FIRE at 26 and Move to the Dominican Republic

[MasterC17]

Life Situation: Married, Filing Jointly. I am 24, my Wife is 26. We have no Children and will likely adopt when suitable.

Gross Salary/Wages: $190,000 Pre-Tax
Adjusted Gross Income: $200,000 Pre-Tax
After-Tax Income: $135,000

Current Expenses: $30,000/year (we keep it low)

Debt: $0

Assets: Around $100,000 (6 Cars, Many Car Parts, etc)

Cash: $25,000

Investments: $275,000

• LendingClub: $86,000 (I know, I know, I am scaling out, but have had solid returns)
  FundRise: $27,000 (Again, scaling out, but have had solid returns)
  TSLA: $70,000 (Primarily ESPP, Some RSU, WAS doing well…need to scale out)
  Betterment/WealthFront/Vanguard: $80,000 (Approx $25k Roth IRA’s)
  Silver Coins: $13,000ish

Net Worth: Approx $400,000

Plan: We have mutually decided that we do not enjoy our jobs and we want to move to the Dominican Republic to live out our dreams of being on an island with great people and great food. We are frugal and we live simple. We have furry children but no actual children. We do plan to adopt 2-3 children in the future. Expenses in the DR are significantly less than the US. I figure if we have managed to live off of $30k in the US (MA, nonetheless), we can manage to live off of $20k/yr (or less) in the DR.

cFIREsim shows a 95% Success Rate with initial Portfolio Balance of $500k and Inflation-Adjusted Spending of $20k/yr. I am not expecting any other income (Social Security, etc).

As soon as possible, I am planning to sell all of my remaining assets and invest in more index funds/ETF’s. The rest of my investments will be trimmed and moved into index funds/ETF’s. Over the next year or so we are planning to invest another $100k or so, bringing our total Portfolio value at this time next year close (or to) $500k.

My question is, does this seem viable? All of research says yes, but I still fear the unknown. This may seem crazy to some (admittedly it does to me too haha), but I have been saving for this for years and am closing in on actually making it happen!

[Padonak]

Why Dominican Republic of all places? Do you speak Spanish? Do you have family ties to that island?

My ER plan is similar to yours, though I am single. I am considering places like Bali and Thailand, perhaps snowbirding on a budget between Eastern Europe and SEA. I traveled to Latin America including DR. In my experience, without Spanish, SEA is better value for money.

[Padonak]

About 500K at 4% = 20K. If I were you I would try to reach at least 600K give or take and use a 3.5% withdrawal rate instead of 4% given current high PE10 ratio and likely lower market returns (PE10 has pretty high negative correlation with expected market returns for the next couple of decades going forward). This is debatable and there are threads on the forum that discuss this subject in detail. However, given your high income it's not that hard to save another 100K. You need 571K to spend 20K per year at 3.5%. Add 30K for emergencies and you are good to go.

In the meantime, you can slow down at work, minimize stress and work hard enough to keep your jobs. You can also travel as much as possible, use all your vacation time, travel hack to minimize expenses. Perhaps explore other places for early retirement.

When you are retired, as a couple you can save a bunch of money by choosing retirement locations with the best combination of low cost of living and high quality of life. For example, a single guy would probably get bored in a place like Chiang Mai, Thailand after awhile. However, for a couple it could be an ideal place. Same thing in DR: you can settle somewhere like Las Terrenas or Cabarete as opposed to Santo Domingo.

Whether it's in Thailand, DR or elsewhere, as a couple you can also choose an apartment not very close to the action (bars, clubs, places to hang out) but cheaper and higher quality.

[MrThatsDifferent]

Sounds good. Do it! If that place doesn’t work, there are like 20 others that would fit the bill.

[Padonak]

Also, if you managed to be debt free and earn 200K between two of you by mid 20s, you have the potential to earn more working remote jobs or running location independent businesses.

[MasterC17]

Why Dominican Republic of all places? Do you speak Spanish? Do you have family ties to that island?

My ER plan is similar to yours, though I am single. I am considering places like Bali and Thailand, perhaps snowbirding on a budget between Eastern Europe and SEA. I traveled to Latin America including DR. In my experience, without Spanish, SEA is better value for money.

My wife and I are big fans of the Caribbean and have found the DR to be one of the most enticing places to live. That being said, I have never been to SEA, so that may be worth looking into.

I don't speak Spanish all that well, but I have been practicing daily for a while now. My wife is fluent in French, so Las Terrenas, which has a large French population, would likely be a good place.

I do agree that $600k would be a safer bet than $500k. I don't think it's a question of IF the market will pullback at this point, but rather when; and I would expect that, that will be sooner than later.

I am also looking into a location independent job/business. I am well versed in Web Design/PHP, so I would likely look down that path.

All that being said, if I can find a way to cut back on my hours and live a more stress-free life, the next couple years before FIRE should fly by!

Thank you for the in-depth feedback!

[chickinyow]

Once you adopt 2-3 kids I would not expect your spending to keep constant at 20K. Kids have a habit of being expensive.

Are you planning to work at all? 26 seems pretty young to completely hang it up. What about medical issues that may come up?

[marty998]

Once you adopt 2-3 kids I would not expect your spending to keep constant at 20K. Kids have a habit of being expensive.

Are you planning to work at all? 26 seems pretty young to completely hang it up. What about medical issues that may come up?

I would suggest they would be leading a much healthier lifestyle being FIRE than they would if they were working.

Not sure of the healthcare situation in the DR, but they can always island hop to Cuba for top notch care :)

[Padonak]

Sorry I didn't notice the part about having 2 kids before I gave my advice.

On 20k per year, I suggest buying a couple of dolls, maybe barbie and Ken. Alternatively, you can get a couple of... I forgot the term... Fluffy children? Feline children? Whatever millenials call their pets these days. Even with pets, expect that you may not be able to afford expensive treatment, international relocation, quarantine and vaccines on that kind of budget, so every now and then you might have to leave your pets behind or have them euthanized, then get new ones in another country. 

Seriously, if you are planning on having two kids, get solid location independent income first or save a couple of million working regular jobs.

[shelbyautumn]

Alternatively, you can get a couple of... I forgot the term... Fluffy children? Feline children? Whatever millenials call their pets these days.

I think you're looking for "fur babies".

[ysette9]

Whatever the latest ridiculous term is for pets. :)

What you are proposing is a pretty drastic lifestyle change. Being the risk-averse person that I am, I would want a trial run before committing. Can you take a sabbatical and go stay in the DR for 3-6 months as a test drive? That would help you understand if it really is what you want as well as give you some realistic spending numbers to base your assumptions on.

As for adopting: I don’t know specifics, but I keep reading that many countries are closing down international adoptions. A coworker adopted twice here in the states in a practically perfect situation, and she says it was EXPENSIVE. Bottom line: do your research and keep your options open. You wouldn’t want to find yourselves stuck and unable to move back home for cost reasons if ten years down the line you don’t like how things have turned out.

[retireatbirth]

With your age and assets, just go. You can always change your mind later. If you end up staying in the DR for the next 60 years, have fun.

[Adam Zapple]

Congrats on the savings.  If you do not make this sort of leap soon, you may never do it.  I say go for it.  It's not like you can never earn another paycheck again.  After a year or two, I'm sure you'll be looking for something to do with your time.

[Acastus]

Just a comment. The plan is kind of a 1 way trip. You can retire to the DR, but you may not be able to afford to move back if you want. Is it worth a little more time here? You can scale back your jobs by 50% and still save plenty.

[HPstache]

What kind of jobs do you have?  Would it be easy to get back in if you have a multiple year employment gap?  Sticking it out for 1 more year of saving would make a huge difference.  That's what I'd do... maybe even 2 more years to head into ER with full confidence and some extra cushion in your budget.

[gerardc]

With your age and assets, just go. You can always change your mind later. If you end up staying in the DR for the next 60 years, have fun.

This. You'll probably be bored in 2 years and want a change anyway, so no need to fret it and plan for "forever" with the 4% rule.

[freedomislife]

Why Dominican Republic of all places? Do you speak Spanish? Do you have family ties to that island?

My ER plan is similar to yours, though I am single. I am considering places like Bali and Thailand, perhaps snowbirding on a budget between Eastern Europe and SEA. I traveled to Latin America including DR. In my experience, without Spanish, SEA is better value for money.

NW required to retire confortably in SEA in mid / late 20s, if single, not married, and plan to have no kids?

[jeroly]

1.  I recommend that you also set aside approximately $600K for three years of end-of-life care per person unless you are willing to be put in a not very nice medicaid-accepting facility. 

2.  Also take the expenses related to medical care into account, which while it will be cheaper in the DR than the 10K/yr I'm paying for single COBRA coverage here in the US, won't be free for you as a foreigner.  I'm guessing $5k.

3.  In looking at expat/foreign retirement sites, folks estimate that their expenses in the DR are 20% less than in the US so maybe expect to spend $24k, more if you plan lots of travel back to the US. 

So in conclusion I'd recommend that you budget for 600K + (4k insurance+24k expenses)x25 = $1.3mm.

[MrUpwardlyMobile]

1.  I recommend that you also set aside approximately $600K for three years of end-of-life care per person unless you are willing to be put in a not very nice medicaid-accepting facility. 

2.  Also take the expenses related to medical care into account, which while it will be cheaper in the DR than the 10K/yr I'm paying for single COBRA coverage here in the US, won't be free for you as a foreigner.  I'm guessing $5k.

3.  In looking at expat/foreign retirement sites, folks estimate that their expenses in the DR are 20% less than in the US so maybe expect to spend $24k, more if you plan lots of travel back to the US. 

So in conclusion I'd recommend that you budget for 600K + (4k insurance+24k expenses)x25 = $1.3mm.

This is probably tight but enough based upon some of the traditional theories.  I will declare financial independence at a substantially higher number because FatFIRE feels safer than leanFIRE.  My job is not one I could return to with a multi year employment gap so it has to work.

[frugal_c]

Its good to be conservative but shouldnt the end of life costs be covered by the stash?  No matter what u r taking a big risk retiring early and without a goverment pension. Op will have to decide how much risk they r willing to accept. If u want 1.3m its a completely different timeline to RE.

[beee]

I would recommend a gradual transition into your ideal life: cut hours or maybe take a 2-3 months sabbatical or negotiate a remote work for a cut in pay or smth else. No need to make a big leap of faith, you can take smaller steps which will still increase your happiness.

[ThaiSmile]

Given your age, I would imagine that your experience with the DR was with a few vacation trips? Before you take such a plunge and untether from familiar US life with a great paying job, strongly suggest that you really research the cost of the lifestyle you want to live. Having lived in expat-a-plenty places such as Thailand (where I am now) and Philippines, I can say that USD 2k/month is a healthy income for most locals, even those with families. That being said, locals can live as locals for everything and their lifestyle may not be appealing from the eyes of a "first world foreigner".

Personally, I would not attempt what you are suggesting (see my post on the setup I am building to FIRE in Thailand) as it is really skinnyFIRE for living in a foreign country. I have seen a lot of expats - singles and couples - come wide-eyed to Thailand and end up in some pretty unhappy circumstances. On one end of the spectrum, many discover that the "quaint and charming" country they visit loses its luster with time. At the other end, there are some really unsavory things that can happen to unaware expats, but I don't want to scare you.

Lastly, being so young you will not qualify for any retirement visas in Thailand (suspect DR is the same). So you will be subject to more stringent immigration requirements. For example, in Thailand you would only get a 90-day visa which would require you to leave the country (the famous Cambodia visa run) to renew. Not only a hassle, but a substantial cost to do 4 times a year. Research this before selling the cars. Good luck and hope you make your dreams come true.