As they approach their retirement years, many people envision a future filled with new experiences, including the freedom to travel. This is especially true for Hillary, 51, and her husband, Mark, 55, who recently sat down with James to map out their strategy. With the goal of retiring in 10 years, they hope to sell their home and spend their retirement years traveling—ideally, settling into a long-term stay abroad, particularly in affordable locales.
However, not all advisors have shared the same level of optimism about their goals. Before connecting with James, Hillary consulted a different advisor who had suggested that Mark work until age 70 to afford this lifestyle. This conservative outlook concerned Hillary and prompted her to seek James’s guidance for a second opinion. James’s approach emphasizes that, with strategic planning and tailored adjustments, their goal of a travel-centric retirement could still be achievable on their 10-year timeline, possibly even sooner.
This experience serves as a reminder that getting multiple perspectives can reveal opportunities and help customize financial advice to better fit your vision of retirement. With that in mind, James and the couple dove deeper into the key elements of their retirement plan.
Step 1: Refining Goals and Understanding Costs
After a recent trip to Europe, Hillary’s desire for travel grew stronger. She now imagines spending extended periods in budget-friendly destinations across Asia and Europe, with regular trips back to the U.S. to visit family. This slower approach to travel not only offers a culturally immersive experience but can also be more cost-effective than frequent, shorter trips.
To start, James encourages Hillary and Mark to refine their retirement budget with specific costs in mind. They estimate a monthly spending range of $3,000–$4,000, which includes health insurance, accommodations, and daily expenses. James notes that budgeting carefully for these expenses will provide a clearer picture of how much they’ll need to maintain their desired lifestyle.
Step 2: Reviewing Assets and Expected Income
With approximately $600,000 saved in retirement accounts and 50% equity in their home, Hillary and Mark are considering selling their property to fund retirement. However, they’re also open to allowing their children to live in the house, which could alter their approach.
Beyond their existing savings, Hillary and Mark can also expect some pension and Social Security income. Mark will receive $1,000 a month from a pension, and Hillary is eligible for $7,600 annually from another pension, which will start at age 65. While these benefits will eventually supplement their retirement income, James advises planning with an eye on cash flow, as these income sources won’t begin immediately.
Hillary and Mark’s withdrawals will likely be higher in the early years of retirement but will gradually decrease as their pensions and Social Security kick in. James projects a 2.5% withdrawal rate in the early years, which will later drop below 1% as additional income comes in. This kind of staggered income structure, combined with well-planned investments, will help make their retirement savings last longer and ensure they have a solid safety net for future expenses.
Step 3: Preparing for Higher Expenses and Health Costs
In retirement planning, healthcare is a crucial expense to consider. For those planning to travel frequently or live abroad, international health coverage is a must. Hillary and Mark will need to plan for comprehensive health insurance that covers them both in the U.S. and while they’re overseas, as well as for any potential emergency needs.
James recommends including a flexible healthcare budget that allows for fluctuating costs. This approach ensures they won’t face unexpected gaps in coverage or large expenses they hadn’t anticipated, giving them peace of mind as they travel.
Step 4: Selling the Home and Living Nomadically
Hillary and Mark’s plan to sell their home could provide additional liquidity, giving them more financial freedom to travel. Without a home base, their monthly expenses might actually decrease, allowing them to reinvest the proceeds and extend their retirement income. However, this approach comes with lifestyle and financial implications.
Mark, in particular, isn’t entirely convinced about giving up their home base in the U.S., a common consideration for retirees making the leap to a nomadic lifestyle. James suggests they explore an extended trip in the next few years to test the lifestyle and identify any financial or emotional adjustments they might need to make. By taking a month-long trip, they’ll get a realistic idea of what day-to-day expenses might look like abroad and assess if it aligns with their travel goals.
Step 5: Stress Testing the Plan and Exploring Flexibility
To feel more confident in their retirement timeline, James conducts a variety of “stress tests” on Hillary and Mark’s financial plan. These tests take into account potential market fluctuations, inflation, and healthcare needs, giving a clearer picture of how their finances might perform under different scenarios. Stress testing the plan reveals the level of resilience they have in their portfolio, helping to ensure they won’t need to compromise their lifestyle goals later.
If the tests show a high probability of success, James suggests that they might even consider retiring in 5–6 years, well ahead of schedule. Additionally, he recommends fine-tuning their investment portfolio to ensure it’s well-balanced and adaptable, especially as they approach retirement. By building in flexibility and establishing a diversified portfolio, they’ll be better prepared for any surprises that might arise along the way.
Final Thoughts on Seeking a Second Opinion
For many retirees, initial advice can sometimes feel overly conservative, especially when it doesn’t fully align with their vision of the future. In Hillary and Mark’s case, seeking a second opinion from James was instrumental in creating a plan that felt both attainable and true to their goals. A fresh perspective often reveals new options and can provide a more customized approach to financial planning.
James concludes the session by recommending that they continue testing their budget and travel lifestyle over the next few years to make sure it’s sustainable and enjoyable. By gradually refining their plan, Hillary and Mark can approach retirement with confidence, knowing they’re on track to fulfill their dream of a travel-focused retirement.
For retirees who want to live out their golden years exploring new places and enjoying the freedom they’ve worked hard for, careful planning, realistic budgeting, and the occasional second opinion can make all the difference. With these tools, early retirement and the freedom to travel can be well within reach.
