Can You Afford Extreme Early Retirement?

Could retirement before you're even eligible to join AARP be the quintessential impossible dream? Not if you're consistently disciplined, focused, driven and don't give a hoot about what the Joneses think of that beat-up Chevy in the driveway, say experts.

Whether you work to live or live to work is a question increasingly answered in favor of living by couples who have opted out of the daily grind before the traditional "early" retirement age of 50-something. What's more, they're not going quietly, but instead are springing up on Web sites and in media interviews, telling their stories and encouraging others to follow suit.

Bankrate found two such couples who were eager to share their tales of extreme early retirement: Billy and Akaisha Kaderli, and Sandy Aldridge and partner Dale Lugenbehl. Though their lifestyles are vastly different, they share many traits. Several Bankrate readers also shared their early retirement experiences.

Set free to roam the world
The Kaderlis can count themselves as members of a small group of founders of the extreme early retirement trend among baby boomers. Now in their 17th year of retirement, the couple ditched their 9-to-5 jobs when they were 38 years old.

At 55, they say they would have made the same choice again, only investing sooner and with more confidence. The Kaderlis' initial $500,000 nest egg has grown steadily, partly because they hung in the stock market through the '90s boom and the historic bust that followed, and partly because they've lived on an average of just $24,000 a year. Initially, they put all their savings in a low-cost index fund.

Retiring at 38, they say, was an excellent age because they had accumulated life experiences through their careers: He was a former restaurant chef and owner, and at one time, the youngest branch manager at brokerage Dean Witter, while she continued to run the restaurant.

"We retired with youth, vigor and plenty of enthusiasm to venture out into traveling the globe. Retiring earlier, we would not have acquired enough skill or self knowledge about how we are able to interact with the world," the couple wrote from Thailand.

The Kaderlis sold their home when they retired, and remained homeless while they explored the world, spending time in the Caribbean island of Nevis, as well as in Venezuela, Mexico and Thailand. They recently purchased a small home in an Arizona retirement community, and now split their time between Chiang Mai, Thailand, and Mesa, Ariz., when not traveling to other countries.

Their Web site, www.retireearlylifestyle.com, gives them the opportunity to communicate with other early retirees, as well as educate the younger generation. Their advice to 20-somethings who want to follow the same path is simple: Save everything and stay out of debt.

Out of the mainstream
Extreme early retirement strikes a chord with people now more than in the past, says MSN personal finance columnist and author Liz Pulliam Weston. While going against the fearsome icon of the "company man" used to be part of the '60s counterculture, Weston says she's seeing a resurgence of the attitude among 20-somethings who are rejecting the consumerism that began in the 1980s. "They want more than to be chained to their desks," she says, and they have more desire to redesign their career to have more personal meaning. Sometimes that means working until 65, but shifting often to careers that suit their changing mindset.

Whether today's employees are enchanted with the idea of dropping out early or not, it's still a small group of people who can make it happen, according to Weston. "You have to be out of the mainstream to do this," she says, adding that in her experience, the successful extreme early retirees are "laser-like, and don't seem to care what people think."

Aside from an unwavering focus on their goal and an indifferent attitude toward amassing all the latest stuff, extreme early retirees can't be lumped into the same category. They run the gamut from young parents, singles and dual-income couples without children. Weston has talked to couples with as many as four children who are living in expensive areas of the country, as well as those who have no family ties and a cabin in the woods.

They share an excitement about their lives, a desire to spend time in pursuits that are meaningful to them, and often, an environmental conscience.

The simple life
All three traits apply to Aldridge and Lugenbehl, who retired more than a dozen years ago to an eight-acre parcel in Cottage Grove, Ore., with a starting nest egg of $135,000 each. They each contributed $50,000 to buy the land where they built their home, and the remainder is in CDs. They live on $400 a month, and have a health insurance policy with a deductible of $7,500.

The money has remained conservatively invested in CDs. "We like to sleep at night, so it's more important to us to know what's coming in, rather than to maximize the possible income," says Aldridge. "We've seen too many folks lose money rather than make money from their so-called investments."

Aldridge and Lugenbehl, who retired at ages 48 and 47, don't have a television and rarely eat out. Yet they don't feel like their life is lacking, says Aldridge. "We are fortunate to have found what is enough for us. I feel so totally blessed with how much we have that I can't imagine wanting more. At this point, I'd have to say it's more than enough to meet our needs and our wants."

Tips for extreme early retirement 'wannabes'
Billy and Akaisha Kaderli, the "grandparents" of the extreme early retirement movement for baby boomers, share their mantra for those seeking to follow the same path: Work hard, spend little, save a lot and spend wisely. Their additional tips include:

• Set spending and investment priorities now for the future
• Stay 100 percent out of debt, except for a mortgage
• Invest in stocks through index and mutual funds
• Use the compounding effect of time by investing early
• Seek a partner with the same financial values

Billy and Akaisha Kaderli at Kata Beach, Thailand
Aldridge acknowledges that the cost of living is lower where they are, but says they make an art form out of living well on less. They grow most of their own food, shop for clothes at yard sales, which Aldridge says is a form of entertainment for her, and find joy in small construction and gardening projects on their property.

The two cook their own meals from scratch, and volunteer to give presentations on the environmental impact of food choices, as well as what Aldridge calls "voluntary simplicity."

"Dale and I would both rather have our time," she says, "even if we end up choosing to work hard at gardening or building. At least we're the ones determining what we're going to do with our precious life energy."

Pursuing passions
Finding passion outside of a career that had become a chore is a theme among most extreme early retirees. For the Kaderlis, that meant world travel and a chance to experience diverse cultures.

"We have our youth and spirit of adventure," they wrote. "The opportunity to travel to exotic locations and meet people from foreign lands has given us a global view that no amount of money could buy."

Aldridge and Lugenbehl enjoy their day-to-day life so much that the thought of vacationing elsewhere rarely occurs to them. "We exercise faithfully three days a week, and usually take a long walk on the other four," says Aldridge. "My mother lives up here now and we take care of her. We do all the regular garden and orchard work."

The abundance of time and the freedom to choose how to spend it are the most satisfying aspects of retirement for Aldridge. "It's being able to get up each morning and decide for myself what I'm going to be doing that day. Honestly, I can't think of any downside; at least there hasn't been one for me."

Surprising reactions
Whether it's the green tinge of envy or an aversion to anyone who steps off life's predictable treadmill, extreme early retirees often face unexpected opposition from those around them.

"Back when we left our jobs, we got mostly shock," says Aldridge. "Dale's mother was a classic. She was sure we were going to go hungry and be out in the cold. That was about 13 years ago, and it's never been a problem."

"Some people have expressed envy, but we don't think we did anything they couldn't do if it really was a priority for them," she adds. "Most of our work history was part-time, and not all that highly-paid."

Aldridge says Lugenbehl's mother couldn't imagine how they would fill their time in retirement. "It was as if she thought we wouldn't be able to find things to do. My response was to ask her what she did with her time. Not another word was said because she realized that she'd never had any trouble in that regard."

The Kaderlis say that when they first retired, people treated them like they were on an extended vacation and would soon return to work. "Some thought we were committing social and financial suicide, and others projected that we were selfish or lazy since we opted out of the mandatory working world. This included family members, friends and even strangers. Our choice of early retirement was too far out of the box for them."

Think like an entrepreneur
Both the Kaderlis and Aldridge say they have always been debt free, except for the time when they had mortgages, and they avoid debt now like the plague. They also live below their means, even when their investments throw off more income.

These two actions are key to the ability to retire early, says Herb Hopwood, president of Hopwood Financial Services in Great Falls, Va. "It really comes down to the fact that you can't control what the markets are going to do, but one thing you can control is your expenses, and that's probably the biggest thing."

Hopwood likens extreme early retirement to extreme sports. "Extreme sports are risky and you must be in great physical shape. Early retirement is risky, because what you're planning is going to be for a long period of time without income...and you have to be in great financial shape."

After an initial financial plan is developed, whether informally penciled on the back of an envelope like the Kaderlis' or more formally with a financial planner, it has to be monitored and changed. Setting yourself up to receive the same income no matter how the markets perform can result in financial disaster, says Hopwood. "The objective is not to tap the principal."

Once you begin doing that, he says, it's alarming how fast principal erodes, leaving you with a smaller pot from which to draw income. A portfolio should remain fairly aggressive in equities, up to 70 percent of the total. But Hopwood cautions against a blanket approach when it comes to what's considered aggressive. "You can be aggressive in allocation, and stupid in investments." For instance, he wouldn't recommend that all the equity allocation be in biotech, or growth stocks, but in a balanced blend that will return an average of 8 percent over time.

Hopwood recommends that clients seeking a long retirement train themselves to think like entrepreneurs. The portfolio, rather than a job, is providing income, and like an entrepreneur, a retiree should be constantly watching and adjusting the rate of income.

"Too many people adjust their lifestyle to their income. That's a very dangerous thing to do."

Copyrighted, Bankrate.com. All rights reserved.

Source:

by Judy Martel
Thursday, November 29, 2007 provided by Bankrate.com

Environment: Mother Nature feels the pains of divorce

Mother Nature feels the pains of divorce

By RANDOLPH E. SCHMID, AP Science Writer | Posted Tue Dec 4, 2007 3:48pm PST

WASHINGTON - Divorce can be bad for the environment. In countries around the world divorce rates have been rising, and each time a family dissolves the result is two new households.

"A married household actually uses resources more efficiently than a divorced household," said Jianguo Liu, an ecologist at Michigan State University whose analysis of the environmental impact of divorce appears in this week's online edition of Proceedings of the National Academy of Sciences.

More households means more use of land, water and energy, three critical resources, Liu explained in a telephone interview.

Households with fewer people are simply not as efficient as those with more people sharing, he explained. A household uses the same amount of heat or air conditioning whether there are two or four people living there. A refrigerator used the same power whether there is one person home or several. Two people living apart run two dishwashers, instead of just one.

Liu, who researches the relationship of ecology with social sciences, said people seem surprised by his findings at first, and then consider it simple. "A lot of things become simple after the research is done," he said.

Some extra energy or water use may not sound like a big deal, but it adds up.

The United States, for example, had 16.5 million households headed by a divorced person in 2005 and just over 60 million households headed by a married person.

Per person, divorced households spent more per person per month for electricity compared with a married household, as multiple people can be watching the same television, listening to the same radio, cooking on the same stove and or eating under the same lights.

That means some $6.9 billion in extra utility costs per year, Liu calculated, plus an added $3.6 billion for water, in addition to other costs such as land use.

And it isn't just the United States.

Liu looked at 11 other countries such as Brazil, Costa Rica, Ecuador, Greece, Mexico and South Africa between 1998 and 2002.

In the 11, if divorced households had combined to have the same average household size as married households, there could have been a million fewer households using energy and water in these countries.

"People have been talking about how to protect the environment and combat climate change, but divorce is an overlooked factor that needs to be considered," Liu said.

Liu stressed that he isn't condemning divorce: "Some people really need to get divorces." But, he added, "one way to be more environmentally friendly is to live with other people and that will reduce the impact."

Don't get smug, though, married folks — savings also apply to people living together and Shaker communities or even hippie communes would have been even more efficient.

So, what prompts someone to figure out the environmental impact of divorce?

Liu was studying the ecology of areas with declining population and noticed that even where the total number of people was less, the number of households was increasing. He wondered why.

There turned out to be several reasons: divorce, demographic shifts such as people remaining single longer and the demise of multigenerational households.

"I was surprised because the divorce rate actually has been up and down for many years in some of the countries ... but we found the proportion of divorced households has increased rapidly across the globe," he said.

So he set out to measure the difference, such as in terms of energy and water, land use and construction materials and is now reporting the results for divorce.

The research was funded by the National Science Foundation, the National Institutes of Health and the Michigan Agricultural Experiment Station.

___

On the Net:

PNAS: http://www.pnas.org

Santa Claus is coming to town -- for 34 microseconds

STOCKHOLM (AFP) - Christmas is hectic for all but particularly for Santa, who must live in Kyrgyzstan and make his rounds at lightning speed if he is to deliver gifts to all the world's children on time, a Swedish consultancy has concluded.

Between Christmas Eve and Christmas Day, Santa Claus's route around the planet includes stops at 2.5 billion homes, assuming that children of all religions receive a present from the jolly man in the red suit, Anders Larsson of the engineering consultancy Sweco told AFP.

"We estimated that there are 48 people per square kilometer (120 per square mile) on Earth, and 20 metres (66 feet) between each home. So if Santa leaves from Kyrgyzstan and travels against the Earth's rotation he has 48 hours to deliver all the presents," he said.

Father Christmas has long been believed to reside at the North Pole, although a number of northern towns, including Finnish Rovaniemi, claim to be his true home.

But Sweco's report on Santa's most efficient route -- which takes into account factors like geographic density and the fewest detours -- shows that he wouldn't be able to make his round-the-world trip from there in time.

"He has 34 microseconds at each stop" to slide down the chimney, drop off the presents, nibble on his cookies and milk and hop back on his sleigh, Larsson said.

Santa's reindeer must travel at a speed of 5,800 kilometers (3,604 miles) per second to make the trip on time.

Another report circulating on the Internet suggested however that Santa's sleigh, weighed down with presents and travelling at supersonic speed, would encounter such massive air resistance that the entire contraption would burst into flames and be vaporised within 4.26 thousandths of a second.

Source: Yahoo.com

Map that named America is a puzzle for researchers

WASHINGTON (Reuters) - The only surviving copy of the 500-year-old map that first used the name America goes on permanent display this month at the Library of Congress, but even as it prepares for its debut, the 1507 Waldseemuller map remains a puzzle for researchers.

Why did the mapmaker name the territory America and then change his mind later? How was he able to draw South America so accurately? Why did he put a huge ocean west of America years before European explorers discovered the Pacific?

"That's the kind of conundrum, the question, that is still out there," said John Hebert, chief of the geography and map division of the Library of Congress.

The 12 sheets that make up the map, purchased from German Prince Johannes Waldburg-Wolfegg for $10 million in 2003, were mounted on Monday in a huge 6-foot by 9.5-foot (1.85 meter by 2.95 meter) display case machined from a single block of aluminum.

The case will be floodePublish Postd with inert argon gas to prevent deterioration when it goes on public display December 13.

Researchers are hopeful that putting the rarely shown map on permanent display for the first time since it was discovered in the Waldburg-Wolfegg castle archives in 1901 may stimulate interest in finding out more about the documents used to produce it.

The map was created by the German monk Martin Waldseemuller. Thirteen years after Christopher Columbus first landed in the Western Hemisphere, the Duke of Lorraine brought Waldseemuller and a group of scholars together at a monastery in Saint-Die in France to create a new map of the world.

The result, published two years later, is stunningly accurate and surprisingly modern.

"The actual shape of South America is correct," said Hebert. "The width of South America at certain key points is correct within 70 miles of accuracy."

Given what Europeans are believed to have known about the world at the time, it should not have been possible for the mapmakers to produce it, he said.

The map gives a reasonably correct depiction of the west coast of South America. But according to history, Vasco Nunez de Balboa did not reach the Pacific by land until 1513, and Ferdinand Magellan did not round the southern tip of the continent until 1520.

"So this is a rather compelling map to say, 'How did they come to that conclusion,"' Hebert said.

The mapmakers say they based it on the 1,300-year-old works of the Egyptian geographer Ptolemy as well as letters Florentine navigator Amerigo Vespucci wrote describing his voyages to the new world. But Hebert said there must have been something more.

"From the writings of Vespucci you couldn't have prepared the map," Hebert said. "There had to be something cartographic with it."

MISGIVINGS ABOUT AMERICA

Waldseemuller made it clear he was naming the new land after Vespucci, describing how he came up with the name America based on the navigator's first name.

But he soon had misgivings about what he had done. An atlas Waldseemuller produced six years later shows only part of the east coast of the Americas, and refers to it as Terra Incognita -- unknown land.

"America has gone out of his lexicon," Hebert said. "(No) place in the atlas -- in the text or in the maps -- does the name America appear."

His 1516 mariner's map, on the same scale as the 1507 map, steps back even further, showing only parts of the new continents and reconnecting the north to Asia. South America is labeled Terra Nova -- New World -- and North America is labeled Terra de Cuba -- Land of Cuba.

"Essentially he's reconnecting North America to the Asian mainland, suggesting a continual world of land mass rather than separated by those bodies of water that separate us from Europe and Asia," Hebert said.

Why the rollback? No one knows.

In writings accompanying the 1516 map, Waldseemuller comes across as if he "has seen the better of his error and is now correcting it," Hebert said.

He speculated that power politics played a role. Spain and Portugal divided the globe between them in 1494, two years after Columbus, with territory to the east going to Portugal and land to the west to Spain.

That demarcation line is oddly absent from the 1507 Waldseemuller map, and flags marking territorial claims in South America suggest Portugal controls the region's southernmost land, even though it is in Spain's area of influence. On the later map, the southernmost flag is Spanish, Hebert said.

"It is possible one could say the 1507 map is influenced strongly by Portuguese sources and conceivably the 1516 map may be influenced more by Spanish sources," he said.

Although the map conceals many mysteries, one thing is clear: it represents a revolutionary shift in the way Europe viewed the world.

"This is ... essentially the beginning or first map of the modern age, and it's one that everything builds on from that point forward," Hebert said. "It becomes a keystone map."

Source: Yahoo.com (Editing by Eddie Evans)