#26 - Financial Freedom for Expats / You May Be Able To Retire One (Or Five) Years Sooner (2024)

In the first half of this episode of Money Matters, host Wes Moss is joined by Edd and Cynthia Staton. Their retirement plans were disrupted by the 2008 Financial Crisis, leading them to create a Plan B. In 2010, they moved to Cuenca, Ecuador, where they enjoy a comfortable and affordable lifestyle. Their experience reflects a broader trend: the number of retirees receiving Social Security outside the U.S.surged 40% between 2007 and 2017. Now seen as experts in expat retirement, the Statons have authored best-selling books, featured in major media, and run an online program calledRetirement Reimagined!

And later, aNational Institute on Retirement Securityreport shows 79% of Americans believe there is a retirement crisis, with over half concerned about achieving financial security. On a recent episode, Wes illustrates how self-discipline, savings, and time can help overcome retirement challenges, suggesting that happiness and financial freedom may be more attainable than many think.

Wes Moss [00:00:01]:
The Q ratio, average convergence, divergence, basis points, and b’s. Financial shows love to sound smart, but on money matters, we want to make you smart. That’s why the goal is to keep you informed and empowered. Our focus, providing clear, actionable information without the financial jargon to help 1 million families retire sooner and happier. Based on the long running WSB radio show, this Money Matters podcast is tailor made for both modern retirees and those still in the planning stages. Join us in this exciting new chapter, and let’s journey toward a financially secure and joyful retirement together. Welcome to Money Matters. I wanted to bring an interview today, one of my favorites from the retire sooner podcast.

Wes Moss [00:00:54]:
It’s Ed and Cynthia Staten. We found Ed and Cynthia living abroad as expats in retirement in South America, something that is intriguing for so many Americans. Maybe it’s a little cheaper, maybe more adventurous, but we’re gonna find out today the ins and outs of living abroad as an expat in retirement. From Ed and Cynthia. Ed and Cynthia, are you guys in Ecuador right now, or are you back in the United States? Where are you?

Edd Staton [00:01:26]:
No, we are sitting in my office in Ecuador, actually in Cuenca.

Cynthia Staton [00:01:30]:
Cuenca, Ecuador? Yeah.

Wes Moss [00:01:32]:
What’s the name of it again?

Edd Staton [00:01:34]:
Cuenca. Cuenca.

Wes Moss [00:01:36]:
And how is your spanish?

Edd Staton [00:01:40]:
It is functional.

Wes Moss [00:01:41]:
Functional. Okay.

Edd Staton [00:01:43]:
It will never be fluent.

Cynthia Staton [00:01:45]:
It’s a. What we like to say, wes, that we can navigate the whole food scene, and we can always get home.

Wes Moss [00:01:53]:
You always get home and order what you would like and find the servicios. Right now, that’s beer. The. Well, what’s the bathrooms? Banyos. Dande los servicios, or banos. Right. I just remember being in Spain. I think that was, like, the first thing I learned is, where are the bathrooms?

Edd Staton [00:02:15]:
The last thing, too.

Wes Moss [00:02:17]:
All right, so you’re living this, you’re preparing for retirement, and you’re all of a sudden, you start thinking, maybe we can go somewhere outside the United States. What did that tell me about how you guys were prepping for retirement? And then what started to. What led you to sort of think, maybe it’d be fun to go to another country for a while, and so take me through that journey?

Edd Staton [00:02:42]:
Well, if it were really that much of a Pollyanna journey, it would be much more. Well, that would be a different version, but that’s not actually the way it happens.

Wes Moss [00:02:51]:
Well, let’s hear the unvarnished truth.

Cynthia Staton [00:02:53]:

Edd Staton [00:02:54]:
We were in our prime, earning years in Las Vegas with what we thought was a solid retirement plan in place. Unfortunately, a lot of it involved real estate. And then 2008 happened. So we went from the peak of our careers and a solid portfolio, blah, blah, blah, to our careers disappearing, our house losing two thirds of its value, and our investments and savings plummeting by the day as well. So it wasn’t like we were sitting around thinking, gosh, wouldn’t it be fun? We were. We were in a desperate financial situation at that time, and we came to the realization we were not going to be able to recover at our age. And we. The employment situation was such that we weren’t going to be able to get to the income level that we had enjoyed for years.

Edd Staton [00:04:05]:
So we had to formulate a plan.

Cynthia Staton [00:04:08]:
B. Yeah, and we did.

Wes Moss [00:04:10]:
And you did.

Cynthia Staton [00:04:11]:
We did. So, yeah. And just, you know, to add to what Ed said, we had thought one day, one of these days, when we retire, we would love to travel, see, maybe even live in different parts of the world, but that was somewhere in the future. And what happened in 2008, 2009 just made all of that happen much quicker than we were prepared for.

Wes Moss [00:04:36]:
By the way, guys, what industry were you all in?

Edd Staton [00:04:40]:
Well, I was in the financial service industry, specifically for automobiles, and nobody was buying cars.

Cynthia Staton [00:04:49]:
And I was in new construction, real estate, luxury real estate, working on a project that was just coming out of the ground at Lake Las Vegas. And I was working for Sotheby’s international realty. Well, the project just came to a halt. My job came to a halt, and.

Wes Moss [00:05:10]:
Luxury real estate came to a halt for a long time.

Cynthia Staton [00:05:13]:
Yeah, yeah.

Edd Staton [00:05:14]:
Vegas was the hardest hit of just about any place in the whole country.

Wes Moss [00:05:17]:
Right, right. Okay. So, because my natural inclination is to think, okay, why not just work? Just extend working, right? Why not just say, oh, we’re going to work another five to seven years. We hadn’t planned on it, but we’re going to do that. We’re going to try to make this up. But for you guys, and like so many Americans during the great financial crisis, because it was so broad, there was such a broad sell off, there’s such a hit to real estate prices, really, like we’d almost never seen. And then every industry around that was crushed. You guys were kind of looking around thinking, wait a minute, there really are no other great options.

Edd Staton [00:05:52]:
That’s pretty much it. So our plan B was, I told Cynthia, we need to find someplace to live with a lower cost of living.

Cynthia Staton [00:06:04]:
And I said, okay, that sounds great.

Edd Staton [00:06:06]:
And then I said, I’m talking about moving out of the country. And she said, what?

Cynthia Staton [00:06:12]:
We’re gonna. We’re gonna do what I was a.

Edd Staton [00:06:16]:
Year away when we moved here from taking early Social Security at 62, Cynthia was in her mid, late fifties, so she was not even close to that. So we kind of. Our moving abroad idea was not so much of which of these great options are we gonna choose from? We felt like it was the best and almost only option. We had to be able to just survive, survive and have a chance to not just kiss all of our dreams goodbye that we had worked for our whole life, basically.

Wes Moss [00:07:00]:
So how did you end up picking Ecuador, and what were some of the other places that you considered? It sounds like you were looking at this from a cost perspective. So where. Where were you looking?

Edd Staton [00:07:10]:
That’s where Cynthia comes in.

Cynthia Staton [00:07:12]:
She said, well, I said, okay, Ed, I’m on board with this, but we cannot just uproot our whole life and move to another country solely based on the cost of living. It has to. This place has to be a place that we really want to make a new life. So there are more factors involved than just the money. And that’s when we sat down and we made our wish list of if we could pick the ideal location, what would that look like? What do we actually want?

Wes Moss [00:07:45]:
So that’s where you guys go through this checklist of, hey, we’ve got to look at cost of living, we got to look at the climate, we’ve got to look at healthcare, we got to look at what real estate they are living, and then do we buy, do we rent? So take us maybe through that a little bit. In the early days, as you were looking at different places, what else was on the radar besides Ecuador?

Edd Staton [00:08:07]:
Well, the early days is a good way to put it, because we’re so used to on the Internet, everything being at our fingertips now. And in 2008, 2009, that information just wasn’t out there like it is now. We happened to find one blogger here in Cuenca that we communicated with, but it was. It was slim pickings. So, based on our personal wish list, which involved the things that you said, cost of living, healthcare, we were in good health, but we weren’t new or getting any younger, so we didn’t want to go to a place with poor health care. Climate was huge for us, proximity to the states, because we wanted to be able to visit. We didn’t have grandchildren at that time, but we hoped that we would, and we, in fact, now do. So we didn’t want to be way away from them.

Edd Staton [00:09:03]:
The size of the city, there was a lot of factors for us. So the climate thing was a big driver, and that ruled out for us quickly. Places that are very popular, expat destinations like Costa Rica and Panama, because for us, they’re too hot and humid.

Cynthia Staton [00:09:22]:
It’s tropical.

Edd Staton [00:09:23]:
We lived in Atlanta. Most of our lives were in the south. Then we lived in Vegas, so we knew wet heat and dry heat, and we didn’t want either one of them too much anymore.

Wes Moss [00:09:34]:
By the way, for those listening, Atlanta’s the wet heat. Of course, Vegas is the dry heat. Right?

Cynthia Staton [00:09:39]:
Right. Yeah. And just side note, we spent most of our life in Atlanta, so we are very familiar with that kind of climb.

Wes Moss [00:09:47]:
All right. So the climate took out some of the really popular destinations because they’re too warm, really too hot, too tropical for you.

Edd Staton [00:09:56]:
And that’s what this wish list thing is, so individualized. What’s important to us may not be important to you or to whoever, but this was our wish list. So I went out trying to research this stuff, and I had looked at Buenos Aires, which sounded good, but it’s a big city, and I realized it was so far away. So just out of nowhere, on memorial day of 2009, I discovered somehow Cuenca.

Cynthia Staton [00:10:26]:
Ecuador, didn’t know how to pronounce it. We have no clue where it was.

Edd Staton [00:10:30]:
We thought it was. So, Wenzo, if you had put up a blank map of South America and said, if you can pinpoint where Ecuador is, I’ll give you $1,000, you’d have kept $1,000. We had no idea. And yet everything about it seemed almost too good to be true.

Cynthia Staton [00:10:48]:
It did.

Edd Staton [00:10:49]:
So I said, we got to go there. Time was not on our side. We didn’t have the luxury of just taking our time and checking out this place in Mexico and that place here and this place there. We needed something to happen. So in July, 2 months later, we were here doing a ten day scouting trip, looking for red flags. This was the one that.

Wes Moss [00:11:16]:
Deal breakers. You’re looking for deal breakers?

Edd Staton [00:11:19]:

Cynthia Staton [00:11:20]:
I said, all right, I’m going to go and look for all the reasons why we shouldn’t do this. And you know what? When we showed up and we’re walking around, I’m thinking, I can’t find any, I can’t find any reason why we shouldn’t do this. So we got on the plane ten days later and said, well, I guess we’re moving to Cuenca, Ecuador.

Wes Moss [00:11:43]:
Tell me about the pricing. What was it to rent a place or buy a place? How dramatic was the difference between the United States and Cuenca?

Edd Staton [00:11:56]:
Well, it was, and it is. That really hasn’t changed that much. I mean, obviously we have inflation, but not to the degree that it’s occurred in the states. Back then, you could buy a place, 75,000 maybe. And up. Our first rental that we lived in for eleven years, we had a two story penthouse apartment. The reason we rented instead of buying is why I’m going to tell you right now. We had a two story penthouse apartment.

Edd Staton [00:12:29]:
Gosh, it was over 3000 sqft. Much bigger than we needed.

Wes Moss [00:12:32]:

Edd Staton [00:12:33]:
We made the mistake. Pollyanna. It’ll work out. Our container that we shipped was on the way and we had no place. So we were desperate to find a place to unload our furnishings. When they actually arrived here, we were so silly to think it was going to be so simple. But anyway, that place was, it started out $650 a month. So when you can have a 3000 square foot penthouse apartment for $650 a month, we chose to go that route and the savings that we had, rather than invest so much of it in the roof over our head, we thought we would look around for other potential investment opportunities because we knew nothing about any of that.

Edd Staton [00:13:23]:
When we hit the ground, it turns out there are those opportunities.

Cynthia Staton [00:13:28]:
You know, taxis are. I mean, this is, we marvel a typical lunch will cost you 350. That includes it’s a full course lunch, a fresh juice, a soup, an entree and a small dessert. And that’s 350. That’s our main meal of the day. And so it was that maybe $3 when we first moved here. It’s gone up to 350 most places. And the taxi rides, I mean, they’re still the same.

Cynthia Staton [00:13:59]:
We can go anywhere in the city for under $3 for a taxi ride.

Wes Moss [00:14:05]:
So I’m thinking that if you start to try to do apples to apples, an Uber ride in Atlanta can be $80. It really could be.

Edd Staton [00:14:14]:
We do that.

Wes Moss [00:14:15]:
So, I mean, if you’re looking at it that way, three divided by 80 you’re talking about, it’s like 95% cheaper in some ways. A lunch in Atlanta is, let’s call it $15 easily could be $20. So you’re looking at, again, 80% cheap, 75% 80% cheaper. Now, housing is still maybe not 90% cheaper, but it’s still call it 60 or 70% less expensive. How do you guys look at the average cost relative to the United States?

Edd Staton [00:14:47]:
Well, when we go back to the States to visit our family, as soon as we walk in the grocery store, holy cow. I mean, you spend $100 at the Harris Teeter or Kroger or wherever, and you walk out with a bag in each hand and we spend a $100 here and we have to have a taxi to take us home because we can’t carry it all between the two of us. So that’s for starters. And what kind of apartment are you going to rent in Atlanta for six, $700 a month?

Wes Moss [00:15:21]:
Yeah, you almost can’t even do it.

Edd Staton [00:15:23]:
No, you can’t even do it somewhere maybe. So. This is a term that we coined for those that have the courage or the boldness or the whatever or either out of desperation, whatever the motivation to give this moving a broad thing a shot, you hit what I call the retirement trifecta because you get to, number one, lower your cost of living. Number two, raise your standard of living and number three, preserve or even grow your nest egg. Where is that possible? How is that possible?

Wes Moss [00:16:06]:
Only in Cuenca. You guys have become experts on this. And I ballpark how many places would you put on somewhat on par with what you’re able to do at Cuenca?

Edd Staton [00:16:18]:
Oh, it has nothing to do with Cuenca really.

Cynthia Staton [00:16:21]:
The shocker is there are lots of places and we spent until September, October of last year. The previous two and a half years we spent traveling full time to these popular expat destinations and a few others thrown in there to actually put boots on the ground in more places than just cuenca to make sure that what we’re saying is authentic and real. You can research all day long on the Internet and a lot of places sound great, but you really, I think, need to personally experience those places to be able to talk about them with some authority. So, you know, if you want, if you want us to throw some out there, we’re happy to do that.

Wes Moss [00:17:10]:
Yes, I want to throw them out. I want you, I want our listeners to be able to say to their family or their parents or whoever it might be, call Cynthia and Ed and just go through a handful of places. And I know you guys start, you probably have some income because you’re essentially guides now and I’m sure you have a little bit or at least some income because you become experts on this. But yeah, give me a flavor of some other areas.

Edd Staton [00:17:40]:
Yeah. And the real, I want to tell you realistically, this is what people don’t understand, that two and a half years that Cynthia said that we spent, we just put all our stuff in storage here. After Covid and left, we just, right.

Cynthia Staton [00:17:54]:
It’s not that we suddenly, you know, had a windfall. We, we figured out that once we got there we could cover our transportation to get into these places. And we stayed weeks not just going like for a long weekend.

Wes Moss [00:18:08]:
Oh, so during COVID you guys stored your stuff in actually Ecuador and went and traveled around?

Edd Staton [00:18:14]:
No, right at the end of COVID when you could travel during COVID you couldn’t go anywhere.

Wes Moss [00:18:20]:
Okay. So at some point, when the world opened up a little bit.

Edd Staton [00:18:24]:
Yeah. Well, we started with Mexico because Mexico never closed. So that was the beginning of our journey. And for two and a half years, we did Mexico all around there. We went to Europe, we did different places in South America. And I mean, literally, wes, if you don’t. If you lived in the suburbs, you can live in Paris on a Social Security budget. You’re not gonna walk out the door and say, oh, there’s the Alpha tower.

Cynthia Staton [00:18:51]:
We did that.

Edd Staton [00:18:52]:
Cause we did it. We stayed at an Airbnb in the suburbs. We took the train into the city inexpensively. You just have to. A lot of this thing I was talking about, about making your dreams come true, you’ve got to decide, what am I willing to give up to make that happen? Because if you can’t have everything, what are you willing to not have to have? At least most of it? The crux of your dream.

Wes Moss [00:19:20]:

Edd Staton [00:19:20]:
And in situations like a big city like Paris, that’s how you do it. But we guess there’s all kind of places in Mexico.

Cynthia Staton [00:19:29]:
Well, yeah, it’s like some of the. Some of the top. Top five places that we can wholeheartedly recommend. Of course, we have to give a shout out to Ecuador, our hometown, but. Well, our home country right now. But then Costa Rica, Panama, those two have been on the radar for quite some time. Probably prices have gone up a little bit, but they’re still quite affordable, and they have a lot going for them. And then Ecuador and Mexico.

Cynthia Staton [00:20:00]:
Number of places in Mexico. And, I mean, I think, gosh, you know, the places we visited, San Miguel de Allende, Lake Chapala. I mean, there are other places that have established expat communities that you could transplant to quite comfortably. And then Portugal. We loved Portugal when we were in Europe. That’s been out there for a few years. And then I think Spain and France have come risen to the top of great expat destinations.

Wes Moss [00:20:31]:
So the ex. So here’s this combo. First of all, if you’re going to any of these places, and for some reason, I always think of Portugal, because when I was in college, I did study abroad, so I was in that southern Spain or near Portugal, and it’s a magical part of the world. But maybe to your point, you’re not living in downtown Sevilla or Seville or downtown Lisbon, you’re maybe living out a little bit more in the suburbs or maybe not even in some of the cool places. Now you’re not getting a water view. Correct. That’s not happening.

Cynthia Staton [00:21:10]:
Well, I mean, that would be unusual, right, to have that because you have to do the research and you have to really understand your budget and what is it that you’re looking for? What can you spend?

Wes Moss [00:21:24]:
And when you say, so, let me go back to this. Let’s do a baseline here. When you counsel people around this, for the most part, the places that you, let’s call it your top ten, you can live. You can go there and live essentially just on Social Security.

Edd Staton [00:21:41]:

Cynthia Staton [00:21:42]:
Well, of course, that depends on how much your Social Security is. We combine our Social Security, but I have to tell you, in the beginning, we were spending most of it. Now we actually live on our Social Security and we’re able to save money, which in the United States, I mean, that would be unheard of, right?

Wes Moss [00:22:03]:

Cynthia Staton [00:22:04]:
So we can cover our monthly expenses. We’ve figured out how to use credit cards strategically to earn points and miles, and that will pay for a lot of the transportation outside of the country. And then we have some leftover to still invest. And it’s really, I mean, if we were living in the states, we would be scraping by and living a very minimal lifestyle and spending every penny of it.

Wes Moss [00:22:34]:
So maybe two things that it makes it seem like this equation becomes more realistic for people relative to when you did this. Because, again, you were like the first high school class in a brand new high school. Whereas today, if you were to, you go to one of these places, you pick your country, pick your town, pick your city, and you are much more likely to be able to be plugged in pretty quickly with the expat community. That’s my first question of what that’s like today. And then, of course, I want to know about healthcare. That, to me, that’s the scarier part about all this. So let’s start with that expat community. Why does that make it so great? And is that pretty accessible in a lot of these locations?

Edd Staton [00:23:18]:
Yeah, well, that’s. There are two extremes of people that want to expatriate in that regard, ones that want to duplicate as close as possible to their north american lifestyle. And on the other end, those that want to assimilate into the local culture and. And kiss everything about their former life goodbye. Then there’s the big group in the middle. That bell curve is not equal. It would list toward the people that want some of the comforts they had.

Wes Moss [00:23:51]:

Edd Staton [00:23:51]:
In the US or Canada as opposed to just wanting to go native, so to speak.

Wes Moss [00:23:55]:
Go native, yeah.

Edd Staton [00:23:57]:
And within Mexico, during our travels there, I will tell you that the expats that we found and met in Tulum seem to be more of that off the grid. Off the grid people, they don’t have a big community there. They don’t get together for happy hours and all that. They do their own thing. They move there for that reason. You go to Lake Chapala, which is home to more north american expats than any place in the world, and you walk into a grocery store there and you feel like you’re back in Kroger. I mean, not the size of it, but not the size of it. But you’re buying availability.

Cynthia Staton [00:24:39]:
Yeah. You’re buying products from Costco.

Wes Moss [00:24:41]:

Edd Staton [00:24:41]:

Wes Moss [00:24:42]:
So it’s just like you in Marietta, Georgia pretty much.

Edd Staton [00:24:46]:
I mean, there is a Costco in the next city over from Lake Chapala. And we found out if you go in a grocery store there and say, can you get so and so? It’s so close to the states that they order things and go weekly across the border into Texas and bring it back. So you got it all and they got like we do, they got community theater, they’ve got blah blah blah, blah, blah. So a place like that is just plug and play. You just show up. That’s all you need.

Wes Moss [00:25:15]:
Plug and play. Expat living in a place like Cuenca, do they have, is it almost like again, little Italy in New York City 100 years ago? That’s where everyone from Italy located and it was burrow of mostly people that were from Italy. Are there little americas in these towns?

Cynthia Staton [00:25:38]:
You know, I think that that would depend on where, where you are in Cuenca. That’s one of the things that was attractive to us. There are no gated communities where all the gringos live. People live all over the city. So it’s the opportunity for just fitting in more to local life is greater when you have that and these gated communities in some and some expat destinations, I think that you become more isolated and those smaller towns within Ecuador have those communities, but that’s not something that appealed to us.

Wes Moss [00:26:19]:
And so it’s really about that bell curve ed, what you’re saying. The flavor, how much of the flavor of the country do you really want as an example, an extreme? The folks in Tulum really wanted to feel like they’re, quote, native, whereas if you wanted to, you can find very american subdivisions, if you will. In XYZ country. And you guys are kind of living maybe a little bit in between, I think so.

Edd Staton [00:26:50]:
It’s funny about that. We’ve used the term gringo, and I want you to understand, it’s not gringo, go home like the old guys.

Wes Moss [00:26:57]:
Yeah, I think that is a little bit like, get out of here, gringo. Right.

Edd Staton [00:27:01]:
It’s not like that’s what we’re affectionately called here. There’s no derogatory gringos. Well, I’m telling you that as a lead into the fact that the area of town where we live now is affectionately called Gringolandia. But.

Wes Moss [00:27:21]:
Take a left at Gringolandia.

Edd Staton [00:27:23]:
But the reality is, in the building where we live, people are. All. We told we were moving into this building, it was like, oh, that’s where all the gringos live. But they have a. We have a roster of all the people that live in this building, and we’re maybe 10% of the population of even this building. So it’s. You go to a restaurant here and it’s. We may be the only expats in it, but it’s still all right as we part one.

Wes Moss [00:27:51]:
What is your. Give me your one quick favorite thing about expat living? Ed, you first.

Edd Staton [00:27:59]:
For me, it is the stress free life that comes with financial freedom. We went from a situation where we didn’t know what we were going to do, to a point where instead of a lifestyle in the States on Social Security income, where we would always be thinking about what we’re not getting to do, we live an upscale lifestyle and do whatever we want to do within reason. So the peace that that brings you, it’s almost indescribable. And so few people know it, by the way.

Wes Moss [00:28:40]:
That was so good. I just. That was amazing. Cynthia.

Cynthia Staton [00:28:45]:
Well, I have to concur, of course, with what Ed says, but one of my favorite parts about our expat life is our pedestrian lifestyle. And we didn’t touch on that at all. But living in the United States, outside of a few big cities where there is good public transportation, you have to have a car and you have to drive most every single. Where every place you go. And here we walk out our door and within 1015 minutes, our whole life is right here. And that is a game changer. Not only are you getting physical activity and exercise just by going to the store or walking to the gym or the yoga studio, I’m saying things that we do, or just walking by the river, it changes everything. Your whole perspective.

Wes Moss [00:29:38]:
That is like a blue zone ending it’s a blues, it’s a blue zone. Beginning is what it is. Guys, we’re gonna wrap. Thank you. And this is so much fun. This is like, so I feel so warm and sunshiny after sunshiny after talking this through. So thank you, guys. More money matters right here.

Wes Moss [00:30:02]:
Straight ahead. If you’ve ever done a Jane Fonda workout, or if you remember as a kid rocky running the steps, and if Michael Keaton is still mister mom to you, then guess what? It’s officially time to do some retirement planning. It’s Wes moss from money matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead. Schedule an appointment with our team today@yourwealth.com. dot that’s your, yourwealth.com dot. How to retire one year sooner or five years sooner. You know, I’ve been writing for Forbes.com for a while now.

Wes Moss [00:30:45]:
It dawned on me the other day that we have all this content on the retire Sooner podcast, how to make your money last. We’ve talked about the 4% rule, the 4% plus the 4% versus the 6% rule. We talk about how to lower your anxiety around money when it comes to your retirement so you can retire sooner. We talked to a couple who moved to Ecuador because they didn’t have a whole lot of money for the United States, but they’re kind of living like kings. As expats, we talk about maximizing or optimizing your Social Security because it’s a big piece of the equation for most folks when it comes to the retire sooner calculation. But I realized the other day, we haven’t done an episode in a very long time around how to actually retire sooner, meaning shave off a year. Shave off three years. Shave off five years from a work perspective, get into that economic freedom we’re all searching for.

Wes Moss [00:31:40]:
So today we’re going to do exactly that. We did a bunch of math. There’s a little bit of math here on this episode, but that’s really a huge part of what financial planning is all about. It’s what investing is about. So we’re going to go through some of the math that will help you make a plan to shave off a year of working three years. Five years of working as we up our savings, up our investing. So we’ll start with the bottom line. And the bottom line here, and we’ll explain all this, is that we know savings is hard.

Wes Moss [00:32:11]:
It’s really hard. The only way to really lessen that savings load in a given year is to give yourself more time. The longer we wait, the higher the amount that needs to be saved each year. And it goes up and it goes up, but it almost goes up parabolically, meaning that if you wait a couple of years, you delay a couple of years. It doesn’t really have a material impact on how much you need to increase your savings in any given year to reach the same goal. But if you start waiting six years, eight years, ten years, it’s not so much that the amount that you need to save each year goes up linearly. It almost goes up parabolically. So it goes up a lot the longer we wait.

Wes Moss [00:32:52]:
So to lessen the uphill climb, we need to give ourselves more time to retire sooner. And as I’m going through and looking at all these numbers, I’m thinking, well, there’s really not much magic here, but maybe there is some magic here. It’s called the magic of time and giving yourself enough of it, you can do almost anything. Here’s another reason why I thought we’d focus on something this fundamental when it comes to retiring sooner. Here on this episode. I’ve been writing for Forbes.com for a while now. I’m in the personal finance vertical. Gives me a lot of leeway, though.

Wes Moss [00:33:28]:
I write about the habits of happy retirees and income investing and dividend investing, retirement planning, you name it, kind of across the board. Some of the articles have done okay. At least a few people read them. But one we recently published was so simple and so basic that I thought it would bomb. It was titled one small shift that can make a $2 million difference in retirement. Now, I will admit the title is pretty good. It’s a good title. But all the article really did was show the difference between Jack Saver and Jill investor super simple.

Wes Moss [00:34:08]:
They both saved $1,000 a month for 30 years. The saver got 1% per year. The investor got a hypothetical 10% per year. And there ended up being a huge difference between the two. The saver, Jack ended up with about four hundred k. The investor, Jill, ended up with almost 2.4 million, almost a $2 billion difference. But that was it. Ultra simple.

Wes Moss [00:34:30]:
Just a little bit of mathematic. That one article has now more reads and more views than all of my other forbes.com articles combined. Huh. But it made me realize that simple is often the very best approach. In fact, one of our core values at CIA Capital investment advisors is, to quote, make it simple. The world of financial planning and investing is by nature almost infinitely complex. So the better we are at herding all those cats into something that is simple and manageable, arguably the better you should be able to do. Over time, I think we can all forget just how impactful a small or simple shift or simple idea can make on your overall retirement journey and your life.

Wes Moss [00:35:19]:
So we’re going to look at something today that’s also easy, very simple, but powerful concept. What could help you retiree just one year sooner? This is, after all, the retire sooner podcast will also go for five years sooner. So before we start with some math, I also want to revisit a YouTube video I did a couple of years ago. It still stands very true today, and it was titled five reasons you should retire ASAP. Essentially, if you’re facing these five things or any of these five things, you should really think about how to either retire from your primary job or go part time or do something else kind of catalysts around what should get you into that next phase of life. Early retirement, regular retirement, any sort of retirement at all. And I’m going to quickly go through these five and just focus in on one because it impacted me today. And that is, number one, is your commute longer than 45 minutes? Two, is your work schedule unhealthy? Three, do you love your job? Do you really love it or not? Four, are you appreciated at work? This goes beyond just the money.

Wes Moss [00:36:30]:
Are you really appreciated and valued for all the time you spend at your job? And then five, have you topped out financially? Now, all of these deserve their own conversation. I’m just going to focus in on the very first one, because it hit me today in the southeast, and this happens, I would think, most places in the United States, not all, but in the southeast, we’re well known for these surges that either come through the Gulf of Mexico, tons of hurricanes. Obviously, we’ll come through New Orleans or Louisiana and the Alabama coast, and then they will eventually. By the time they get to Atlanta, they’re usually not hurricane strength, but they, they do a lot of damage, obviously, in their path that along with just good old fashioned thunderstorms. We are a city of trees. Atlanta is well known to be a city of trees. If you fly over Atlanta in an airplane, yes, you see downtown and midtown and you see the skyscrapers, but it’s surrounded by trees. It’s a very green city, as you do a flyover.

Wes Moss [00:37:36]:
And that’s wonderful. But it also means that almost every time we have some sort of weather system that comes through that can last for ten minutes. We have downed trees and down trees mean down power lines and down power lines means traffic chaos. We didn’t even have that big of storms last night, but evidently it knocked out a bunch of power in kind of the main area of Atlanta and what is normally a, let’s say, 20 minutes commute for me, which is really good when we start talking about commuting, very fortunate turned into almost an hour. And I thought, this is ridiculous. This is terrible. What an awful way to start the day. And then it reminded me of what we’re talking about here today.

Wes Moss [00:38:18]:
A lot of people have a 1 hour commute each way every single day. That’s when there’s no weather and when all the lights are working and there’s no road construction. And the reason I originally came up with this idea as one of those many catalysts that kind of pushed, that can kind of push you over the edge and say, okay, I’m done working, is that it’s not uncommon that a family that I’ve, let’s say, worked with almost the last straw, the straw that broke the camel’s back on saying, I’m done is a brutal commute. And we’re well known for it here in Atlanta, because a lengthy commute takes a toll in a lot of different ways. The stress of a super long drive, it’s not that healthy for your body. There’s been studies that show long commutes over 45 minutes can hurt your relationships. If one spouse commutes longer than 45 minutes each way, the couple is 40% more likely to get divorced. Time spent in the car.

Wes Moss [00:39:14]:
Yeah, maybe we listen to podcasts or our favorite radio station, but it’s not time you’re spending with your spouse or your family. And as much as you might love the retire Studer podcast, you’re way better off hanging out with your kids and your family and not me. And they’d be getting worse commutes. Now, the average city is around 30 minutes for a commute each way. Atlanta is 29, Philly’s 28, DC is 33. They have one of the worst. That’s the average. That’s the average.

Wes Moss [00:39:43]:
That means for every 15 minutes commuter, there has to be a 45 or an hour to get the average that high. And we all know people, and it may be you that regularly spend 45 minutes, an hour, an hour and 15 minutes in the car each way. That just isn’t good. There’s just real negative impacts. According to the Keck School of Medicine at USC, there’s all sorts of physical and psychological impacts associated with long commutes. And once the distance rises to 30 miles or more. It increases the probability of obesity. Who has time to exercise with commutes that long? Another study from the Keck School of Medicine at USA found that those with a commute of more than 90 minutes are far less likely to make trips out for social purposes, to visit friends, relatives, play sports, or even go to the movies.

Wes Moss [00:40:37]:
That means higher levels of loneliness, lack of sleep, more exposure to pollutants, and, of course, increased levels of stress. Long commutes are just not good, and it’s just one of many reasons why being able to stop work or shifting to a work from home schedule at least a couple days a week is a real variable when it comes to what retirees are thinking about in their next phase. Now, let’s do some retired sooner math. When it comes to this math, the equations are pretty simple. We’re just talking about different set periods of time. Ten years, 15, 25, 30 years. And we need a destination target. So we want a goal in mind.

Wes Moss [00:41:21]:
So we want to solve for a certain amount of money saved, and then we have to have a rate of return assumed, and we’re going to use 8%. Now, that’s not a low bar. 8% is not a low bar. However, since the s and P 500 has been around 10% for most longer periods of time, 10% on average per year, I’m okay with using just a hypothetical 8% in the real world. It could be less, particularly if you’re a more balanced stock bond real estate investor. But it also could be more in the real world. Now, we need a goal or a checkpoint that we’re reaching for. And since we all know that, ah, traps on average have a $1.25 million savings pool in liquid retirement savings, let’s start there.

Wes Moss [00:42:09]:
Million and a quarter. Again, not a low bar. We’ve got to start somewhere. And since a lot of our listeners, many of you listening, are already savers, you’re already an investor. So let’s assume you already have $250,000 saved. Don’t worry, we’ll do some starting from scratch examples as well. But let’s assume you’ve already at least gotten started. You have 250k.

Wes Moss [00:42:34]:
Now you need a million more to get to one and a quarter million dollars. And let’s set our baseline at 25 years to get there. That means let’s say you’re 40 and you’re looking at age 65 as your target age, or you’re 30 and you’re looking at age 55 for your target age. That sounds like a retire sooner age 55. I love that. If we’re assuming the 8% rate of return, what kind of savings would it take then? What would it take to get there one year sooner? So we’re going to start out with Conor. He’s our example to start out with. Conor’s age 40 and wants to have a total of $1.25 million by age 65.

Wes Moss [00:43:16]:
It’s 25 years for you listening. Whatever your age is, just add 25 and that’s your goal year. So if you’re 35, your target age is 60. When it comes to this example, okay. Conor already has $250,000 saved invested. For him to reach a million and a quarter in 25 years, he needs a million more. How much would he have to save each year and each month, assuming again this 8% rate of return to get there. Spoiler alert, Conor doesn’t need to save anything more.

Wes Moss [00:43:48]:
Here’s a breakdown of the calculations. If he already has $250,000, that just an 8% rate of return, that would grow to approximately 1.7 million by age 65. With an 8% annualized rate of return, what? That way exceeds the target of one and a quarter. So nothing additional yearly or monthly necessary. Our producers here in the studio didn’t even see that coming. It’s funny, when I started doing the math, I didn’t even see that coming. I was thinking, okay, another million dollars. He’s got 250.

Wes Moss [00:44:23]:
Excel table calculated out, 8% rarity. He’s at one. It’s 1.7 million. That is just the power of being able to have a nucleus that is starting to work for you. Now we’ll assume he’s starting from scratch. Okay. At least. Okay, now we’ll assume he’s starting from scratch.

Wes Moss [00:44:42]:
$0. So if Conor started with $0, he wants to reach 1 million a quarter in 25 years, 8% rate of return. He’d need to save approximately $17,000 a year. And I’m rounding these numbers, by the way, it’s $17,098 a year. But just to make it simple, I’m going to round these numbers just a little bit. That translates to about $1,425 a month, 1425 a month, 8% rate of return, 25 years. He gets to his goal of one and a quarter by age 65. Time in this example is so on Conor’s side here.

Wes Moss [00:45:19]:
Is $17,000 doable for some people, no, maybe not. But for some people, hopefully those listening today, I think it is doable. In fact, it’s several thousand dollars less than what we can put in our 401 ks 2024 levels about 23 grand to max out a 401k. That’s if you’re under age 50 50 plus it’s $30,500 a year. So we’re able to do all this hypothetically with just 401k contributions. Now, what if Conor wanted this to happen just one year sooner? Let’s shave off a year. A million and a quarter is the goal. But now at age 64, not 65, he’d need to save approximately $18,700 per year, or $1,560 a month.

Wes Moss [00:46:05]:
That’s not a whole lot more. It’s barely any difference. It’s only $135 extra per month. So one year earlier or sooner translates into only 135 bucks a month more to essentially buy you a full year of economic freedom. This is where you can start to see why starbucks and lattes got such a bad name. Because a little bit of money in any given month, if you do it for a really long period of time, adds up tremendously. And in this example, it adds up to an entire year of being able to retire sooner. What is $135 bias these days in the inflation world we live in today? Producer Mallory just told me that it’s easy to spend $6 on a latte.

Wes Moss [00:46:53]:
I don’t go to Starbucks just because the line is too long. But six, $7, easy to spend on a drink, plus a tip. Call it $8. Guess what? That’s 16 lattes a month. That’s one every. It’s not a latte a day. It’s a latte every other day to get to that 135 extra. That buys an entire one year when you give yourself time.

Wes Moss [00:47:16]:
Now, this is an example. Over 25 and 24 years, it’s a long time. A little extra a month goes a long way. Now, how about five years sooner? Conor wants to get to that one and a quarter million dollar goal by age 60. But he’s only got a 20 year timeframe. Now, he’d need to save approximately $27,300 per year. That translates to about $2,300 a month. By saving and investing that amount.

Wes Moss [00:47:44]:
If he were to get a hypothetical 8% rate of return, he can get there. He can reach that retire sooner goal in 20 years, not 25. So shaving off five years, what would it take relative to the so 20 versus 25 years? It’s an additional $850 per month. So this is not a small amount. Now, we’re going beyond lattes here, but that’s the math. On top of that, 17,000 a year that he’d need to save to get to 65 to shave five years off to make it work by age 60, it takes an additional $850 a month. Again, not saying this is easy, but that’s the mathematic. Let’s look at this.

Wes Moss [00:48:25]:
On a monthly basis, $1,425 gets to the goal in 25 years. 2300 bucks a month gets him there in 20 years. So an extra $850 a month buys five years of arguably financial freedom. A, can he do it? B, can you do it? C, is it worth it? Well, that’s up to you. As I’m going through these numbers, I do recognize this is a lot of money to be able to save. When you’ve got median household income in the United States, that’s 70 grand a year. To save. 30 is a giant deal.

Wes Moss [00:49:07]:
So I also recognize that not everybody’s able to do this. I also recognize that that number, 27k, is still. A lot of that work can get done just by using or maxing out. The is more than the max, but it’s pretty close. And it’s actually less than the max if you’re 50 plus. Now, here’s what I mean about as we wait to get this started. This reminds me of the great buffet quote, the trees that you see today. This is the essence of the quote.

Wes Moss [00:49:39]:
The tree that you see today was planted many years ago by someone who planted the seed of the tree, something like that. And if you don’t see any trees, the best time to plant a tree is today. But if I go and look at this over time, and let me explain what I mean about parabolically, another thing I recognized when I went through this math. And think of this. If you’ve got. I looked at this in a slightly different way, still trying to get to the same million and a quarter goal, doing it in 30 and 29 and 28 years, all the way down to only having ten years to do it. So think of somebody at age 50 that wants to get to a million and a quarter and wants to do it by age 60. I mean, in the end, it is just math.

Wes Moss [00:50:26]:
But when you have a long period of time, those early years of waiting doesn’t cost you that much more savings as long as you get started. Meaning that if you have 30 years to get to the million and a quarter, it only requires about $920 a month. If you only have 29 years, okay, it’s only $1,000 a month. If it’s 28 years, it’s only $1,100 a month. If you haven’t gotten started now, you’ve got 28 years. If you got 27 years, it only goes up to $1,200 a month. So in those early stages of delaying savings, it’s not that dramatic of an increase of what you’ve got to save additionally. So you wait a year, it goes up by $82 a month.

Wes Moss [00:51:12]:
You wait two years, it goes up by 173 bucks a month, et cetera, et cetera. But the longer we wait, if you look at this as a graph going from left to right, the bar chart that shows how much you need to save each year stays pretty modest for a while on that graph and then really shoots up almost parabolically when you only have starting around. If you only have 20 years left, particularly only 15 years left. So if you only have a 15 year horizon, so say you’re 40 and you want to retire at 55, you’d need to save almost 50 grand a year, $3,800 a month. A month. If you only have ten years left. So youre age 50, you want to retire at 60, you want to get to that million in a quarter, takes over seven grand per month in savings in order to hit that goal. Of course, it makes sense.

Wes Moss [00:52:03]:
Much higher dollars because we have a much shorter time horizon, plus the rate of return over time. Theres more uncertainty when the timeframe is that compressed. I think thats just another variable if were looking at these shorter timeframes. So thats the mathematic. But there is hope. I truly believe it is never too late to start saving for retirement. I have seen so many families over the 25 plus years I’ve been in the planning and investment business that did not start until they were in their mid to late forties, even early fifties, because they just, these are fairly high earning people that they lived in an expensive city. They had multiple kids.

Wes Moss [00:52:48]:
Those kids went to college. They had to help pay for college. And in the end, they just really couldn’t afford to save three grand, five grand, eight grand a month. But once the kids got out of the house, let’s call it age fifties, and got out of college, and mortgages were closer to being paid off, or in some cases, paid off, then they were really able to ramp up and accelerate and compress the period of time it took to save and get to the goals they needed. I’ve seen it happen over and over and over again. So even if you are in your forties and fifties and haven’t really started and don’t have that, that quarter million dollar jump that we talked about in the first Connor example, it’s okay. It’s okay. I’ve still seen people and families make it work again.

Wes Moss [00:53:33]:
We’ll go back to the bottom line. This is just, this is really just around math and time savings is super hard. We all know that there’s a reason why more than 50% of America essentially has nothing saved. There’s a reason that almost 70% of baby boomers are aged 65 to 69 have less than 100k saves. It’s hard. Saving is really hard. Investing makes it even a little harder. But in order to get to these goals, if we’re going to have a real rate of return, it’s not going to happen in the money market.

Wes Moss [00:54:04]:
It’s not going to happen in cash. The only way to really lessen the load, the savings load, the difficulty in any given year is to try to give yourself more time. Very simply, the longer we wait, the more we have to put in per month to reach those same goals. But also the longer we wait, the steeper the climb becomes. Gets almost parabolic. So we want to lessen the uphill climb by giving yourself more time again. When you look at it just from a math perspective, there’s really no magic. But maybe there is some magic in understanding what the math tells us.

Wes Moss [00:54:39]:
It’s called the magic of time. And if you can give yourself enough of it, and I’ve seen this, the retire sooner journey is absolutely possible. So I hope this concept is something that you’re able to take away from and enact today or this month. If you see the power behind this concept and these actions, it can do wonders for you over the long run. If you’d like to find me and our money matters team, it’s easy to do so throughout the week. We’re available, right@yourwealth.com? comma, that’s y o u r, wealth. It’s super easy to schedule a time to speak with someone. We’re happy to help enjoy the rest of this wonderful day.

Mallory Boggs [00:55:28]:
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circ*mstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only, and is not to be considered investment advice or recommendation or an endorsem*nt of any particular company. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. The information provided is strictly an opinion and for informational purposes, only and it is not known whether the strategies will be successful. There are many aspects and criteria that must be examined and considered before investing.

Mallory Boggs [00:56:16]:
This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained hereinhood.

This information is provided to you as a resource for educational purposes and as an example only and is not to be considered investment advice or recommendation or an endorsem*nt of any particular security. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. There will be periods of performance fluctuations, including periods of negative returns and periods where dividends will not be paid. Past performance is not indicative of future results when considering any investment vehicle. The mention of any specific security should not be inferred as having been successful or responsible for any investor achieving their investment goals. Additionally, the mention of any specific security is not to infer investment success of the security or of any portfolio. A reader may request a list of all recommendations made by Capital Investment Advisors within the immediately preceding period of one year upon written request to Capital Investment Advisors. It is not known whether any investor holding the mentioned securities have achieved their investment goals or experienced appreciation of their portfolio. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circ*mstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

#26 - Financial Freedom for Expats / You May Be Able To Retire One (Or Five) Years Sooner (2024)


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