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Could you retire at 38?

By Judy Martel · Bankrate.com
Friday, April 16, 2010
Posted: 10 am ET

It's the dream of many a cubicle-dweller: Retire extremely early and travel the world at your own pace. But then you remember the mortgages, college tuitions and shrinking investments in your retirement accounts -- and you think you couldn't even consider it unless you were wealthy. Meet one couple who broke free of the financial restrictions and retired 20 years ago at the age of 38.

When I last interviewed Billy and Akaisha Kaderli in 2007, they were 17 years into retirement. In order to retire, they had sold their home and rid themselves of debt. Since then, they've lived in a variety of foreign countries, and recently purchased a "home base" in Arizona, where they spend about 30 percent of their time.

I wondered how the market decline affected their retirement and their portfolio decided to touch base. They responded to my questions from what they call their "jungle cabana" two blocks from the beach in Playa Del Carmen, Mexico. Future travel plans include a one-way airplane ticket to Asia, where they'll wander Thailand, Malaysia and the Philippines before returning to Arizona. You can follow their adventures on their Web site, Retireearlylifestyle.com.

Here are the abridged answers to some of the questions. This inspirational couple provides insight on how all of us can plan for and look forward to a rich and full retirement, even if we're not Bill Gates:

1. Do you consider yourself monetarily wealthy? (Why or why not?)

If you compare our financial wealth to people like George Soros, Bill Gates or well-known athletes, our monetary holdings are a pittance. We've never considered ourselves wealthy, and many in the States today -- even after the market's recent gyrations -- have more money than we do.

Our wealth lies in the fact that we have numerous options open to us because we aren't tied down to a large home with a mortgage and costly upkeep. We do not have any debt requiring us to work, and we sold our vehicle last year, so we are now car-free.

2. How has the market's behavior (up and down) since its high point in 2007 affected you and your plans? Did you ever consider coming out of retirement? How did you adjust your living costs (if you had to)?

Billy: Fortunately we did not need to adjust our living costs, as we have always lived simply. We did consider living full time overseas instead of remaining in the States, but Arizona has always been one of our least expensive locations. It's just that Arizona isn't nearly as exotic as, say, Vietnam, the Philippines, Thailand or Mexico. We never seriously contemplated coming out of retirement, but rather looked at ways we could rearrange our assets to our benefit to wait out the storm.

For example, we took a position in DVY (Dow Jones Select Dividend Index Fund) and SDY (S&P dividend ETF), dividend-producing ETFs, and have over a 4-percent yield on our purchases. They seem to be tracking the S&P 500 with about twice the yield. Earlier this year, we eliminated our health care holdings and added those to our positions.

3. How has your portfolio changed in terms of asset allocation, and if it did, was it in response to your ages, the market, cost of living in retirement or something else?

Billy: As you know, our portfolio has always been heavily-weighted in equities, and it still is. We did raise some cash during the decline and went from a 5-percent cash position to 15 percent. In hindsight, this was not a good investment decision, that is, unless the market drops again to levels where we see major opportunities.

However, if the market continues to rise, we will simply spend the cash down over the next few years and not have to liquidate any holdings.

Our decision was not due to our age, nor due to our cost of living, but rather it was market-based. And it was not just the stock market falling, but the entire U.S. economy seemed to be coming apart and we decided a higher cash position was prudent at this time.

4. I know your background is as a financial adviser, Billy, and you and Akaisha also have gained wisdom from living in retirement for 20 years. Would you advise people to wait for a certain point in the market before they retire early? Would you do it again, say in 2009, when the market dropped below 7,000?

Akaisha: Our first response is that everyone must assess their own risk tolerance and each person's answer lies there. One must also weigh that there are no guarantees in life, whether one is retired or pursuing a career. Some people we have met have said to us "We're going to work another 10 years. We don't know what the future will bring." Others have said, "We're retiring now. We don't know what the future will bring." They are working from different premises.

Billy: Some people wanted to wait until their homes reached a certain price level of equity before they sold, only to see the housing market drop precipitously.

We say there is no perfect time to retire, and retirement itself is not "perfect" nor the end-all. It is the beginning of your new life after a career and it depends on what one wants to do with their time left on the planet. In our case, we wanted to interject more living into our lifestyle and that was our motivation. It wasn't a bigger house, a boat or a country club membership that enriched us. But rather the yearning to visit far away exotic locations is what got us excited. We wanted to live our lives to the fullest while we were young enough to do so. And neither of us regrets our decision.

5. Finally, how much do you think about your portfolio day to day? How do you plan your budget for the upcoming year, and are you still living on $25,000 per year?

We track our spending every day and Billy does a spreadsheet for our portfolio that he watches daily with the numbers from the markets. Having been in the (financial adviser) business, it comes second nature to him, so in that sense, we think of our portfolios daily, or whenever we can get online to get market numbers. However we are investors, not traders, and rarely make changes. We have never planned our budget and we don't live on one today.

Since we track our spending we know where we are at any time financially, including what percentage of our net worth we are spending. Both of us are very skilled on how to live well on less. We easily live on $24,000 to $30,000 net annual spending and have done so for two decades. If lettuce spikes up in price we buy spinach, if airfares to Asia are high we travel south of the border.

A great example of taking advantage of good pricing is the constant attention over the drug wars in Mexico scaring U.S. tourists from traveling south of the border. Tourism has definitely been affected and we are finding great bargains everywhere, with vendors and hotel operators willing to negotiate. It has made our four-month trip here very affordable.

Generally speaking, even though we can't control the market's ups and downs, we can and do determine our lifestyle spending choices. This is a rewarding and practical skill we wish for everyone. It is all about flexibility and the willingness to make solid practical spending choices.

As a living philosophy, we concentrate on experiences and people -- not things -- and it works for us. Couple that with loving to live simply and it's a recipe for our particular style of satisfaction.

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April 29, 2010 at 2:39 pm

I have read their book. Yes they are promoting their book to produce income but whats wrong with that?
I am also a financial advisor. I have corresponded with them on occasion and found them to be very willing to answer any individual questions. Financial planning is easy if you keep it simple. First is diversify. Most people are better served with mutual funds and etfs. You can figure out alot by using a "monte carlo retirement calculator".
The amount of your net worth will dictate what to spend. Try to not spend more than 5.5% of your savings. The younger you retire, the less you should take out as a percentage. Statistically, if you take out 4.8% or less, you will never run out of money. However, people constantly tinker with their money according to what they see on TV. Get a plan. Adjust every qtr if necesary to stay true to your percentages and never ever think that you should deviate from your plan due to current events. If you follow this to the letter, you WILL be successful. You will also surprise the hell out of me.

April 24, 2010 at 10:28 am

Re: Artist. The book that they are touting is a $12 e-book. It's definitely not going to make them rich. I bought a copy 3 years ago, and I found it a very inspirational read.

If you go to the retireearlylifestyle site and do a bit of reading, you'll see that the Kiderlis retired back in 1991 a few hundred thousand dollars shy of a $1 million in today's dollars. While it is not a trivial amount, it is not an impossible amount to accumulate for most people with regular corporate jobs. Regular savings both in and out of retirement accounts starting at an early age will get you there, if not by 38, then by some time in your early to mid 40s.

If there is one take away from this article it is that winning the early retirement game, as in winning championship football, a solid defense (keeping expenses low) and a good ground game (regular savings) are more important than a flashy offense (big salary) though having a flashing offense definitely doesn't hurt.

As for people with kids and mortgages, you can still retire, but the retirement age will need to be adjusted upward. Figure each child will add at least $200k to $300k in expenses, and plan accordingly.

April 22, 2010 at 6:20 pm

My husband and I have been following the adventurers of this couple for years. We met up with them one time in Chiang Mai, Thailand and they are very unpretentious.

If you read their book or their website more closely, you will see that they have done a good deal of volunteer work, something that is more difficult to do when you are working full time.

April 22, 2010 at 9:35 am

I have been compared to Warren Buffett in many ways



How, like you are both males?

April 22, 2010 at 9:32 am

What this story fails to tell us is how much net worth the couple retired with at such an early age.


They are also pushing a book. You'll see it on their website. And they do columns for papers and mags.

So they DO have an income.

They rub me as disingenuous and are selling their product more than their lifestyle.

April 21, 2010 at 12:36 am

"Live for Today, Hope for Tomorrow", what an inspiration!
Life is just for living..and they did it :)

April 20, 2010 at 10:09 am

What this story fails to tell us is how much net worth the couple retired with at such an early age.

Daniel Manfre
April 19, 2010 at 9:57 pm

I enjoyed the story myself and have to assume this couple retired without the financial responsibilities of minor children. I could imagine retiring early if you subtract children from the equation. Just my two cents.

April 19, 2010 at 2:45 pm

What wonderful insight into this couple's life. While my wife and I do not have such a yearning for travel, we also consider ourselves "cool" for living simply. Even though we can afford things, that does not mean we buy them.

My father told me once: "Son, your wealth should be measured in the quality of things you acquire, not the quantity of things you accumulate."

This couple is rich, by spending 24K per year. They are rich in "life" and contentment. Many Americans should take a lesson from these fine people.

Thanks for sharing this story.

April 16, 2010 at 9:20 pm

I retired at age 48 after working very hard for 25 years in Government and did it the old fashioned way,I retired in 2008. I had only one career job after College. Do not let anyone fool you, it is a very simple process to take any young person at age 18 and if they live below there means and don't run into bad luck along the way that MOST people run into, they will have tax problems by 50! There are certain bad things like divorce, health issues,spending patterns etc., that can get you, however by keeping it simple,, and staying away from these vices they can be avoided!. Being retired young, not so young,, with absolutely no debt is a wonderful thing. I invest in many different things and should never have to work again. I have been compared to Warren Buffett in many ways and make money on all the markets bull,bear or crash, it makes no difference. Remember Warrens saying which I live by a lot "When others are fearfull be greedy and when others are greedy be fearfull", there is nothing at all wrong with being debt free in your 40's when your only complaint are cap. gains taxes, and low jumbo cd rates!