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A Couple Discovered The Secret Of Wealth

If you are a couple aiming to retire rich and early, it’s time to reinvent your financial strategy: Follow this couple’s blueprint to early retirement. This explains why we encourage Kiwis to take actions as soon as possible. It’s Time To Reinvent Your Financial Strategy. A couple did it in their own way. And it works!

If you thought that retiring early is possible only if you win the lottery or inherit a windfall, Harper’s and Charlotte’s story will prove you otherwise. This Auckland-based couple laid the groundwork of an early retirement strategy in their late twenties when both of them were earning in five-figures as IT engineers. Now, at 51, and one year into their retirement, they think that it was the best decision they had ever taken. Incremental raises and an intelligent investment methodology, they say, is their recipe for success.

The couple began pursuing financial independence at 29 when Harper expressed his desire to run a homestay post-retirement. When he sat with Charlotte and analysed the methods in which they had been saving money, Harper realized that at the current pace, they might have to spend their whole life slogging in an office cubicle. This was the moment of revelation that made the couple introspect their financial instruments and the way they were spending and saving money. Thus, with a vision to amass enough money by their late 40s, the couple embarked on their early retirement journey. This was the time when Harper had just landed a job at an engineering consulting firm and Charlotte was juggling her time between a job at Infosys and a part-time MTech degree. Their combined annual income along with the savings they had accumulated over the years was good, if not impressive, and they invested some of these assets in a bevy of insurance policies.

However, one of the most substantial steps they took for early retirement was the adoption of the FIRE philosophy. An acronym for  the FIRE movement has gained immense popularity among millennials and it has been largely successful in letting people retire by their late forties or even earlier. As a textbook definition, the FIRE movement is founded on the premise that socking away 40-70% of one’s earnings for 10-15 years can accumulate a nest egg large enough to generate a passive income that’ll enable people to retire early and comfortably fund the basic living expenses.

While the main engine of the FIRE approach is built on drastic lifestyle downgrades to maximize your savings rate, Harper and Charlotte decided to take on board some of its ideas in moderation. They realised early that an aggressive plan is unsustainable in the long run and hence took up certain proponents of the philosophy like cutting down on mindless spending, intelligent budgeting, and of course investing in the right financial funds to grow their monetary portfolio. Come today, the couple runs an eco-friendly homestay on the buffer forests of Kanha National Park after having comfortably retired last year. And both Harper and Charlotte are sure that they are financially stable and won’t have to return to the old life.

So, what should be your strategy if you wish to be retirement-ready like Harper and Charlotte Adkar? According to the couple, following these four essential rules can work wonders if early retirement is on your mind.

Many people believe that early retirement is possible only for people with high-paying salaries. However unlikely it might seem, this idea is highly flawed. Financial independence for early retirement, in fact, becomes difficult for people with higher incomes as they have a spendy lifestyle. This is why one should control one’s spending to amass the nest egg required to quit the cubicle at an earlier age. The couple divides this thought in two ways. When they embarked on their retirement journey, they mapped cutting expenses and daily spending as a short-term solution, whereas increasing their income through a positive cash flow was a long term solution. They also set a believable retirement budget and ensured that it was not completely set in stone. Over the last 20 years, they revisited their investment portfolio and retirement strategy to ensure that it was up-to-date with the fluctuations in the market.

Rule 1: Focus on your spending and not on your earning

Many people believe that early retirement is possible only for people with high-paying salaries. However unlikely it might seem, this idea is highly flawed. Financial independence for early retirement, in fact, becomes difficult for people with higher incomes as they have a spendy lifestyle. This is why one should control one’s spending to amass the nest egg required to quit the cubicle at an earlier age. The couple divides this thought in two ways. When they embarked on their retirement journey, they mapped cutting expenses and daily spending as a short-term solution, whereas increasing their income through a positive cash flow was a long term solution. They also set a believable retirement budget and ensured that it was not completely set in stone. Over the last 20 years, they revisited their investment portfolio and retirement strategy to ensure that it was up-to-date with the fluctuations in the market.

Rule 2: Invest, Invest, Invest

A UN Population Fund report states that life expectancy at birth in India has risen from 60 years in 1994 to 69 years in 2019. In the urban areas, this rate is even higher with improved medical facilities and the access to avail them. This means that anyone planning for early retirement in India has fewer years to accumulate their nest egg and more years to spend it. This is why one of the pivotal pillars of an early retirement plan is having assets generating income that exceed your standard of living. And this is possible only with Harper and Charlotte had a three-way approach- fixed-income investments, moderately risky investments, and diverse bucket investments. Through the use of conservative annuity plans, the couple was able to make risk-free investments where returns are always assured. But because these annuity incomes do not have fixed interest rates and don’t take inflation into account, they further invested in market-linked and fixed income options that come with part equity.

Rule 3: Prepare for inflation

The couple opines that one of the foremost pillars of an early retirement strategy is inflation planning. The rising inflation shoots up expenditure in ways one cannot even imagine. In fact, financial research suggests that whatever you can purchase from the annuity of your investment strategy now can barely purchase one-third of it 25 years down the line.

This is why it is important to consider inflation in your early retirement planning road map and buy financial tools that cover inflation. Taking an early retirement or financially securing your post-retirement years means investing in the right funds so that your money works for you and helps you meet your desired goals. Helping millennial couples plan towards this goal is

a Unit Linked Life Insurance Plan that offers market linked returns, charges minimally and provides valuable financial protection for you and your family. 

Rule 4: Never stop working

For Harper and Charlotte, early retirement as a life goal only meant that they would retire early but work forever- on something they love. And in their case, it was a homestay. Over the years, they carefully considered the various things that they had to do to give wings to their dreams and made their financial choices accordingly. This is why they are of the opinion that an early retirement plan can never be ‘one size fits all.’ Every couple planning for the same should consider how they are envisioning their lives post-retirement- based on whether they want to work on a passion or would simply reap the benefits and lead a hustle-free life of leisure. Personally, they are of the opinion that anyone aiming to retire early should not retire on nothing but pursue a passion that they had always wanted to.

The way ahead

Harper and Charlotte’s journey into early retirement gives sound financial advice to a lot of people envisioning the same dream. Apart from the four major pillars through which they structured their post-retirement roof, they are of the opinion that couples today have a host of financial tools to build their nest egg- something that wasn’t there 20 years back.

Most financial experts suggest that retirement planning should begin the day you start earning. And if it is an early retirement that you are planning on, it requires twice the thought.

Forget the retirement home. Head here.

These days most of us can expect our retirement to last for more than a couple of decades. So, with life expectancy on the rise where you choose to spend those twilight years is more important than ever. 

A growing number of pensioners are seeking far-flung destinations. They’re lured by hours of sunshine, a slower pace of life, favourable tax rates, and the prospect of a more fulfilling lifestyle where their income goes much further than it does at home. Considered carefully, retiring abroad can deliver all of the above without compromising home comforts or quality healthcare.

From tropical towns in Thailand to coastal comforts in Central America, our guide to the seven best countries to retire has it all.

Panama

Panama, the southernmost country in Central America tops the 2016 global retirement havens listings compiled by International Living, with what the magazine describes as “hands down the best package of retirement benefits in the world”. These include discounts for retirees on transport, entertainment, medicine and energy bills.

To receive these wide array of benefits all you need is a Pensionado Visa, for which you need to be over 18 years of age and have a pension of at least $1,000 a month to qualify (both private or social-security payments count). The currency, the Panamanian balboa, is pegged to the dollar, so US retirees shouldn’t face shocks from currency swings.

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Savings will go a long way here too. Even without these pension benefits, living costs are already low compared to many countries in Europe, North America and Australasia, with a three-course meal for two in a mid-range restaurant in Panama costing $30, according to numbeo.com, a website that tracks the prices of everyday items.

Property prices are also reasonable, with foreigners having the same property rights as Panamanians. Purchasing a three-bedroom property in the popular mountain town of Boquete would cost about $179,000, according to globalpropertyguide.com

Panama has an internationally well-regarded healthcare system, with many doctors trained in the US and Europe. However, retirees should allow at least $200 a month to cover private health insurance.

The biggest downside for many retirees is the country’s poor road infrastructure outside of Panama City. But balance that against Panama’s affordability, leisure options and proximity to the US — just two-and-a-half hours flight from Miami — and it’s easy to see the country’s draw.

And compared to some Central American countries, Panama is relatively safe, according to Overseas Security Advisory Council, a body set up by the US Department of State, whose primary aim is to assist private sector in identifying and tracking security threats.

Ecuador

Ecuador ranks second in the 2016 listings, compiled by International Living magazine, on its generous retirement benefits, affordable housing and a great climate. Indeed, for housing and climate, the country tops this year’s rankings.

Resting on the equator, the country enjoys 12 hours of daylight every day throughout the year. In addition, the highlands of Ecuador, which include popular expat destinations like Cuenca, Cotacachi, and Vilcabamba, sit several thousand feet above sea level, giving residents a year-round spring-like climate.

(Credit: Thinkstock)

For housing costs, there are few countries that can beat Ecuador. In the popular colonial city of Cuenca, for example, a two-bedroom apartment can be rented for $500 a month or less.

To live here though, retirees will need to learn Spanish, as English is not widely spoken and expats will have to adapt to a limited national road infrastructure.  

But there are plenty of perks. Like Panama, Ecuador offers a wide range of desirable retiree benefits, including half-price public transport for those aged 65 or over and IVA (value-added tax) refunds on many purchases.

The Ecuadorian government also made a recent change to its healthcare system that will likely prove a major pull for expats. Since 2014, foreign retirees in Ecuador have been able to join the country’s national health care system, which is managed by the country’s Social Security administration, at a cost of about $70 a month. At the same time, age and pre-existing medical condition restrictions were removed. Previously, those older than 60 weren’t eligible for membership. Retirees can also opt for private healthcare.

Malaysia

For year-round sunshine and diversity, consider Malaysia, which offers everything from tropical beaches and remote rainforests to the high-rise bustle of capital, Kuala Lumpur.

(Credit: Thinkstock)

This former British colony is also an inexpensive place to live, with International Living placing it among the cheapest places to live in its global cost of living index. 

Add to this widely-spoken English, low cost of restaurants and direct foreign ownership of property freehold, and it is easy to see the country’s appeal for older expats.

The magazine reports that a couple can live comfortably in a spacious luxury apartment for less than $1,000 a month. Xpatulator.com, a website that analyses costs for expats, rates healthcare and accommodation costs in Malaysia as “very low” and at the opposite end of the spectrum to destinations such as Hong Kong or Australia. But be warned, not everything is cheap here: many imported goods, from cars to wine spirits, are often sky- high as a result of local taxes.

Malaysia also ranks as one of the world’s top “medical tourism” destinations attracting more than 700,000 healthcare travellers in 2013, according to the Malaysia Healthcare Travel Council.

(Credit: Thinkstock)

Under the country’s second-home program, retiree residency is relatively easy to obtain. The visa lasts for 10 years and extends to your spouse and children. The minimum monthly income requirement is 10,000 Malaysian ringgit (around $2,320). Retirees also typically benefit from pension, or social-security income, which is exempt from Malaysian taxes.

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