So things just got interesting here in the R2R household. We’ve decided to move our early retirement date up to be 12/31/18.
Yeah, that’s right – just over six months from now. Crazy, right?
Then to top it off, we decided to push up our move to Panama as well. We’ll now be starting that adventure about a year from now in the summer of 2019.
Making the decision to move up our early retirement date isn’t a decision we’re taking lightly.
Although we’re excited to move onto our next adventure, any changes we make on the “when” can have a profound impact on our future.
But it’s something we’re ready to do. The opportunity is now here so we’re going to jump on it.
Let’s talk a little bit about what took place and why we made this decision.
Why are you moving your early retirement date up?
I think most of my regular readers know that I’m ready to move on. I don’t hate my job, but I’m just burnt out with it and I have so many other things I want to be doing.
I’ve been re-evaluating the numbers lately and felt like we could make this happen. However, it’s not something I want to be wrong on so I wanted more input on this.
Over the past few years, I hired a financial advisor for a one-time job. He felt good about where we were headed with everything and suggested a few good tweaks to things.
I later talked to another financial guy who basically ran our numbers again and said we were good-to-go. This was somewhat useless, but it was free through our 401(k), so why not?!
But here’s the thing – it kept bothering me that all of these guys are good with numbers, but the first two guys aren’t experts in early retirement. Things work a little differently when you need to make your money last for possibly 50 years.
My good friend, Fritz from The Retirement Manifesto, also took a peek through our finances recently. He felt confident about our plan to leave at the end of 2019 as well.
While Fritz knows early retirement though (he just retired earlier this month at 55!), he’s not an expert at living in another country. Dammit, Fritz – why can’t you know everything?! ;- )
And that’s an important difference because there are a number of twists and turns that living in another country present. For instance, there are legal ways to pay little to nothing in income taxes through the foreign earned income exclusion.
Then there are the questions about having multiple businesses while living abroad. Right now, I have Route to Retire, a real estate LLC, and a book publishing company. Are there smarter ways to strategize and optimize these businesses by leveraging the country I’ll be moving to?
I don’t know these things well at all… so I took a chance. I did some Googling and found what seemed like the perfect person to help me with these things.
After an intro phone call, I felt like I had found the right guy. His name is David Jacoby and his business is Remote Financial Planner. He’s a Chartered Financial Analyst (CFA), CPA, and a certified financial planner.
But just as important, he’s young enough to understand the FIRE movement. He’s even been to FinCon before. Not only that, but he’s an expat. He’s been living in Spain with his wife for almost a couple of years now.
This guy checked all the boxes of what I was looking for and after the past couple of weeks of working with him, he didn’t let me down. He gave me a whole different perspective on a lot of things regarding early retirement that the other guys missed. He also gave me some great strategies for the businesses.
Long story short (or was it already too long?), after our final call, I felt a lot more informed. That’s crazy considering that I focus on this stuff constantly.
Nevertheless, I also felt confident that we could pull off me leaving my job a year earlier than planned.
One guy says “go for it” and now you’re going to do it? Are you crazy?!
Of course, I’m a little bit crazy – I am the guy that randomly decided to shave my head into a Mohawk after all!
That aside, I do have some other important reasons for deciding to pull the trigger early. And these reasons are a little more sensible than a bad haircut!
» Cash bucket
The biggest reason that I’ve been holding back from quitting my job is that I needed more money. Not more money over the long haul, but more money in cash.
You see, we’re planning to do a Roth IRA conversion ladder to get access to my 401(k) money, but that means I can’t touch the money for five years. In other words, I need to have five years of cash to cover our expenses while we’re making this happen.
We didn’t have that… but now we do. On that last minute decision to sell one of our rental properties, we ended up padding our savings quite a bit. That, along with our plans to sell our current residence when we move, puts us in a good spot.
It also helps protect us from the inevitable downturn of the market – sequence of returns risk. Knowing my luck, it’ll happen the market will crash day I leave my job.
» Housing market
Speaking of selling our house… the housing market’s also at what looks to be the top or close to it. Who knows for sure, but I’d rather sell it while things are higher versus lower.
I don’t know if it’s going to stay alive for much longer, but all I can hope for is that things hold up until next spring! Waiting another year like we originally planned might be taking even more of a gamble on things.
» Our daughter’s still young
Kids put an interesting twist on early retirement when you’re leaving the country. You have to do a lot more planning – just because you’re leaving work doesn’t mean they get to quit school.
We’re planning on homeschooling our seven-year-old daughter for at least our first year in Panama. After that, we’ll probably send her to private school, which is a heckuva a lot cheaper in Panama than it is here!
However, another issue we have is that she’s at the age now where she’s starting to make friends that she’s seeing outside of school. Obviously, that’s a good thing. However, the longer we hold off on going to Panama, the harder it’s going to be for her to leave her BFFs.
So in this case, an extra year here would mean a closer bond with her friends. That’s going to make it more difficult to say goodbye. And right now, she’s looking forward to this move. But if we wait… who knows?!
» Because we can
I’m not getting any younger, so why not make the move?
Seriously – while an extra year would mean more money saved, is it really going to make that big of a difference?
Sure, we could probably pad a little more onto our bottom line, but that could also backfire. It’s possible that housing prices plummet by waiting another year and it washes out any gain we would have made by working longer.
Any number of different things could theoretically happen. And if something like that does occur during that extra year, I’d potentially be working another year for nothing.
I don’t want to fall into the “one more year” trap. We’re young enough that we’ll figure out any problems down the line that could potentially threaten our early retirement.
Are you nervous, Jim?
Hmm, good question. Early retirement’s something crazy that only a small percentage of folks are even attempting. And then to top it off and jump out of the plane before getting our parachute on all the way first?
Yeah, that bit of insanity might lend itself some nervousness. But I’ll be honest – I’m actually good with it. Sure, it’s a little surreal right now to think I won’t have a W2 job again after the end of this year.
However, for me, the nervousness tends to stem from the unknown of moving to a foreign country shortly thereafter. And that’s not really nervousness, but more of an excitement than anything.
It’s like you would probably feel right before going out the plane door while skydiving… hmm, I feel like I already used that analogy somewhere.
As far as the numbers go, I’m comfortable. We’ve checked ’em six ways from Sunday and everything seems to green light us to make early retirement a reality.
So no – I’m happy and ready.
Mrs. R2R is still not completely sure though. She definitely wants this to happen, but she’s still a little uneasy.
It’s a lot of changes and unknowns that are all coming together at the same time. And pushing both early retirement and our move to Panama up by an entire year made it more of a reality.
Regardless, she’s on board for making this happen… but, yeah, she’s a bit nervous and I think that’s fair.
Do you really have enough money saved for early retirement?
When you first start down this journey, you tend to use the 4% rule as a sort of guide. This helps get you in the ballpark of how much money you’re going to need for early retirement.
The further you go down this path and continue to learn though, the more you start to realize that the 4% rule is more like a 4% rule of thumb.
You have both sides of the fence that debate on whether or not it will work for early retirees. And both camps have some great points.
Personally, we’re going down a path that I think makes sense. We’re basing our savings and stock market investments on the 4% rule.
However, that’s not our entire plan. We have a few other legs to this stool that should keep us from falling over:
» Rental property
We did sell our rental house recently, but we still have a duplex that is cash-flowing nicely. We have no plans to sell it and we already have a property management company taking care of it so it doesn’t make a difference if we’re here or in Panama.
» Panama expenses
Our plan for early retirement is based around our expenses living here in the U.S. However, our expenses in Panama will likely be much less than they are here (U.S. healthcare system anyone?).
We planned it this way on purpose. Although we’re excited about living in Panama, what if we decide we hate it and want to move back? Suddenly our expenses would go up and our early retirement could go out the window just like that.
In the meantime, while in Panama, we can live it up a little more and likely still not draw the same expenses as we budgeted for in our plan. That means the saved money can continue to grow for us.
» Blog income
I started this blog in May of 2015 for two reasons – to share my thoughts of what I’m learning along the way to FIRE and to eventually make some money with it. The idea was to create it early and grow a nice size following by the time I actually got to my retirement date. Then I’d have something fun to do while in Panama.
The site made just over $2,000 in 2017. Not a ton of dough, but still exciting to finally see a little bit of money coming in. In the first half of 2018, the site has brought in around $2,350. Again, not enough to live off completely, but it’s growing a little more quickly. I anticipate seeing the income continuing to grow once I quit my job and have more time to spend on it as well.
And the best part… we purposely didn’t count on the blog income in our plan. This is gravy and will allow us to just drawn down less from our investments over time.
» Other income
The term FIRE stands for Financial Independence / Retire Early. The whole idea is that you can quit your job (if you want) and focus on what you love. But here’s the thing, just because you retired from a regular job doesn’t mean you can’t ever bring in money again.
In fact, being as young as we are, we’re bound to find some passion projects that end up generating income for us. And that’s Ok. Just because I decide to write another couple of books when I retire, for example, doesn’t make my early retirement a failure. The great thing though is that money will no longer be the primary motivator – the love of what I’m doing will be.
Mrs. R2R plans to do volunteer work when we’re down in Panama (the woman is a saint I tell you!). However, no one knows what the future holds. Maybe that will lead to something that ends up bringing in a small salary there or at another place. If so, great! If not, who cares? As long as she loves doing whatever she’s doing.
» The Darwin “Adapt or Die” mentality
To be honest, if the #$%^ hits the fan, it’s really not that big of a deal. We can plan every single detail, but life will definitely find some way to change our plans. #$%^ happens and we’ll adapt and figure it out.
I really think we’re never going to have a problem with money. We have enough saved up that even in a worst-case scenario, we should be Ok.
But if ten years from now I had to go get a part-time job at Home Depot a couple days a week just to top things off, so be it. I’d probably love it anyway – as long as it keeps me from going back into IT field, I’m good with that!
So that’s it – early retirement is moving up on us so things are going to start to move a little more quickly around here as we prepare for our move.
Now I just need to find some time to get The Game Plan page updated with the new early retirement plan!
Think we’re crazy to move up our early retirement date? It’s Ok – you can say it – I won’t get offended.
Thanks for reading!!