Retire Before Age 40: How This Couple Made the Retirement Dream Come True

KaderlisIt’s the opposite of working till you drop. Retire before 40. There’s no shortage of blogs stating just such an intention. The writers share their own personal mantra of how to pay off debt, save more money and begin life after work while you’re still young enough to enjoy it. Some are working toward the goal, others claim to have achieved it. Most are only a few years into their effort either way, so whether they achieve long-term success or just a huge resume gap, remains to be seen.

But Akaisha and Billy Kaderli retired at age 38 – and that was 25 years ago. To say they have achieved proof-of-concept is an understatement.

“We’ve got enough that if we can control our spending a bit, we can live anywhere we want.”

Coming to a crazy conclusion

Billy, a French chef, and his wife Akaisha bought a Santa Cruz, California restaurant in 1979. Later he became a financial advisor while she continued running the popular eatery. After six years of her serving hot dishes to customers and him cold-calling prospective clients, things were getting a little tense at home.

“It got to a point where ‘Kaish and I weren’t seeing each other anymore,” Billy tells Money Cynic. “She was running the restaurant and working nights — and in California the stock market opens at 6:30 in the morning and I was done at one o’clock. I’m at the beach, and she’s just going in to do the dinner shift.”

Being a “numbers guy,” he took stock of their assets and came to a seemingly crazy conclusion.

“All of a sudden it just clicked. I said, ‘We’ve got enough that if we can control our spending a bit, we can live anywhere we want.'”

Running the retirement numbers

She was not so sure.

“I was 36 at the time, and that wasn’t in my plan at all,” Akaisha admits. “I figured that I’d work until I was 55, and that would be ‘retire early.’ And he comes with this harebrained idea that we’re just going to chuck it all.”

It took a little convincing, to say the least.

“We were tethered to our jobs, to our bills,” she says. “And the idea that we could chuck it and live comfortably really was appealing. Once I calmed down.”

They analyzed their spending — so much of it was work related. Two cars, a house near the beach, insurance, meals out; the usual American overhead. The Kaderlis took two years to “test the waters” before making the leap in January 1991. Their nest egg? $500,000.

$500,000 to last a lifetime? Seriously? Can that work? It does when you spend just $22,000 a year in living expenses. As of the end of 2014, after 24 years – 8,760 days, Billy notes — the Kaderlis have spent an average of $22,040 annually or $60.38 per day. Basically the Kaderlis are living on the 4% withdrawal rule.

“2008 did rock our boat”

“The S&P 500 on the day we retired was 312.49,” Billy tells Money Cynic. “And if you do the math on that, up to last year, that’s about an 8.18% return, plus dividends. So with a couple percent for dividends, you’re right at the 10% level.”

Don’t you love the way he says “about” and then quotes a hundredth decimal point return? When it comes to numbers, this guy is not guessing. But after a sustained bull market, isn’t he a bit leery of a long-overdue correction?

“2008 did rock our boat,” Billy admits. “At this point, we’re a little more conservative in our investments because we’re now 62. We’ve gone through three or four of these down draws in the market. So, am I nervous? I’m always nervous.”

But Billy says it’s not just what you make, it’s what you spend.

“The key to this whole thing is: How much are you spending today on your lifestyle? If you’re spending level is $100 a day then you just have to have the assets — the net worth invested — to support that. That’s all.”

Retirement living in ‘cost beneficial countries’

Kaderlis-2However, it’s a safe bet that many Americans, at least those contemplating retirement, are living on much more than $100 a day.  And will require a large enough nest egg to support their current rate of spending. The Kaderlis admit that part of their strategy is living in “cost beneficial countries” such as Mexico, El Salvador, Vietnam, and Thailand. When we spoke via Skype, they were living in Lake Atitlan, Guatemala, one of their favorite stops.

“Housing is one of the largest expenditures in any budget. So if you work on getting  your housing down to an affordable amount per month, you can live just about anywhere,” Akaisha says. “It’s housing, transportation, taxes and food — but housing is your biggest [budget item].”

They don’t live by a budget, but to this day track their spending diligently. The Kaderlis spend 21% on housing, 24% on medical expenses (a spend rate that has been impacted by some recent health issues), 20% on transportation, 22% on food and entertainment, 8% on miscellaneous, and 5% on computer expenses. These are net expense amounts, after taxes.

Their housing costs have been reduced almost in half by house sitting. The couple says these stints can include spectacular beach views in well-appointed homes with maid service. Otherwise, they find monthly rates for apartments or hotels.

Low-budget living in the U.S. 

Can such low budget living work in the States? The Kaderlis say you have to get creative, look for low cost-of-living areas and consider renting out a room, a floor — or owning a duplex and leasing out half of that to a tenant.

Health insurance is also a major consideration. In the beginning, they bought a high deductible, catastrophic coverage plan. Now, when they visit the U.S., they take out a traveler’s policy. Day-to-day, living outside of the States, the Kaderlis are exempt from the Obamacare health insurance mandate.

“We’re self-insured,” Akaisha says. “We pay out-of-pocket for all of our medical expenses.” The couple also relies on their own version of medical tourism, visiting favorable foreign locales for healthcare.

And they don’t own a car. They used to own a vehicle, but now use local mass transit, walk, bike, share rides with friends, or hire a driver. It’s a debt-free lifestyle built on frugality – and freedom.

“The financial industry is not doing their job,” Billy says. “Debt is the killer. You’re a wage slave when you have debt. And if you can eliminate that, it frees up a whole lot of options.”

Check out the Kaderli’s website:

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