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In its time, this would have been a five-smiley book. But now it is
dated, and the author has no plans to update it. Much of the advice
on retirement investments and average daily expenditures are not now
sustainable.
Nevertheless, for
certain people with high incomes early in their working career, socking it
all away to retire early is still a distinct possibility, as Paul and his
wife Vicky have aptly demonstrated in real life.
After converting all their assets to cash, and investing it in
income-producing financial instruments, The Terhorsts live strictly off
the interest of their investment portfolio, and do not draw down the
investment principal. In fact they grow the investment principal by the
amount of inflation. That makes their retirement formula ultra
conservative, and results in less income to enjoy their retirement life
than they could have. But on the upside, it also greatly simplifies the
retirement income strategy. And for such a very long retirement period, as
much as 60 years or more, it is better to be conservative. But at the end
of their lives, that means if they never draw down the principal, they
will have all their investment principal unused, and wasted. They also
have no children to leave it to.
Paul Terhorst does not have a formula for a draw down of his wealth based
on probable life span, net yield on investments, and estimated average
future rate of inflation. His rules of planning are simple, and of
necessity extra conservative. There is an inflation adjusted formula,
based on the geometric gradient finite series. But you won't find it here.
Despite these shortcomings, this book is an interesting read, though their
rules of thumb of $50 a day average expenditures is far out of date.
Nowadays, that figure is more like $100 a day. The Terhorst's also live overseas for the most part, which if done properly
can result in a much lower overall cost of living -- for just a little
lower standard of living.
The Terhorst's have not updated this book, and don't plan to. But they do
maintain a website where you can follow their experiences. The best way to
find it is just do Google search.
I myself retired early, at age 53, and lived overseas on much less than
the Terhorst's. So I can vouch for the do-ability of it. But I don't envy
their flit-about lifestyle, and find myself much happier with a pretty,
young Asian wife half my age, with our little kids running around my feet.
Which also means we don't travel around that much. All in all, all things
considered, I find that the best place to live is the US. But there are
many foreign locations that come in a close second, and for some people,
would be first choice.
If you have kids, and plan to send them to college, you can pretty much
forget about retiring early. But if you are childless, and plan to remain
so, then I think this might be a book full of valuable tips for you.
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