Could you retire at 38?

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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,

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.