Oi galera - Wishing to retire to S. America (& soon)

[Raul]

A word of thanks to my good friend Ed who pointed me to this website. And now the gory details, via the Maldini template (or something close enough, anyway):

Present Location: Pacific NorthWest

Family: SWM, late 30's, reasonably decent health. All 4 grandparents lived into 80's, two of them into 90's. I eat very well. Father's family has a history of heart issues, unfortunately.

Work Info: just above 6 figures currently; ~85-90% active income, 10-15% passive income. Max 401.k + company stock (minor amount). Living expenses are about 15-20%. Taxes are 20-25%. Travel is 10%. Remainder goes into savings/investments. Rapidly approaching my peak earning years. Job is stable if somewhat stressful, and will likely be here for me if RE doesn't work out.

Financials: Retirement savings of ~100K, split 80/20 between stocks & bonds. Cash savings of ~140K; 45% utility/REIT stocks, 20% laddered TBills, 10% CD, and 25% liquid (and needing a good home). Throw in a paid-off Explorer, and I'll put NW right at a qMill, which was my mental note point to start asking for opinions. Not carrying a mortgage presently.

The retirement figure is admittedly much lower than I'd like, but I have taken 4 year's worth of sabbatical versus 13 years of work. My 3 weeks of paid vacation just doesn't cut it anymore, sadly, as I see all my foreign friends with 8-12 weeks off annually (or more if they take "pretirement" breaks) and in much better spirits, generally, than myself.

Retirement goal: as soon as feasible. Ideally 40, but more likely later, depending on feedback.

Expected expenses in ER: I am considering purchasing a small plot of land, near the beach in Brasil, and homesteading it abroad (or convert it to a hostel/community center, haven't figured this all out yet). Once that's in place, living expenses would be ~10-12KUSD/year. Factoring in the conversion to Reais, that's about 18-20K equivalent here. Unit prices for goods and services are much lower there, obviously. My family is originally from S. America, hence the plan.

My hobbies are water sports, philately, soccer, cooking, and travelling. I'm probably trimming that last one down significantly if I opt for ER.

So that's the nutshell. I'd be willing to discuss other options and/or disclose more info offline if people see fit. Thanks in advance for all your questions and comments.

 

[bssc]

Hi and welcome.

Sounds like you got a lot of answers. Have you run your numbers through Fire calc. The $250K sounds like it could generate 10K per year but have you factored in things like travel back the US and healthcare?

 

[Raul]

Bailing early

I've got about 300K miles saved in a FF plan so I'm ok short term travel-wise. The healthcare issue is a bit murkier, the biggest variable and on my to-do list for the year. No sense in making this long, drawn-out plan for the next 50 years if the doc says 30-35 is more likely.

 

[Andy R]

Well if you convert the land to a hostile or community center, that might provide you some additional income. Of course then you wouldn't technically be retired but changed careers so you can live life "your way". You might find that your skills from a more modern society could provide you with some competitive advantages in Brasil and you end up with a successful business. You might also want to consider buying an existing pousada that has historical information (occupancy/rates) and then using that income for living expenses.

I know a guy who owns a hostile/puosada on Ilha Grande and he works about 4 hours per week making sure the staff is doing things right and hosting a couple of Churassco parties. I know he is making good money because his place is nearly always booked. The lifestyle is certainly laid back there and he spends about 50% of his time in Rio because he's wired to enjoy more people/activity around.

Don't forget to factor in much higher cost of living inflation rate. Prices shoot up noticeably over just a couple of years. Brasil is currently in a period of record breaking low inflation but you can't count on that for your projections.

There is a big fluctuation in cost of buying land in Brasil for posh vacation spots and remote places. I know a guy who bought a great little place in Bahia with nice neighbors on the beach for $5,000 and then spent $5,000 fixing it up. I know another guy who paid $125k for a house in a fancy subdivision in Jurere (island of Santa Catarina, Florianopolis) in 2002 which is now worth $400k (depreciation of the dollar help increase his returns). So the location is going to be important. One place that is pretty nice (with good surf) is Garopaba. It's just south of Florianopolis and is a surf heaven with growing tourism numbers. I think you can still finds some bargains there. Also, remember you will have to pay 1% fee on the money you bring into Brasil for land purchases, etc.

 

[Raul]

Conselho bom, muito obrigado

Kaapstad, very nice, hoping to get there some day before the WC goes Afrikaans on us!

In my second sabbatical, I used a portion of my non-ret. funds for initially a 6 mo. trip to S. Am to scout out the sights. That morphed into an educational trip of ~2 years after I got into a private university there in Rio, with the sole intention of learning Portuguese to complement the Spanish I took in school here. I can also read and understand French/Italian, though cannot speak it well. Engineering background + language skills + financial planning courses I took at an earlier position = good RE candidate in my book. So I'm not too daunted by the thought of working/living abroad. Plus, it's where I met my Carioca gal.

My GF's family is from southern Bahia and northeastern Fluminense. Plenty of options for beaches there, and all relatively reasonably priced. Floripa is filling out quickly as it is becoming the fashionable European boomer place to retire....judging from the surf I saw at Praia Joaquina, it's understandable. The northern portion of the island where your friend bought property is rapidly becoming the new Punta. I can avoid the 1% hit by having her make the purchase (after a legal marriage of course). I used 6% inflation for a first pass at Firecalc and got a 91% probability score....good, not great. I chose an income level low enough to avoid US taxes, but high enough to be reasonable for a pragmatic (ie frugal) couple to live on. I'm still not 100% whether/not to go into a side business that I have had little exposure to, but it's a thought. Buying an existing place and letting someone else manage it may make more sense if it's within the family. Your friend on Ilha Grande doesn't happen to run the Beira Mar does he? I had several intriguing conversations with other aspiring early retirees there. The island slows down considerably in the southern winter, but is probably booked solid now through end of April.

The biggest risks I can see right now are currency exchange, and factoring in health care costs as I age. Parents are relatively well off so not terribly concerned with that aspect of the picture. I assumed no SS allowance or inheritance on first pass numbers.

 

[Andy R]

It was not the Beira Mar that he owns, it's call the Aquario and is all the way down at the end of the beach. I think he hedges the off season by developing a reputation with backpackers. He keeps the room prices low and makes up for it with a fantastic bar. I have met some great people there. Here is a photo of Aquario:

I never actually stayed at Aquario because my first visit I found Porto Girasol which is about 50 meters away. It's a bit nicer and quieter with hammocks on the balconies. I dream of buying that place one day and letting the same lady run it. I think I could promote it better on the internet and keep it booked at higher rates then it currently is.

It sounds like you have put plenty of thought into things and understand the risk/variables you need to account for. Don't sell yourself short on some type of entrepreneurial opportunities there. Even building a house, living in it, selling it and building the next one. Just having some capital gives you a big advantage there and opportunities abound.

 

[Raul]

I had originally conceived the sabbatical years as primarily educational, with secondary motives of job hunting/case the countryside looking for opportunities. Brazilians that I met couldn't fathom how I could live on my own without work, in Ipanema, travelling the country with regularity, and still keep the discipline to go to school and try my best at the language. I did manage to go to Euro 2004 in Portugal and by that time my listening was sufficient to where I had no issues with Os Lusitanos.

I replied that, for all the shortcomings and perceived BS that goes down here in the US, it is still the land of opportunity IF you have the education, motivation, and moxie to think outside the box at an early age.

Have met several gringos in my time(s) there who got stung badly by their Brasilian cohorts, which is why I want somewhere small and tranquil and not hectic like RJ or SP.

 

[Ed_The_Gypsy]

Raul Blanco! Welcome to the board, amigo!

'Water sports and philately' come before soccer? Since when? No, wait...I recall an account of 'water sports' of a sort. Jeje!

When I am back in Hamstertown we must do a little more aguave research.

Cheers,

The other gitano.