
30 Years Ago They Retired at 35: An Update - JacobAldridge
http://www.nextavenue.org/30-years-ago-they-retired-35-update/
======
jpatokal
In case you were wondering how they pulled this off at 35:

 _The author retired from his CPA job at KPMG to live the life of world travel
and financial freedom. When he retired in 1984 he was making in excess of
$125,000 a year. The concept works best where you have a high priced personal
residence in a hot real estate market. The premise is that you sell your high
priced house and your status car. Then you take the proceeds and invest it in
a SAFE, CONSERVATIVE investment living off the interest and never touch the
principle. You move to a lower priced area, either in the US or outside._

(from [http://www.amazon.com/Cashing-American-Dream-Paul-
Terhorst/d...](http://www.amazon.com/Cashing-American-Dream-Paul-
Terhorst/dp/0553278150))

Although that leaves it unclear how you got the high-priced house in the first
place, much less the status car (why buy one if you're going to sell it
anyway?). And the "safe, conservative" investment was cash deposits at a bank
paying 8%/year, but good luck finding that these days...

~~~
douche
> Although that leaves it unclear how you got the high-priced house in the
> first place

1984, man. Prices were half or a third then what they are now. That probably
means they originally bought the house in the 70s, when things were yet
cheaper.

I think back to my grandparents, that paid around 20k for a house around 1960.
If I were to buy an identical house today, I'd be looking at 200k minimum,
probably more like 250k, and it would be on a one acre lot, not 20.

~~~
sokoloff
That's equivalent to the effect of an average 4.25% inflation compounded over
55 years.

The 10x headline multiple seems shocking, but when you unpack it, it's not
that shocking.

~~~
protonfish
And $125,000 a year salary at 4.25% for 30 years is almost $450,000 today. It
wouldn't be a struggle retiring in 10 years if you made that today.

A single inflation rate paints an inaccurate picture when the difference
between income and living expenses increases are that dissimilar.

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im3w1l
They didn't mention the real trick in the advice section: Don't have kids.

~~~
s3nnyy
The "early retirement community" has people who manage to retire early while
having kids. Check out
[http://www.earlyretirementextreme.com](http://www.earlyretirementextreme.com).

The real trick is living way below your means. The main cost factors for most
people are shelter, transportation and food. If you manage to lower these
three recurring expenses considerably, you can retire within 5-10 years (even
if you don`t make a six figure income).

~~~
vasilipupkin
The problem with early retirement and having kids, is that kids need to go to
school and presumably, in one place. So you can't just bounce around the world
when you have kids, or at least it's not as easy, finances aside.

~~~
orasis
My unschool and homeschool friends bounce around with their kids just fine.

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mitchi
I read this and immediately thought of this :

Retires at 35, explores the world for 30 years

Claims Social Security at 62.

[http://weknowmemes.com/2015/05/25-ways-the-baby-boomers-
had-...](http://weknowmemes.com/2015/05/25-ways-the-baby-boomers-had-it-
easier-than-the-millennials/)

~~~
cldellow
I assumed the social security benefits aren't that good if you only worked
until 35?

In Canada, e.g., the Canada Pension Plan (our version of social security) pays
on a schedule based on how many years you worked. You must work for 39 years
to get the maximum benefit.

If you work fewer than 39 years, no consideration is afforded to whether you
worked those years at the start of your life or the end of your life. i.e.,
the time value of money is completely ignored.

Thus, I think the subjects of this article are likely being shortchanged by SS
in some ways: they contributed, say, $200K to the coffers of SS. SS then had
30 years to grow that money, but will pay out ignoring the 30 years of growth.

~~~
saalweachter
Social Security benefits require a certain minimum pay-in before you get
anything out. If you're paying in a lot, you can get your points in quite
quickly. I'm a 30-something well-to-do software engineer, and the last time
the Social Security folks sent out paper letters updating on benefits -- which
was several years ago -- I had already paid in enough to qualify for Social
Security (at 60-something), even if I stopped working today. I'll get more, of
course, if I keep working and paying in.

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vasilipupkin
I am not sure. This seems to me a very boring way to live. Sure, it's
fantastic to travel around the world and explore different places. But, there
is also a lot of satisfaction in meaningful work. Plus, a lot of things are
really fun BECAUSE you are taking a vacation or rest away from a job.

~~~
mcjiggerlog
I think that depends on your world-view. For some they see it as it's better
to work to live, than to live to work.

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hnnewguy
> _the couple uses Washington state (where Paul’s brother lives) as their
> address for U.S. residential purposes because there’s no state income tax._

> _Plus our benefits are grandfathered in if Congress screws around with
> Social Security._

> _" But at least now, when we go to the United States, we have coverage and
> if we get sick, we won’t be devastated financially.”_

Not sure how I feel about people taking advantage of safety net, while doing
whatever they can to avoid contributing.

~~~
a3n
Their safety net is not provided by Washington State.

They presumably worked the required number of quarters for their SS benefits,
and played by the rules at the time.

~~~
pkaye
It is playing by the rules but if everyone did it, the whole SS benefit scheme
will collapse.

~~~
dsr_
It appears that you are misunderstanding Social Security, and you may think
that the US federal government plays by the same set of fiscal rules that a
household, a corporation or a state has to use.

This article from the Washington Post can help:
[http://www.washingtonpost.com/blogs/fact-
checker/wp/2014/01/...](http://www.washingtonpost.com/blogs/fact-
checker/wp/2014/01/08/social-security-a-guide-to-critical-questions/)

~~~
_broody
That article doesn't actually counter what the OP says. In fact it ends by
stating that SS is being more strained and giving diminishing returns as time
passes by, which sounds disturbingly like a ponzi scheme. It's unsustainable
_by design_ even without free-riders, much less with min-maxers gaming the
system to not put anything in.

~~~
chadzawistowski
I don't know why you think social security is necessarily unsustainable. It's
been running a massive surplus since the 80s. Unfortunately it was borrowed
from to finance wars in the middle east, but that's not a problem with social
security.

[http://www.accuracy.org/release/social-security-has-a-
large-...](http://www.accuracy.org/release/social-security-has-a-large-and-
growing-surplus/)

~~~
hnnewguy
> _It 's been running a massive surplus since the 80s._

When the boomers were in their prime earning years, supporting a smaller, aged
cohort.

------
digi_owl
Brings to mind the Victorian concept of "retire with competence".

Problem is that it pretty much depends on getting in the door with the rentier
economy, and not everyone can be there (unless you fancy trying to run the
world on an eternal Ponzi scheme)...

------
nathan_f77
Pretty awesome. Chiang Mai is a great city. We lived there for a month but
just moved to Uthai Thani, which is even cheaper. It's a lot quieter, but
pretty nice.

Unfortunately, you can never really settle down in Thailand, unless you marry
a Thai person. Foreigners aren't allowed to own land, although you can buy an
apartment. But even so, it must get tiring to go on visa runs every 90 days
for over 30 years.

~~~
geomark
If you have a retirement visa (age 50 years and up) or spouse visa (married to
a Thai citizen) you never have to do a visa run. For all others, it's a PITA.

Also, it's not that cheap to live in Thailand. You can live cheap if you like.
But if you want a car, TV, bottle of wine, a decent steak, etc. you pay far
more in Thailand than in the U.S.

I've been living in the Khao Yai area for more than 10 years.

Added: Something is wrong with the story of that couple in the article re:
their visa. Because the only one year visas are retirement, spouse and
business visas. They could have retirements visas at their age but no visa run
is required - you never have the leave the country at all, just renew it once
a year. If they are in the country on tourist visas, well, there is no such
thing as a one year tourist visa. There is a 60 day multi-entry tourist visa,
valid for one year, extendable by 30 days one time after which you have to
leave the country and re-enter getting another 60 days, rinse and repeat.
(Added: maybe this is what they are referring to). And you used to be able to
get 30 days visa exempt on arrival and do visa runs every 30 days
indefinitely, but they put a stop to that recently.

~~~
nathan_f77
> Also, it's not that cheap to live in Thailand.

That's an interesting perspective. My own perspective might be slightly
skewed, since we moved from San Francisco, where we were splitting $4,400 per
month for a 2 bedroom apartment.

I see what you mean about luxury items costing more, so it definitely depends
on your lifestyle. We're renting a house for $200 per month, and we've found
great meals for under a dollar at local restaurants. Going out to eat at
western restaurants rarely costs more than $5 per person.

About the visa details, I met someone in Chiang Mai who was here on a
retirement visa. He said he had to leave the country every 90 days, but I
think he mentioned that they had recently changed the rules.

~~~
geomark
Well yes, that's a pretty hefty monthly rental. I just got back from Singapore
which is even more absurdly priced. So you can definitely save a lot on
housing in comparison to some places. On the other hand, if you want to buy
then you find land prices are pretty high throughout the country, even in
areas I wouldn't live if they paid me. I compare that to friends who bought
ranch lands in the southwest U.S. - much cheaper and nicer.

But a basic car is hardly a luxury item yet costs 2X to 3X the same car in the
U.S. does due to high import tariffs. I eat at the local places for $2 (used
to be $1) but when you want a pizza you pay $10 for a small one that is no
bigger than one of those giant slices of Costco pizza in the U.S. Try a steak
of local beef and break a tooth it's so tough, so if you want a decent steak
you pay $30 at a restaurant for import. I suppose that is a bit of a luxury.
The list goes on. Some things are cheaper, others more expensive. It's just
not uniformly cheaper as many people think.

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hatheyn
I really like the pragmatic focus on what they actually enjoy and want from
life rather than chasing conventional 'task-oriented' achievements.

Parents often push kids to be competitive and achieve, when actually there are
plenty of other ways to a fulfilling life!

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falcolas
Meta: The static headers and footer eat up about 50% of the screen real-
estate. Makes reading this a real chore.

On topic - If you can save up some 25x your living income, it's absolutely
possible to retire from a normal job early and live off the interest of your
investments. However, it's not a trivial amount of money to manage (it takes a
savings of around 1 million to provide an "average" American household
income), and your job can quickly become managing that money to ensure you get
your interest on a regular basis.

