Hi, 2014 is my year!

[ER2CR]

I have been lurking on this forum for a while. I really appreciate all the expert advice provided by the members of this forum. I have been planning my ER for a couple years now and it just got very 'real' as my company just advertised for my replacement. I will be retiring in August when DW and I will transition to Texas for 2 months (to establish residency), then ship out to Costa Rica to begin the nomadic period of our lives.

I am 55 and DW is 54. We have no children, no real estate, and we are in the process of selling off most of our possessions. We also have no debt and no financial obligations.

Our finances are as follows:

We have a net worth of $2.5m of which $2.4m is in either equities, fixed income or cash. At this moment, my AA is 40% equities, 30% bonds and 30% cash. Pretty conservative.
$500k (of the $2.4m) is in tax advantaged accounts (IRA or Roth) the rest is after tax.
The remaining $100k is in non liquid equity investments or physical assets.
I also have a non-COLA pension of $6k/yr that will start at age 65.

We have prepared a detailed budget for Costa Rica of $6k per month that includes every possible expense, plus a 20% buffer.

I have run Firecalc and it tells me I am 100% for $88k/yr (a $16k buffer) with 100% success with the numbers above. This does not include projected SS at $2,500 for myself and $1,200 for DW. This also doesn't include a potential sizable inheritance for DW of 7 figures and 3 oil wells. We would never want to count on that as we want her parents to spend it all.

I know my retirement plans are different than most I have reviewed on this forum, but I am very interested in hearing any questions our doubts from the esteemed members of this forum.

[38Chevy454]

From what you describe, it seems you have the required assets and are on your way to enjoying retirement in Costa Rica. You have a good amount of assets and a fairly conservative withdrawl rate, on top of your withdrawls exceeding the anticipated budget.

Add in SS and you are even better shape. Any inheritance is just nice bonus that reinforces the safety of the withdrawls. With all of your additional income, I would go higher equities and less cash. You can stand a downturn, but you have potential to recover fine. I think 60% equities is not out of line at all.

My only question is why wait until August? I would be out now.

[WoodHoot]

ER2CR, livin the dream...

Ditto on August, why not now? Also, if you've got to wait, might I recommend waiting til November? September and October are the wet months.

Also, where in CR?

[ER2CR]

Woody_Emissary,

The reason for the wait is due to a couple of reasons. One being to make sure I leave my employees in a good position with a my replacement. Secondly, I have some loose ends to tie up here in Pittsburgh before making the move. The planning and logistics necessary to relocate to another country are significant and I am leveraging the last few months of employment as a platform to get that done. The situation at w*rk is not too stressful...yet. So it hasn't been too much of problem. This biggest headache is the crappy sub-zero weather we have experienced this January...especially considering that this time next year I will be dealing with 65 degree lows each day

We actually will be traveling to CR on November 1st. We are first transitioning to Texas for 2 months (September and October) to establish residency. This will eliminate state taxes from my budget which are at 3.5% here in PA.

We have found a nice ocean view home to rent in Ojochal, Costa Rica which is on the Southern Pacific coast. We have traveled there many times and we fell in love with this area.

[Rothman]

Congrats your numbers look great. I'm curious on how you decided on CR? I've traveled the world in my job but have never thought of retiring elsewhere, is your decision driven by climate or cost of living?

This winter made many of us wonder about why we live where we do, I just restrict my dreams to Arizona and Florida.

[ER2CR]

Rothman,

I have also traveled extensively for my job and also for pleasure (4 continents). My DW and I have always preferred warmer climates, the ocean, beaches, as well as nature. When we took a trip to Costa Rica a few years back, we immediately fell in love with it. Of course living day to day is far different from vacation, and we understand that. However, we have become very adept at moving and create new friends in the various places we have lived. Many trips back to CR have reinforced out desire to start our next life there.

To answer your question, both climate and cost of living factored into my position. But most of all, the need for a dramatic change in life style is driving the desire to retire overseas. In many ways, the success I have achieved has been accompanied by the obligatory trappings which I hold very little interest in. So a dramatic change in venue at the same time as a dramatic shift in my life is an approach my DW and myself feel is necessary and will be extremely beneficial.

While we love CR and hope to stay there, we have positioned ourselves to be flexible and mobile. We intend to spend time in CR as well as Panama and Nicaragua. In addition, we are considering a few months in Italy. The cool thing is that each of these locations can be achieved on the same monthly budget. At some point we may decide to settle in one place and only then will we consider purchasing a home.

[MooreBonds]

Congrats on putting together a great plan! Costa Rica is definitely on my list of places to experience (and I hear you on the Pittsburgh weather - I spent my college glory days at CMU in the late 90s, and was reminded too much of home back in St. Louis ).

Although you have traveled to Costa Rica several times, make sure you are aware of all potential issues regarding accessing your money down there. Recent rules issued by the IRS/US Treasury department make any and all US Citizens an immense liability for any foreign bank (paperwork as well as financial penalty), regarding new onerous reporting requirements imposed for any US citizen that has any accounts located outside of the US.

I see where your initial residency involves Texas, but review your plan on everyday bill paying, cash ATM withdrawals, and other money transfers, as this could be a very big challenge once you get down there. There have been one or two threads on this topic recently in the forum, including a few members who have had to file the various forms (if you think doing your taxes is fun, wait until you get to these forms!).

[Rothman]

Thanks for reply ER2CR, clearly you have thought this thru. I wish you the best in CR, another 4" of snow in Michigan today confirms the advantages of a southern strategy.