Yes, I want to retire by 40, at the latest! Right now, as of May 2018, I am 32 years old, so that gives me 8 years to achieve my goal.
How did I come up with that number?
Well, as you know I am a huge fan of Andrew Hallam, former expat teacher, now financially free and author of “Millionaire Expat,” “Global Expatriate’s Guide to Investing” and “Millionaire Teacher.” He provides a simple way to realistically calculate how much you’ll need to retire on and therefore tells you how many years you have to accumulate that sum of money. Check out his brilliant video below and keep reading to see how I applied it to my retirement, step-by-step.
So how did I apply Andrew’s super advice to my own personal situation?
Before I go into this, here are a few things you need to know about my retirement plans:
- This is my sixth year as an expat teacher. I was in Qatar for four years and London for one year before I moved to Dubai two years ago.
- I currently live and work in Dubai, but I only plan to be here for another few years. This is encouraging me to increase my already decent saving!
- I have a 4-bedroom detached house in my home town in Ireland, which I bought in cash during the economic recession, thanks to my four year stint teaching in Qatar. I rent it out to a lovely family who are in their second year living there. Each month, this puts €500 rent (after tax) into my Irish account, which I never touch and leave to grow. I am currently waiting for the house’s value to increase by 40%-50% of what I paid for it. When that happens, I will sell it and add this money to my retirement fund.
- I am Irish and I plan to move to Spain and retire there. I am currently going through the process of buying a 3-bedroom apartment in Dénia, on the east coast. To purchase this, I used my UAE savings, my Irish savings (mainly the rent), a €10,000 loan from my parents (my first and only parental loan!), and I took a personal loan from my Emirati bank. I will have it paid off by November 2018. This means I won’t have to worry about mortgage repayments or rent when I retire.
- Living in Spain means that my cost of living will be incredibly low. Using Numbeo, a city cost comparison tool, it seems that the cost of living in Dénia is 74% less than Dubai- woohoo! Click here to see more.
- At 40, I don’t plan to fully stop working ever again for the rest of my life, but I want to have the choice to take months off at a time if I want to! I still plan to do some blogging, teaching online, tutoring privately, or doing CV and cover letter work, but having the financial freedom to decide what, when and how long I want to do it for.
Ok, back to how I applied Andrew’s advice to my life!
- Due to factors above, I will be happy to have €2,000 a month to retire on in Spain, as I won’t have rent or mortgage repayments. That is €24,000 a year. However, €24,000 in 8 years won’t have the same value, so I need to add inflation by adding 3% per year for 8 years. I went to the Moneychimp calculator to do this. I know it is in $ but I just treat it as €.
2. So I need €30,402 in 8 years to maintain my life in 8 years’ time. Then I need to multiply it by 25 to get my magic retirement figure…. €760,050! €760,050 is what I need to have in my portfolio to retire. The idea behind multiplying it by 25 is because when you retire, you will live on 4% of your portfolio per year to ensure that you don’t run out of money during retirement. So how do I get there? Yes, I save as much as I can, but not just through saving alone. This figure will also include returns from the money I have invested on my online Internaxx platform that I set up last year. I spoke to Mark Zoril from PlanVision, an independent expat financial advisor recommended by Andrew Hallam, who showed me how to set it up and how to buy and sell on it. Before working with Mark, I had done about two years’ research, so I knew what I had to do and which ETFs (exchange traded funds) were best to invest in, but the thought of setting up the online investment platform left me absolutely petrified. I spent $96 on a year’s support from Mark Zoril and it was the best money ever spent! He provided unlimited support via email and Zoom meetings to answer my many questions and make me feel more confident to invest myself.
3. As I need to pay back my loan by November 2018, I probably won’t contribute anything to my investment account until December 2018. By August 2019, I hope to have €50,000 in my Internaxx investment platform. I also hope to have at least €120,000 from the sale of my house in Ireland by that time too. This means that by August 2019, I will have at least €170,000 as a lump sum in my Internaxx account. Then I must add €44,000 each year (€3,667 per month) to my account for the next 8 years. The average market return is 7%, so after 8 years, the amount in my Internaxx account is projected to be €775,123.16. Let’s recap my magic number I calculated… €760,050! Yes, this more than meets it!
I know there is A LOT of “ifs” and “whens” in my plan, but now that I have solid numbers to work for, I feel I am more likely to fulfil them.
- I’ve crunched the numbers and made a realistic monthly budget for the next year 2018/19 to be sure that I have €50,000 in my Internaxx account by August 2019.
- I am keeping a close eye on the Irish property market and its trends to see when I am likely to be able to sell it off to make at least €120,000 profit.
- In terms of the annual €42,000 contribution to my investment account, here are a few things I need to do to achieve this:
- Get back to my minimalist lifestyle so I buy less and reuse more.
- Save more of my rent allowance by living with housemates and/or living in a cheaper part of the city.
- Earn more money (providing more CV and cover letter services, working longer during the summer holidays, writing a book, “How to Become an Empowered Expat Teacher- Personally, Professionally, and Financially.” Read more about that here!
Why don’t you calculate your own retirement number? Then you can project how long you need to work and how much you need to save to retire comfortably! I hope this post has inspired you to start thinking about your own retirement plans.
The expat life has so many wonderful aspects- the high salary, the job security, the sun, and the standard of living. However, it has one downside- it is unpredictable. We might plan to teach here forever with its tax-free salary and perks, but life here can change in the blink of an eye. We might lose our job, do something silly and get deported, or we may have to go home for family reasons. Whatever the reason, we want to have something to show for all our hard work. Many of us are no longer paying into our private teaching pension at home, which means we must have alternative methods to fund a comfortable retirement that will allow us to lead the kind of life we have now. Start today!
I’d love to hear from you in the Comments! Let me know when you plan to retire, where you plan to retire to, and what you are doing to get there!
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