Looking for assistance

[barnakiel]

Originally Posted by ctsrj1

1. How much is enough money for a couple to retire at age 45? Budget is $200k or less for the boat and we intent to live within our means, whatever that may be.

2. What boat do you recommend under $200k?

3. How do you handle health insurance?

4. Where can we buy and register the boat to save $$? CT is expensive.

Once I overcome the above, I can ask more questions. Thank you all for you help.

shane

IMHO:

1. This depends hugely on your current lifestyles. We tend to drag our needs and likes along. If your cruising involves extensive sailing then you may in fact live on way less than your current landbased lifestyle (-s!) budget.

2. This depends on what you like and dislike. Some people like big boats, some prefer smaller ones, some like monos others prefer cats. A wild but not beyond any measure guess is if your land home now is big, you will want a big boat. If your apartment is luxurious, you will possibly want a new boat, etc.

3. We stay healthy (healthy food, long sleep, a couple of marathons or ironmans a year, and plenty of sex). And we do not hope to live forever. Some cruisers buy quality medical insurance. If you are going to visit odd places (say St. Helena, etc.) make sure your health insurance covers REPATRIATION. At times your health troubles can only be addressed at home (e.g. due to health services limitations of less fortunate nations.)

4. Browse Yachtworld for this. I think EU and US are two of the best spots. I have also seen heaps of less expensive boats in Papeete (I do not know why as they all looked pretty decent shape too). Register in your home country if you can - this simplifies all matters as tax, import, sales and inheritance processing.

All the best. Have fun shopping and spending your hard earned thousands.

b.

[barnakiel]

Originally Posted by ctsrj1

1. How much is enough money for a couple to retire at age 45?

Shane,

There are many ways one can answer this. All of them based on some assumptions and you will have to accept one set of assumptions (likely based on your definition of acceptable risk) to arrive at any numerical solution.

Try to gather the following:

- your FUTURE (not spot) life expectancy,
- your monthly / annual cash flows (mostly, withdrawals),

then decide on:

- leaving (or not?) the base capital (your retirement capital at the moment of your retirement) to children,
- investing (or not?) the capital, to potentially make gains along the way,
- any other factors that could make your sums bigger or smaller (e.g. a major health issue that calls for funds beyond your health insurance coverage).

When you have as much data as you can gather, run it thru any cash management software (a plain Excell sheet will do too). See where it takes you. Consult a pro on details when not sure.

If your not into Excell and maths, ask a junior member of your family who are into business / investments course. They will have a case study exercise, you will have your answers.

PS ALWAYS cross check your answers, be it money or course setting.

Regards,
b.

[Don C L]

If I had $200,000 I'd get a beautiful boat for $40,000 or $50,000 (I have a couple in mind) and use the interest on the rest to supplement the retirement income.

[Don C L]

Originally Posted by LLCoolDave

Looks like you are in a pretty good spot. Check out early-retirement.org for the financial stuff. There are lots of people there that retired at your age. $800k of your money should be invested. I would by an older boat for $50k and use the other 50k to cruise.

Generally if you live an expensive lifestyle on land it will follow you to the boat. Your $800k will give you $32k a year based on a 4% withdrawal rate. You will have this amount in perpetuity and it will adjust for inflation. I would say that after boat maintenance, taxes, insurance, and health care you might have a budget of $1500 per month. There are people that do it for even less. This is if you never want to work again. If you don't mind part time or seasonal work you can spend more.

Personally I wouldn't spend a 1/4 of my net worth on a boat. Actually on any depreciating asset.

I'm with Dave. And wow, you are set with that plan. A few of us are green with envy!

[hellosailor]

"As LLCoolDAve said, if you invested $800k, it would yield about $32k, adjusted for inflation."
Not these days. A 4% ROI is not assured these days. You won't get it from bonds or munis and stocks are always a gamble. Plus, if you got $32k with a typical federal income tax rate you might lose 1/4 of that off the top, so you're down to $24k in income.
And unless you skimp on health insurance, a good policy for two can easily gor $1500 per month then and there. Ooops, budget all gone.


Which is not to say "don't do it" but rather, search the threads for what people have done and spent, and then speak to a financial planner or other money person who can give you some CURRENT information on what to expect from investments. On the web, you'll find all sorts of people telling you how they can cruise and stay rich doing day-trading or making baubles. In reality? If that could work for you, you'd probably already be doing it.
Bottom line is that you'll probably have to spend as little as you are comfortable with, cut lots of corners, and sooner or later come back to land and back to working. But at least you will have done the trip while you are still young enough and healthy enough to do it. Another ten years, and unless you won a genetic lottery, things start breaking down and a fixed base and medical assets can become a very much more important thing.

[LLCoolDave]

For the last 120 years a 60% stock/40% bond mixture has returned 8% on average. Yes bonds are in a rough patch but you shouldn't make investments decisions with a short term view. Stick with index funds/bond funds and you will minimize your risk.

There are a lot of great perks to a frugal lifestyle. First, a couple living on 32k per year are going to get huge ACA subsidies. You may end up paying $200 per month for the two of you. If you stay outside the US for 300 days per year you can drop US coverage and buy an international policy. Also you will be in a low tax bracket and won't have to pay any long term capital gains taxes. Set up an address in a no income tax state with a mail forwarding service, like in florida or nevada. I think your tax rate would be around 10%

Like the OP said it won't hurt his career if he takes a few years off and returns to work.

One way of calculating how much you need to retire is to estimate your annual expenses and times it by 25. It's difficult in this situation because you don't know what your spending will be on the boat.

[a64pilot]

Funny this came up today, I just got my estimate from my financial advisor tonight.
We leave in a year and a half when I get our youngest in school, her school is paid for.
I'm retired Military and get what will amount to about half my income from that and it will cover medical.
We will have about 600K in cash, a paid for boat and his prognostication was a 93% probability of having enough money to reach 90 years old having $4,500 a month and buying a 200K home when we quit cruising, and a 63% probability if we withdraw 5K a month and spend 250K on that home. Amazing there is that much difference. I do not believe this counts on anything from Social Security, but I'm not sure, it may. Boat is assumed to have no residual value.
Now I will be 58 when we leave. I bought an older I think better found boat for 85K, (1987) and will maybe spend another 50K in outfitting it? I haven't honestly kept up with the expenses, but that is pretty much replacing all systems, new sails, chain plates, rigging, windlass, all electronics, adding Solar, generator, bunches of "toys" and safety gear, it adds up to more than you might think. If you plan on having 200K for a boat, I'd start looking for 100K boats, that way you know you will have plenty.

You will have at last ten more years than I, and I think that means you need more up front?


I'm a test pilot by profession, I do not think once I go I could come back to that job in a few years, so I have to plan on it being a one way trip.


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