New Life!

If you're an American, and you plan to travel around America and Canada, you will have to buy U.S. health insurance. As a former resident of Bermuda, please be careful when you select your U.S. state of residence. Only a few have decent health insurance rates for folks in their 40s. Tennessee, Washington...I don't know of any others, and even Tennessee may be hiking their rates now. In some states the health insurance you buy as an unemployed/self-employed person is not worth the paper it's written on, and it would be better to just stay out of the U.S. altogether and travel in countries where you can afford health care.

If you are tempted to roll the dice, well, I just learned that a friend's son, un-insured at age 23, was in a terrible auto accident. The first day in the hospital cost $400,000. He is now completely disabled and can't ever work again, so he has ruined not only his own life but his mother's. So you are doing the right thing by buying the insurance if you want to travel in the United States and protect your savings. One accident or one serious illness could destroy you without it.

If you're a citizen of another country (Bermuda?) then I think you can just buy the travel insurance instead but, please, don't take advice on finance from the internet without checking it with knowledgeable people in real life.

Re your proposed budget: I don't think a budget of $80 USD for the rest of your life is realistic, because of inflation fueled by skyrocketing oil prices. It's actually a pretty shaky income right now, even in Louisiana and Mississippi, among the cheapest of the states. If I was in your shoes and had the option to keep working, I would do so. Retiring at 39 sounds good until you realize that in a few years you're going to be living at a poverty level income -- and maybe after the gap in your history and age discrimination you'll never be able to get another "real" job. It's always easier to find a job when you already have a job. So obviously I don't think your bankroll is throwing off enough passive income for a comfortable retirement. It may get you 5 years or 10 years down the road, but sadly, the longer you go without working, the less likely you are to like the choices you have when you MUST work again.

As always there is more than one way to view something.

If by $85 you mean $31,025 US per year NET, it is indeed possible to retire for life. But there are a few things it would help to know.

First, you must continue to grow the capital to keep pace with inflation at least. That means that if inflation is 2.5% (example) you would need to leave $775 invested thus reducing your actual net income to $30,250 in year one. It would be better to increase the principal by even more than inflation if possible and there are many ways to do that which do not require having a 'regular' job.

Second and this perhaps should really be first, NEVER, NEVER, NEVER touch the principal. No matter how good an investment sounds (opening a bar in Thailand or somewhere is a common mistake), don't do it.

Third, being retired does not mean you cannot work. There is nothing wrong with SUPPLEMENTING your income from time to time when things pop up that interest you. There is a vast difference between having to work and choosing to work. Without ever looking for a job of any kind I have fallen into several interesting and reasonably lucrative situations over the last 15 years. My last 'job' was designing and selling decks for gardens in the UK. For around 4-6 hours of consulation (sales) a week, I was able to earn $24,000 per year CASH IN HAND. That paid for some nice trips. After about 2 years of that I got bored and packed it in. Choice, not necessity. I've also designed and printed menus; designed and helped build a 6 apartment building; got paid to play pool. My Brother who also retired quite early, has driven a school bus (2, 2 hour periods per school day), and managed an RV park (he full-timed in his RV for 3.5 years) in Baja.

Fourth, and contrary to what peachfront thinks, I can tell you from first hand experience that telling people you are retired at a very early age, does not reduce the likelyhood of you being offered jobs, it INCREASES it. I believe that happens for several reasons. First you don't NEED to work and so your attitude towards the whole thing is far more relaxed. Second, people look at you and figure that if you were able to retire by 40, you must KNOW something they don't and they want to try and get a little bit of it. Maintaining a bit of an air of mystery doesn't hurt either. In my current home (small town BC, Canada) I have been asked to sit on the board of the local Art Society as well as a local Nature conservation organization (both non-payed) and am currently the President of our Condominium corporation (also non-payed but with perks). All within 1.5 years of moving here. If I wanted a paying job I don't think I'd have to hint much. It has nothing to do with how long you have been out of the job market, it has to do with what perception people have of you.

So it can be done. The only question then is where. Well your budget and needs will help decide that along with nationality. As an American you are limited to where you can legally live for any length of time unless you invest capital in a country (see Rule #2). Given your comment that you might like to stick to the US for a few years until the dollar strengthens, I'd seriously consider full-timing in an RV. You can do that on $20,000 per year (real number based on my Brother's experience). A decent used 24-26ft. motorhome can be found for $15k (buy that with the money you make between now and next June) and that leaves you with just under $11k from your $31k per year.

Insurance is a necessity though. So get some good cover.

It is interesting this retired thing. I gave away 30 yrs of work, full time plus part time jobs, this year. Did the travel thing did the work away from home work thing. Back now doing some building industry courses. I have this opinion. Unless I am dead I will not retire. I may work for some dollars and then travel but retire, Never. It is my opion in terms of my lifestyle but I would think life without work/committment would be a waste of oxygen.

Thanks Peachfront - when I look at the coverage by WorldNomad offered to a resident of Bermuda and even Taiwan (I have a passport for that country too), they look like pretty good coverage. Major medical in the USA will probably run about $5000 I'm guessing. I'll have to read up more on this on LP and other sources.

Cognomen - thanks for your input too. I plan to do some volunteering too, like in the rainforest of Ecuador, so I'm sure there are many things that'll keep me busy and enjoy my free time and also feel a sense of contributing to nature and society. I thought about real estate with all the foreclosures in the States, but feel safer with something a lot more conservative especially if I'm not going to be working. Yes - the $85/day is net - and I'm probably going to get twice as much as that right now, but the $85/day is my estimated worse case scenario at getting about 3% in return.

I've been look into the RV/Pop-up Camper option also if I stay and travel in the States - so thanks for the est cost on that. I did a RTW back in 2001 and it cost me about $10k for the whole year, staying in hostels and such, so I'm fairy comfortable with what I have after I leave here. Then again, that was 7 years ago when the USD was strong.

Cheers for all your input!

George

#2 says: <blockquote>Quote
<hr> I can tell you from first hand experience that telling people you are retired at a very early age, does not reduce the likelyhood of you being offered jobs, it INCREASES it. <hr></blockquote> That is completely untrue in America, which is a youth-oriented society and also a society where health insurance comes from the employer, giving employers an incentive not to hire older people. Statistics don't lie, and we know that one of the reasons American women earn so much less over their careers than men, despite living longer, is because of gaps in their employment -- the infamous "mommy track." A gap in your employment record, especially if you claim to be early retired at age 39, creates a lot of suspicion. At least in the case of the mommy, the employer can understand why you haven't been working. In the case of a single man? The prospective employer often thinks you have a problem and doesn't want a piece of that problem. Many prospective employers won't even hire people have been long-term self-employed, for similar reasons. Why aren't you like everybody else? Do you have a problem following instructions a.k.a. as orders? Do you have issues with authority? Did you have a health problem? Do you have personal problems? Were you on an alcohol or a drug bender? Heck, have you been in jail or in a mental hospital? The individual who follows the different drummer needs to understand that different is going to be viewed as different.

Maybe it is different in Canada, but I doubt it, since #2's jobs admits that his jobs are non-paying positions. As I said in my first post, you might not like your choices if you have to go back to work with a big gap in your employment record, and being allowed to work for absolutely no pay at all while you are judged to see if you are worth paying a little token is about the most unattractive choice I can imagine. And, yes, I've heard other older people given this advice to volunteer and work for nothing, so that eventually they might be paid a little something, so I know it happens and not just to #2. #2 apparently retired with an abundance of bankroll and doesn't care. But your bankroll of $3,000 a month USD or less, that's marginal. And one day you might very much care.

$32K net annual income is well below the median American income. For an older person, who has Medicare and hence doesn't have to worry about a health insurance bill that rises every 6 months like clockwork, and who has paid off her home, it's fine. For a younger person who has no job and (from the sound of it) currently no home, you are going to have to budget insurance and rent/room/RV/housing of some kind every single month. I'm not seeing much left over for actual travel. And I can look at the rising oil and food prices, and at the rising price of medical care, and IMHO it seems obvious that you are going to be left with a more and more marginal budget over time. In your forties health insurers will raise your premium every 6 months, like clockwork, even if you make no claims. I am a non-smoker, at my ideal weight, and have never filed a significant claim, and yet that's exactly what happened to me. I'm not trying to scare you. But I'm not going to humor you either by telling you what you want to hear. I'm going to assume that you want to consider all sides of the issue.

In an ideal world, you would find a new job, in a place that you wanted to visit anyway. Then you would be earning and still seeing the world. Easier said than done sometimes, I know. Another way would be to take a year to travel, the equivalent of a sabbatical, which is much more respected than taking off for 5 or 10 years.

I'd like to supplement the information in Peachfront's post about health insurance in the US.

First, about Medicare for those over 65. I know that seems a long way off for you, but if you are retiring now you need to look at the far future, not just the short range--you'll live until at least 80 and probably longer, so you what you have now has to last for another 40-50 years. Americans are eligible for free Medicare A (hospitalization) insurance only if we have worked for the prescribed 40 quarters (10 full years) in the US or for a US company and paid the Medicare tax. Otherwise the only way we can get hospitalization insurance once we reach age 65 is to pay the Medicare A premium. In 2006 that premium was $393 per month. Those of us eligible for free Medicare A still have to pay the Medicare B premium (doctor bills and outpatient treatment). We are also required to buy a drug plan (Medicare D) even if we don't take any prescription drugs. And then there's the matter of coverage. Medicare pays generally 80% of what they call the "reasonable and customary" fee for a service. What Medicare calls "reasonable and customary" is about 40% of the actual cost (it's what was "reasonable and customary" 10-15 years ago). In other words, Medicare will cover 1/3 or less of my actual medical cost. To get further coverage, I also have to purchase a Medicare supplement or join an HMO plan ("Medicare Advantage" or "Medicare Part C"). I currently pay $202 per month combined for the Medicare B premium and the HMO premium which includes drug coverage.

You can expect medical cost in the US to increase at least 10% per year due to inflation. Most insurance companies keep increasing the copayments, coinsurance and deductible--the amount you have to pay directly--each year to keep their premium increases under 10%. My HMO is not increasing my premiums for next year, but it has dropped a lot of benefits, has doubled or tripled the deductible (the amount I have to pay before the insurance starts paying) and has increased the copayment (the fee I have to pay) for an office visit from $15 to $50. Note that this inflationary increase has no relationship to the sharp age-related premium increases that Peachfront mentions and which make individual health insurance policies unaffordable for most people.

You also need to be aware that most US health insurance plans won't cover you while you're outside the US. A few do have an emergency travel benefit (for which, of course, the premium will be higher).

You might want to hang on to your Bermuda and Taiwan residency and check out the insurance/retirement/pension situations there! Peachfront's advice of taking a sabbatical instead of permanently retiring is also excellent. You need to get detailed financial advice, which you will have to pay for (beware the type of "financial planner" who makes his living by selling you investments). You certainly won't get it free on the internet. You can reasonably expect to live until you're at least 80 and probably longer. What you have may be sufficient now, but will you be able to live on it 40 years down the road, when the cost for everything will have at least tripled?

Are you a selective reader or what Peachfront?

I wrote, "I have fallen into several interesting and reasonably lucrative situations over the last 15 years. My last 'job' was designing and selling decks for gardens in the UK. For around 4-6 hours of consulation (sales) a week, I was able to earn $24,000 per year CASH IN HAND. That paid for some nice trips. After about 2 years of that I got bored and packed it in. Choice, not necessity. I've also designed and printed menus; designed and helped build a 6 apartment building; got paid to play pool. My Brother who also retired quite early, has driven a school bus (2, 2 hour periods per school day), and managed an RV park (he full-timed in his RV for 3.5 years) in Baja."

Did you read only the, "I have been asked to sit on the board of the local Art Society as well as a local Nature conservation organization (both non-payed) and am currently the President of our Condominium corporation (also non-payed but with perks).", comment I made?

Let me ask you one simple question regarding your OPINION that retiring early will not increase your likelyhood of job offers. Did you retire at 40 in America? If your answer is no, how can you state as if it were a fact, "That is completely untrue in America". You are entitled to an opinion but your opinion based on no personal experience really doesn't compare to my opinion based on actual experience.

I'm telling you based on actual first hand experience that people look at you in a different way when they know you are retired and no longer HAVE TO work for a living. They expect it from someone 55 plus but not from someone younger than that. I have seen the look on their faces countless times and yes job offers actually do just appear out of the blue peachfront.

I suspect that you are already past the 40 mark with no hope of being able to retire anytime soon and resentful of anyone who can.

<blockquote>Quote
<hr>I can tell you from first hand experience that telling people you are retired at a very early age, does not reduce the likelyhood of you being offered jobs, it INCREASES it. <hr></blockquote>

Five weeks ago I left a well-paid career abroad and told colleagues, friends and family that I am retiring (as I am now 48 and financially well set-up). Since then I have returned home (Australia) and at least weekly have had people (mainly friends) calling me and offering me jobs (some quite well paid). It is driving me nuts as I don't understand why they don't believe that I am managing my life just fine and heading in the direction I have chosen. When I turn down their offers, some actually get quite upset saying they have gone to a lot of effort to do whatever they have been doing on my behalf. Good grief!!

And for once, I have to agree with cognomen.

Some websites of others who have done something along the lines of what the OP wants to do or general retirement funding health issues pages. Many are written by Americans so cover some of the issues about health insurance or place of residence in the USA for tax reasons. I'm dreaming of getting out very early so have a lovely collection of webpages!

Deliberately Homeless

Retire Early Homepage

How to retire today

A retirement funding calculator

And another calculator