It is easy to draw a parallel of this to one’s life, in that we chase an existence predicated by the strings and bindings of our society (stone), when in fact we should think about remaining flexible and nimble (rolling stone). There is a case to be made that by thinking outside the box, you can achieve a life that offers a more unconventional path, but one equally satisfying.
For this discussion let’s first examine what we need. Keeping up with the Joneses is expensive. New cars, expensive holidays, designer clothes have a cash cost. You may like those, but you don’t need them. What if you step off that moving path on to another one, not necessarily more humble but certainly more considered? You spend less than you earn and continually salt that away as investments. This is not merely the earnings we contribute to a pension, it’s much more than that. In our case, our assets were in building our own homes and businesses; for others, it is the stock market. Your goal is faceted; you need to limit your outgoings and grow your assets. However, it’s also achievable. In many of the places you will journey to, your cost of living will fall precipitously, your outgoings diminish. As a general guide, take your expected expenditure per annum and assume your retirement nest egg will have to be 20 or 25 times that.
Still sitting down, but feeling this is impossible? It’s not. A random statistic I heard recently was the average middle-class retiree from Florida to North Carolina has a net worth of something in the region of $1.2M. House, savings, 401K, possessions, and cash. That’s just the average; if the direction of this content resonates, then “average” is likely not you.
So just how to achieve your goal in a reasonable timeline? As investors we have had quite a journey in life so far, most of which have not followed traditional thought lines. But leaving aside that journey, let’s look at a home we built last year in Palmetto Bluff, Bluffton SC.
|Total cost of construction, outfitting, and land (approx.):
|Total Finance Amount:
|Carriage House rented in term time
|Main and carriage house outside of term
|Overheads (City, utilities, mortgage interest, etc.)
|Gross Cash Remaining
Now, this house is an operating business, and that business has necessary overheads. Within the rules of the US Tax system, many of those overheads are tax-deductible. So the remaining funds are available to support your ongoing lifestyle and not sunk into maintenance and operation of what is typically your most cash-hungry asset. We can all live on that and have an adventure-filled life at the same time. Additionally to that, your home becomes your inflationary hedge. It’s your major asset, and the value will rise with general real estate prices. Cash does not behave in this way. This is not far removed from the average net worth of the average retiree in these parts, so it’s not outrageously unachievable is it? Important also that their need for 20 to 25 times outgoings just dropped to 10 times as the major cash-burning asset has been eliminated. Try re-reading this paragraph a few times. The answer to how it is achievable is clearly outlined.
I spoke of Palmetto Bluff, though in truth, 2×4 bed homes on Folly Beach, 1×5/6 bed homes on Isle of Palms, 2×3 bed homes in downtown Charleston or many other destinations will achieve the same results. The caveat here is that you have a home to live in, and when you do not need to be there, you are free to roam, and your home provides the income to support that wanderlust. It would help if you planned ahead for this; we can be out of our home in 24 hours, leaving little trace of our existence. Nesting is not a choice of this lifestyle.
I could go on about our own journey, but I’m not going to do that here.
I’ll highlight instead one of our clients, Janet and John, let’s call them J&J for now. They are well educated, have good white-collar positions in a major city, no children at the moment. An upwardly aspirational and stereotypical American dream. They are also observant and open to thinking outside of the box.
J&J recently bought a house in Palmetto Bluff in the area allowing short-term rental. They often work from home, and the definition of “home” for them, is now basically anywhere connected to WiFi. We will market their new home for them when they themselves are not in residence. It will perform well given the market statistics. In their late 30’s and following their instincts, the nomadic lifestyle is perhaps now only a few years away. We all need a purpose in life, and retirement is not the goal of everyone. Freedom of choice, though, that’s an absolute home run.
Note: Our Luxury Simplified Retreats team manages an ever-growing portfolio of Charleston luxury vacation rentals both downtown and on Folly Beach. When it comes time to choosing a company to manage your property, they know you’re entrusting them with a significant asset and it’s their job to maintain and secure it while you’re out of town.