Short Fuse to FIRE!

[CurtSeattle]

Hi!

I just walked from a high paying job after 18 years b/c of poor treatment.

Imagine my surprise when I discovered FIRE at the start of my new job search!

Put some time in with the FIRECalc calculator and it seems I can surprise my fiancé with good news that we can retire now (I'm 48 and she is 41) if she will move to lower cost country (Panama/Ecuador/Columbia/etc).

On a side note, we have no kids and she is the type to want to go for this kind of thing. Also I've done my homework and am confident we can live in a foreign country (most likely Panama and so glad I took Spanish for so many years now...Thanks Sra Erickson!), so please take the "you want to move away" questions out please as I just want to make sure I'm not goofing up something on the math of it more than the move to foreign beaches.

It's important to consider the cost of living being so much lower for a number of reasons. We will buy a place so just carrying costs only vs mortgage/rent and there is no property tax in Panama for what I'm buying which will help keep costs even lower. We are looking at places where cost of living is going to be $1,500/month being frugal to $2,000/month if we want to splurge and eat out a lot and whatnot.

Inflation should be much less vs United States experience which does affect things a bit too...kind of like high fees on your mutual funds!

Attached is a quick spreadsheet and hopefully to explain it a bit easier...
1. Top show ages when waves of money hit (First 401k for me in 12 years, then 401k for spouse in 18 yrs, then SS for me at 22 years at age 70 and 28 years for spouse at 70. SS calculated by entering "0" for income forever from now on the SS gov website.
- 401k amounts are as of today and I listed monthly income underneath but it is using no growth over coming years so should be too low.

2. I should have (after home and property sales) $1,021,400 and that includes that $212k in 401k currently (rest would be cash).

3. Plan is to give $625k cash (or more or less maybe if I can/have to) over to long term investments in stock/bond/etc and keep $212k current 401k growing on the side at same time.

I listed out move costs and car costs of $25k which leaves @$159,400 for house and safety net money.

House is @$125k where we are looking so leaves $34k as emergency fund as needed above our @4% yearly planned/ballparked withdrawal rate.


I think everything comes out pretty good from what I can see as I just need to make it to SS and that covers the bills in these foreign countries. I should have a lot of money left on average if I'm a bit of a gambler too, so hopefully SS is just gravy ideally.


Any feedback from any gurus? I don't think I've ever wanted anything more and I don't want to "sell" myself on success if I'm being illogical.

Questions:
1. $1,500/month doable? $2,000/month? I've set the math to generate $1,760/month after 12% tax rate on the sheet as a baseline. Maybe I can take more out after a few years of lower withdrawals is also the goal.

2. Recession post-FIRE any time soon would crush plans I guess?

3. Just realized as I typed this that I should just lump the 401k into the rest of the retirement money on the FIRECalc site so it's not $625k + 401k but is just $837k lump some for investment money to get me to SS in 22 years? Does that give me more room or less room on monthly basis? lol...so confusing, but exciting!

HELP ME ESCAPE!

 

[HI Bill]

Welcome!

For a more precise SS determination, I'd suggest using their spreadsheet calculator (PIA).
"Inflation should be much less vs United States" - Developing countries often have unstable currency values. Would keeping your investments in the US help you ride out unstable local currencies?
Have you looked into the taxation situation?
Have you looked into the availability and cost for local health care?

Good luck!

 

[Teacher Terry]

The big question is what if you decide you want to come back to the states. Can you afford to live here without working or will you need to return to work? If so that brings up more questions about the likelihood in your field, etc? This happened to someone I know that moved to Thailand. Also countries that were once nice become unstable like Venezuela is now.

 

[CurtSeattle]

All good points!

I will have to check out the spreadsheet calculator as I have not yet.

Panama is most likely location and they are very stable and very friendly with U.S. (but I understand things can change).

Taxation is nonexistent for the most part in Panama on foreign earned (U.S. in this case) income, so that's good too.

Panama uses the U.S. dollar 1 to 1 with their Balboa so no risk there as pricing for items there will just drop vs previous levels as U.S. inflation rises (at least that is how it has worked in the past there).

Healthcare is as good or better than the U.S. at a fraction of the cost. $500/month covers a couple there and abroad anywhere. You can get away with less even ($200/month in Panama only for a couple), but if you want to travel....

Another option is to travel endlessly and stay monthly or half yearly in different countries where there is arbitrage advantage in terms of their money vs the dollar. Brazil, Columbia and Mexico all give massive value against dollar currently if one just lives there while the dollar is strong.

If the FIRECalc keeps coming up 100% and I'm confident in my costs, then I guess we are good to go? Seems so crazy...

 

[lhamo]

I would not buy a place right away -- this is a huge change and unless you have lived there already for an extended period of time, you really don't know if Panama will be the best fit for you. Better to rent for at least 6mo-1yr and take your time looking around, getting to know different neighborhoods/developments, etc.


When we first moved to Beijing, the laws did not allow us to buy. But I happened to visit an apartment complex that i LOVED at first sight. we couldn't afford to rent there at the time. 2 years later, during the financial crisis, they relaxed the rules, and that was where we focused our search. It turned out to be a great choice -- we loved living there and the value of our place went up 3x in 8 years (we managed to buy at the bottom of the market dip -- our mortgage was about 1/3 what renting the same size apartment would have cost), propelling us well into FIRE territory.

 

[gauss]

You are planning to still pay US tax on your US income- right?

 

[CurtSeattle]

You are planning to still pay US tax on your US income- right?

Yes. Only foreign earned income will be investment withdrawals so should be minimal taxation compared to the last 30 years or so for me.

 

[Souschef]

I sometimes watch the HGTV program called "House Hunters International" One thing I hear most is,"we want a second bedroom for guests" BULL!
You are paying 12 months for a room that will be empty 80 to 90% of the time. Let them stay in a hotel.. That way you will both have privacy.

 

[Scuba]

I sometimes watch the HGTV program called "House Hunters International" One thing I hear most is,"we want a second bedroom for guests" BULL!
You are paying 12 months for a room that will be empty 80 to 90% of the time. Let them stay in a hotel.. That way you will both have privacy.

Yes I agree. Or get a nice pullout couch and the guests can sleep there if/when they come.