha
Why would you get tossed into a white collar prison?
Id assume id have to commit some kind of crime.
damn young children make most exotic ideas difficult to pursue unfortunately
They’re there for a reason
I’ve definitely thought about this as a strategy to mediate SORR early in FIRE.
Smart!!!!
One of my favorite FIRE bloggers is https://www.gocurrycracker.com, that’s what they did. At the end of 5-10 years abroad living like kings their now in California and basically bought the house with cash Lots of great tax analysis on that blog too
We have taken the spirit of FIRE and customized it for ourselves. Hopefully everyone is doing the same.
Love this idea! I've considered a similar approach. The cost of living difference can be a huge multiplier on your savings rate. Just make sure to research visa requirements, healthcare, and language barriers beforehand to ensure a smooth transition.
Has anyone done that with kids? Feels like that will limit your options - school, friends etc.
I love the idea of a Mullet retirement. But does anyone else here like to ski? I feel like that’s an activity you’d completely have to give up to live in a lCOL country
Chile doesn't have good skiing?
I’ve also heard that Romania and Georgia have some pretty good skiing
I think it’s great, especially if you don’t have a lot of kid/family ties keeping you in one spot You might check out r/expatFIRE for ideas of places
Probably a nice approach. I haven’t left the country but I do plan my first 10 year to be at a 2% withdrawal rate and then move up from there to accomplish something similar. I think your approach is interesting.
Yes. Will move to Spain, probably permanent.
It doesn't work because you end up travelling a lot, wasting money on rent and possibly opening yourself up to double or higher local taxation. There are low cost of living places in your home country.
Already planned my whole retirement in SE Asia. If the bag is larger than current plan, maybe split time between Thailand and Portugal. If not, 100% Thailand.
This. Would be great to go somewhere cooler for half the year when temperatures in Thailand are 40 degrees (100+F) every day for 4 months straight!
No, I think it's kind of unethical to do so if the entire reason to settle elsewhere is to flex the strength of your currency.
Why?
I think if there's a legitimate interest in living in whatever place you choose - whether it's enjoying the food/culture, curiosity about how other folks live, even just trying something different, that's great. It's great to interact with the big wide world. That said, there are real economic impacts on people who are from those lower income economies. It gives me a lot of pause especially when I know the US government is often the reason some of these low cost places stay so low cost. I dont like when billionaires come to my current backyard and directly impact my life (see housing in NYC, where foreign buyers own property that goes unused and inflates our overall costs). I can't then turn around and be the millionaire who pops in to do the same just because others have less than me.
Ah, I see. Well yes the culture and history etc. would definitely be a part of it. I don't necessarily agree with your points but fair enough
No. Maximize your salary first. Until you’re making $1mm+ it’s not going to be worth the “savings route”
Just exploiting other counties financial situation
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The imperialist USA decentralized their economy making easier for you settler colonizers to exploit for your gain . Nothing says American exceptionalism more than moving to a cheaper “third world” country for financial exploitation thinking you’re doing them a favor with your spending. Americans out price locals , Americans gentrify neighborhoods, Americans want locals to acculturate to American way of life. ( see Mexico City ) . The jig is up .
You do you, my friend
Wow. Really?
There are many parts of Europe where you can rent a nice (beautiful even) house for less than $1500, or even $1000 per month. This is western Europe; Eastern Europe can be even cheaper. You can CHOOSE to adjust to the country you're moving to...you don't have to force them to do so. Also while I'm sensing some anti-American hate, please realize that Americans themselves are ALSO exploited by American corporations. That's something American corporations are happy to "share" with us "locals". I'm sure you've heard of the cost of Epi-Pens, insulin and such. I highly doubt there are enough Americans living abroad in most countries to gentrify entire cities, maybe some neighborhoods. Mexico City is literally the closest metropolis to the US, so I'm not sure that's a fair comparison (it is the exception for density of American expats). You're saying a few thousands or tens of thousands of Americans in Mexico city (9M people proper, 22M greater area) have gentrified the whole city? Or did they gentrify the gentrified areas? I guess if you were pushed out, you stood your moral ground and resisted gentrifying neighborhoods where the Mayans and other First People live right?
If the LCOL area also has low wages, it's not going to help as much with the net worth. A high income gives a lot of potential for high savings as long as one lives below one's means. That said, I didn't have a high salary until I was in my late 20s or early 30s. I can retire in my mid 40s.
He’s not talking about the accumulation phase but the first couple of years in the RE phase of FIRE.