Critique My Escape Plan...

[slomotion]

Originally Posted by CruiseFan

We took a BVI charter in the past - loved it -

Well, you didn't tell us that. There's no hope for you now.

Fair Winds

[Pete7]

We are in a similar age group and looking to do the same, all be it downgrading the house to a flat / cottage and a small yacht, but retiring at 55 if I can.

By going then you could have a decade of fun before old age and medical problems catch up with either of you and you have to return.

Waiting until your 65 could be too late so go early.

Is there a financial risk, perhaps but no one knows whats going to happen in the future, so don't worry about it, just enjoy life.

Pete

[Christian Van H]

Originally Posted by maxingout

By the way, God, if you happen to be listening, I would appreciate it if you would extend my unwitting and unplanned existence for another forty or fifty years, because there is so much to do and so little time, and I want to make the next fifty years into a real adventure. I promise I will do better this time. Amen.

Amen Dave. Amen.

[teejayevans]

Assuming your company will let you take a leave of absence, I would plan on taking one
at 55. Then you can test all your assumptions, things don't work out for whatever reason,
go back to work.
Tom

[osirissail]

Whether you plan to retire on land or afloat there is an old R&I (Retirement and Insurance) axiom that works very well. First do a realistic cost analysis of how much money you will need each year to live the lifestyle you want. Then have investments and passive income that when multiplied by 6% will equal or exceed your annual needs. This 6% rule is based on the last 50 year history of investment growth. Some years you will earn multiples more than that and in other years you will much less or negative, but over a 50 year history the average investment growth is about 6%.
- - The idea is to live off the "interest/appreciation" and not off the equity. Capital costs of a new home or boat are not included and should be provided for with other sources of income or savings.
- - Once you have achieved that equity amount then age is not relevant and working switches from being for survival to being to the pleasure of working. If it is no longer any fun then flip them the bird and head on out to sea.

[PyotrBee]

Just a note.. you mentioned boat appreciation... Don't boats depreciate and not appreciate?

[97fxdwg]

Originally Posted by PyotrBee

Just a note.. you mentioned boat appreciation... Don't boats depreciate and not appreciate?

That got my attention too. Glad to hear it though as it may turn out that I'm getting rich while floating around.

[PyotrBee]

I just want to weigh in on cats... We've lived in a dozen countries (on land.. boats not counted). We used to live in the Med. You dont see cats that often, because anchorages are not as good or numerous in general, or are restricted. Marinas are expensive. Now we leave in the Caribbean... where its normal to always anchor... If you are going to Med, I have to advise against a cat. If in the Caribbean, go for a cat. I have a cat here... and even though I live on land, I anchor mine where I live.... Of course I check on it 2-3 times a week and sail it 1-2 times a week.. I also have it anchored where I can see it from my office which helps.

You can spend the money you save on a decent dinghy, and provision mostly via that. We do that except for major things like fresh water... we even dinghy out fuel in fuel jugs... its doable! Just anchor close to the marina or a dock and make a few trips... you can even get a second recreational inflatable (the kind at wal mart), load it with stuff instead of people and pull it behind your dinghy.... get the boat and deflate it.

[MarkJ]

Originally Posted by osirissail

First do a realistic cost analysis of how much money you will need each year to live the lifestyle you want. .

Yes, note those wise words: "realistic cost analysis"

the OP has a good amount in kitty, but should understand that some threads on this forum people have quite erred in their thoughts on budget. And none ever erred on having too much money!

Cruising is like grabbing that well known old tiger by its tail: your wild ride is not just weather and the vagaries of sailing by the vagaries of costs exponentially higher than what you perceived.

Just one example (and if anyone says I am picking an argument re boats I'll have to crane them)... 2 boats recently went through Suez Canal: one cost $200 transit fee, the ohter cost $2,000 transit fee. an a third boat which there is a thread on here, a bit larger, cost $4,600. So from $200, $2,000 to $4,600 you really don't know what the costs are going to be untill its too damn late!

I have always said I would have a $5,000 contingency fund in my account for unexpected contingencies. Well, I'd be lucky if we ever had a $500 contingency fund... and that manages to find a way to leak in days....



Mark

[osirissail]

My rule of thumb was developed for the 99.9% of the population that lives on land. It can be adapted to the 0.1% (or less) that we cruisers represent. The realistic cost analysis is termed "realistic" so that you will take into account the every 5 years major replacement of worn out equipment and every 10 years major rigging and sails replacement or refurbishment. (I know the rigging and sails can be stretched to more than 10 yrs if you planned ahead and used seriously good (costly) materials instead of "discount" materials. Things like air travel home, air-med-evac, health insurance, and to most forgotten - cost of maintaining your financial and paperwork "ties" to your home country (e.g., home address, mail sorting/forwarding, license renewals, real estate, storage and the various tax filing considerations along with banking ties and inflation). All of these cost time and money. Long term cruising involves a lot more than just diesel, food and check-in/out fees.

[YOGAO]

Originally Posted by PyotrBee

Just a note.. you mentioned boat appreciation... Don't boats depreciate and not appreciate?

Re-read that post from osiris...he was speaking of living off the "interest/appreciation" of investments (CDs, stocks, bonds, etc).

Fair winds,
Mike

[teejayevans]

Originally Posted by osirissail

Then have investments and passive income that when multiplied by 6% will equal or exceed your annual needs. This 6% rule is based on the last 50 year history of investment growth. Some years you will earn multiples more than that and in other years you will much less or negative, but over a 50 year history the average investment growth is about 6%.

6%? Rule of thumb is 4% if you want 100% chance of success, at 6%
it's 80%, if you go to 7% it's less than 50%. Given the economic uncertainty of
the times, I would use 4%.
Tom

[osirissail]

In the "old days" investments grew in accordance with sound business plans, and many other "value of the business" some were known as "blue chip" investments. That was when the 6% rule of thumb came into existence. But times have radically changed in the recent decade or so. Now investments climb or plummet on rumors, scandals, or just plain gambling risks. Logic has left the market and now we are on a wild financial roller coaster with nobody at the controls. So your 4% rule of thumb makes more sense in these days.
- - In the last decade my investments have barely managed 4% while in the preceeding decade they did better than 10%. So it is a "crap shoot" as to what you need as your equity "nut" before retiring. Welcome to the wild world of high finance . . . .

[PyotrBee]

Originally Posted by YOGAO

Re-read that post from osiris...he was speaking of living off the "interest/appreciation" of investments (CDs, stocks, bonds, etc).

Fair winds,
Mike

" I have no clue if boats will appreciate faster than real estate"

From the first message in the thread..

[MarkJ]

Housing must be very weird in the USA.

In Australia boats do not appreciate buy may hold in value dependant on type.

Houses, well, I hear a lot of you saying the first thing you'd do to go cruising is sell the house. In Australia the house in any reasonable area is an investment 'safe as houses' and the rent stream can be a torrent

Australian capital city house prices rise by 20 per cent in year to March

NEWS.com.au - Chelsea Mes - ‎55 minutes ago‎
AUSTRALIAN capital city house prices have risen by 20 per cent over the year to March, latest government data shows. ...
Australian capital city house prices rise by 20 per cent in year to March | News.com.au

It is much less than 20% but its a fair bit!

averaged annual growth between 1960 to 2006 was 8.7%

This is an interesting one, especially for Australians thinking of selling the house to go cruising (or for any other reason)
http://www.retireonproperty.com/propertyinvesting/research/australian-property-prices-since-1960.html