The Mysteries of Retirement

Even if you work long and hard enough to afford the standard vision of a “perfect” retirement, you will almost certainly be bored by it. (I know you don’t believe me, but I can show you plenty of evidence: testimonials by dozens of businessmen I’ve known who retired, found themselves bored, and went back to work.) Maybe you will be the exception. Maybe you can walk away from a lifetime of creative, challenging work and be happy to idle away the rest of your life. I retired when I was 39.

My partner and I had just sold our multi-million dollar business, and I decided to “kick back” and dabble in writing and painting for a while. As it turned out, dabbling wasn’t in my bones. Within a few months of walking away from my career, I had a full-time executive assistant and a large personal office to handle the volume of activities I was creating. Soon, it dawned on me — I was just as busy as I had ever been. And I had as many challenges, frustrations, rewards, and disappointments.

The big difference was I wasn’t getting paid for it! You may be able to gear yourself down to a simpler and more tranquil pace. But it will take a great deal more effort than you probably realize. Which brings me to the question of money — the second big reason your retirement will probably be different than you imagine. Because living the fantasy lifestyle is expensive.

Even if you find a relatively cheap place to live, playing golf or tennis all day and dining at fine restaurants costs a lot of money. That kind of living would probably cost you between $150,000 and a quarter-million dollars a year. What would it take to have that kind of money? Let’s look at the math. Assuming your retirement fund can earn 9% a year (which is about equal to the long-term stock-market return), you’d need between $1.7 million and $4.2 million in liquid assets.

That’s not counting the value of assets that you use, such as your house, your furniture, your collectibles, etc. If you go for a safer yield, let’s say U.S. Treasuries, your retirement fund would have to be almost twice that amount. To have between $1.7 and $4.2 million liquid, you would probably need to acquire a net worth of about twice that — all other things being equal. Not too many people are worth between $3.5 million and $8.4 million when they retire.

Yet, many, many fantasize about a retirement lifestyle that requires that kind of net worth. If your current financial situation is meager, don’t despair. Because accumulating wealth is just another goal . . . like learning to ski or play the piano. And by following the advice you read every day in ETR, you can definitely do it. In the meantime, there are ways to bring the target a little closer. The best way — by far — is to find a retirement paradise that is less expensive than the United States.

If you can enjoy living in some other part of the world, you can definitely get that great retirement lifestyle for a lot less money. My own retirement eden is a beautiful hillside property overlooking the Pacific Ocean in Nicaragua. Don’t shake your head at Nicaragua. It’s a great country, beautiful and full of potential. The “instability” that existed 10 and 20 years ago is gone. It is a little-known gem . . . and that is why I like it.

My retirement casa is on top of a hill above a dramatic, pink beach. The community is private — and my ownership entitles my family and guests to use the beach club and many other amenities. It’s a short drive to Granada, a very old and very charming city, where we can dine at nice restaurants, dance in the town square, and visit local art galleries. My cost? For the land, I paid $22,000. And then I spent about $96,000 on a 2,000-square-foot house.

It’s a very impressive structure, complete with four bedrooms, a study, a huge open-air living room, and a built-in pool. Water and food are dirt-cheap in Nicaragua, and I can hire a housekeeper/cook for about $6 a day. A gardener/handyman will cost just a dollar or two more. This property is a 20-minute copter ride from the capital city, which is a two-hour hop from Miami. It is available via a highway (now being rebuilt) and is considered right in the middle of the country’s next real-estate market. I may finance the house over five or 10 years. Done that way, it will cost me about the same as a car lease. Or I may pay cash as I go. It’s that reasonable.

Whether I sell it for a profit in five years or hold on to it and move there some day, I can’t say. But it’s nice to know that it’s there for me . . . now and when I really want to escape. But here’s the important thing: For what it would cost to buy a small, two-bedroom cottage in the middle of my hometown, I have a stunning mansion overlooking the Pacific Ocean in Nicaragua. And while my lifestyle in Florida costs me about a quarter-million dollars a year, I can live as well or better in Nicaragua for about one-fifth of that.

Even if your retirement income is paltry by U.S. standards — say $2,000 a month — you can still live VERY comfortably in some other countries. If this sounds like something that might interest you, I recommend that you check out International Living’s website Meanwhile, tomorrow, I’ll talk about another thing you need to consider in order to enjoy your retirement years to the fullest.

[Ed. Note.  Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]