You can retire in your 20s or in your 60s. It doesn’t really matter how old you are, you can absolutely retire in the next few months.
You’re probably thinking one of two things: either you are seduced by the “get rich quick” overtones and want a piece of the action, or you want to find out what kind of gimmick I’m selling, and then expose me for the scam artist that I truly am.
Well I’m sorry to disappoint you people looking for a scam, because this is real. It doesn’t matter if you are 20 or 65, you can retire if you can just follow two steps.
How To Retire At Any Age
- Move to a country where you can live on that passive income
As some of you may know, I’m going to Costa Rica for over three weeks this summer. You may not know that the Purchasing Power Parity (PPP) of Costa Rica is about $10,732, which is less than 1/4th of PPP of the United States at $47,123. This means that you can buy about the same amount of stuff for $10k in Costa Rica as you can with $47k in the US. Think of PPP like median family income.
That means if I could generate $1,000 a month in passive income, I could live in Costa Rica without working and have enough money to live a reasonably comfortable life.
If Costa Rica doesn’t do it for you, Brazil, South Africa, and Venezuela are a few other countries where your money could go roughly four times as far as it goes in America. Wikipedia gives you a convenient list of countries by PPP. Find a place you want to live (or at least spend some time), and then get to work on the two step process.
Step 1: Generate Passive Income
While it’s not easy to generate $1,000 a month in passive income, it’s not exceptionally difficult either. Lots of my readers have their own websites and make money on advertising. If what you’re making with your website is enough to pay for where you want to live, then you just have to maintain that website and you’re ready to retire. Maybe you have enough money to buy high dividend yielding stocks to give you the money you need. There are thousands of ways to create passive income; all you have to do is find one.
With that being said, people have written books, devoted blogs, and sold lots of crappy infomercial products about generating passive income. I’m not an expert on generating passive income, so if you want more information on how to execute this step, you can do a Google search and find more information on the topic from the experts.
Step 2: Move to Another Country
This, in my opinion, is probably just as difficult if not harder than step one. Moving to another country is not as easy as vacationing there. For example, in order to establish residency in Costa Rica as someone without social security or a pension, you have to deposit $150,000 into a Costa Rican bank. Once again, I’m not an expert on fulfilling requirements for moving to a different country, but if you know where you want to go then figure out what it will take.
If you are looking for something less permanent, you could try to travel to a variety of different countries without staying in one place for too long. Again it depends on the laws of the individual countries you want to visit, but you could probably stay 2-3 months in one country, and then move onto a new one. You could rotate between four or five countries and never truly establish residency anywhere; just be a guest in different countries indefinitely.
Next Step: Retire
I’m sure there are a lot of people saying, “Sure, you can retire to some far away country, and then have no friends or family and be miserable.” If that’s how you feel about moving, then this obviously isn’t for you. However, I live 600 miles from my mom and see her about four times a year. I live a few thousand miles away from my dad and see him about once every year or so. I could maintain this frequency of visits with my immediate family on just a few thousand dollars in travel costs. If you have a similar situation, then this could work for you too.
With these two basic steps, you are ready to retire. If you want to live a more extravagant retirement lifestyle, then you’ll need more passive income than just the median household income for the country or countries you want to visit, but the same concept still applies.
It’s really that easy. There’s only one question left.
Are you ready to retire?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
Good article. And after seeing your statistics, I can understand why so many retirees are also flocking south of the border!
It takes their retirement next egg and just multiplies it by about four. How about that for a return on your investment!?
Haha, anyone can retire at any age….JUST NOT IN AMERICA.
Yeah, but think about how awesome it is that we live in America and have that option. If you grow up in Costa Rica, you’re gonna have a hard time finding a country to retire to that is four times as cheap as where you were raised. And if you want to retire to America, well then you need four times more money than you would need in your home country.
Some countries, including Costa Rica, also have decent health care and other services, which makes them look even better to retire in.
Another great point! Although I think it only applies to citizens or permanent residents. If you don’t meet the requirements to live there full time, I think you would be smart to find a company to buy a health insurance policy with, although I’m just guessing here.
This made my day 🙂 I know some folks moving to Costa Rica for retirement in a few months and it makes perfect sense to me. I’m looking at more of an early 40’s retirement in this situation so that my son will be out of school but it gives me 10 years to plan and dream!
Sounds like you have a good plan. However, you don’t have to wait for your kid to grow up if you don’t want to. You could take him to Costa Rica today. Then he’d grow up bilingual! I bet there are some good schools in Costa Rica if you look hard enough.
Cool post Kev.
I work with a guy who was thinking about retiring in Costa Rica, but it looks like he’ll pick somewhere closer to home (and more expensive). His $2000 a month pension would have let him, as he put it, “buy respect from the locals.”
Maybe to avoid the residency requirements, you could just marry some nice Costa Rican girl…
Thanks. I’ll be on the lookout for some hot babes while I’m down there. If I find more than one I’ll send her to your website. 😉
I am not looking to retire but take my own sabbatical and, among other things, move forward the income generated by various online ventures I have in place or want to start. I have settled on SE Asia (largely because I want to travel during the sabbatical – to India, China, Australia, New Zealand, Thailand…
I am debating between Singapore and Malaysia. I started a new blog to track some of my thoughts and what I have learned http://malaysia.curiouscatnetwork.com/ Malaysia makes it much easier to do (visas).
As it turns out I plan to do some consulting and within the first 3 people I contacted for SE Asia I was able to arrange some work in Singapore. I wasn’t considering Singapore, at all, but visiting there was very appealing. Unfortunately it is not a cheap place. If I do more consulting work than I was planning on though, this may work and it is a great city/country.
I am now preparing to move and I will tell you this has turned out to be a huge job. There are tons of details to nail down and things to get done. I can’t wait to be over with all that and be in place over there.
Thanks for sharing John. You seem to be confirming my suspicion that it’s harder to actually find where you want to go and make sure you plan it all out properly than it is to actually pay for it. Good luck on getting everything worked out!
I love this idea. I would love to retire abroad, it is just a matter of picking the right country. And having a passive income, of course.
Thanks for commenting Niki. I just checked out your site, and I’m sure you could do it. As soon as your hubby retires from the service, that retirement check should be enough to get you into a great retirement at an early age!
Smartmoney had a great article this month about “golden years gone global”. They highlighted a number of countries, PPP, medical costs, and residency requirements.
Thanks for the tip. Now go spend some money on something.
Thank you for the thought provoking article. People thinking about moving to another country shouldn’t forget to factor in cost of living inceases which might be higher in these underdeveloped nations. This means in additon to income you should have a growth portfolio and reserves. Also, factor in the chances conditions change in the country you move and/or you want to move back.
Thanks Ken. There is definitely some risk here. Your passive income might go away. Cost of living could increase where you decide to go. Lots of things could happen. The key is to be flexible and be willing to step out of “retirement” for a bit to get yourself back on track
Thanks Kevin
Purchasing power parity is one of the important factors that anyone should consider for both places to live as well as when considering investments. I personally pay a LOT of attention to this for both investments as well as choosing places to live.
I currently live in NZ and Thailand for about 6 months either way, however Argentina is high on my list and I’ve invested in real estate over there. It is very very cheap, with a fantastic standard of living.
One thing that I would include here is living and earning money tax free (legally) which is a huge consideration. For example I don’t pay any tax….and its all totally legal. I live in countries with my family of 2 kids and wife but never allow myself to become resident for tax purposes. Think about it. If you could earn 40% more than you currently earn AND you could live in a country that costs less than half your “home” country how fast do you think you could compound your wealth?
The more I hear about Argentina, the more I want to go there. After I’m done with Costa Rica, I’ll have to look into going to Argentina
You plan on coming back? You should say hi to Srini from Blogcastfm.com! He’s there right now!
Didn’t realize CR was so cheap. That’s a no brainer then!
Sam
The key for Costa Rica is knowing Spanish! Hopefully by the end of July I’ve have that down pretty well.
I’m not convinced that websites are truly passive. The problem with websites is that for newcomers they’re turning into a low margin operation with lots of competition. It’s hard to make a website and just leave it alone for the next 10 years and still expect to get paid.
I agree with you there. It would be very difficult to set up a website that provides consistent income without ever updating it. If you have passive income to do it now, then I say go for it, but be prepared to get a job or start another passive income stream if one dries out. That’s why ideally you should have multiple passive income streams to diversify your income and reduce risk.