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June 23, 2020, 3:20 p.m. EDT

Can my investments survive a crisis if I retire early? It did for these FIRE pioneers living in Mexico

‘The FIRE lifestyle prepares one for situations like COVID, in that we are already living within our means and have no debt’

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By Alessandra Malito, MarketWatch


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Billy and Akaisha Kaderli retired almost 30 years ago and now live in Chapala, Mexico.

Nearly 30 years ago, Billy and Akaisha Kaderli decided they wanted to retire at 38 — in that time, they have experienced cities around the world and their money has survived numerous financial crises. Yet, they’re still doing better financially than when they started their journey, they said.

It was 1991, and the Kaderlis, who were living in Santa Cruz, Calif., had owned a restaurant for 10 years. Billy was a trained French chef working seven days a week for breakfast, lunch and dinner, at the restaurant, while Akaisha managed the business. Years into running the restaurant, Billy left to work at a brokerage firm, where he continued to work nights, weekends and holidays in his new job. Akaisha continued to manage the restaurant. “We finally asked, how much is too much?” Akaisha said. “Billy came to me with the idea of selling everything and traveling the world.”

This was well before the term FIRE, or “Financial Independence, Retire Early,” became common. The FIRE movement’s followers strive to leave the workforce well before traditional retirement age, or at least curtail their reliance on a paycheck.

The couple, who blog at Retire Early Lifestyle , invested 100% of their assets in the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05%  and let the market work for them. “Thirty years later and we have a higher net-worth today than back then, and that’s after inflation and spending,” he said.

It’s been quite an adventure, including the one time Akaisha almost lost her finger in Guatemala during the country’s independence day celebrations. A doctor opened up his practice to take care of her, and even with travel to the city, 11 visits with a surgeon, anesthesia and everything else, the total out-of-pocket cost was less than $3,000. As pioneers in financial independence they didn’t have the thousands of blogs about how to save and invest to accomplish these goals. In fact, during the early days they got their news — and tacos — from a nearby American Legion post.

See: How to start on your financial independence journey

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How bad is it if I withdraw from my 401(k) during the pandemic?

If you've been affected by the coronavirus pandemic, the CARES Act allows you to withdraw up to $100,000 from a retirement account, such as an IRA or 401(k), without having to pay a 10% penalty - even if you're not 591/2 years old. But should you do that?

Billy and Akaisha spoke with MarketWatch about what early retirement was like before FIRE, how they have managed, and what their experiences have been like during the COVID-19 crisis. The interview was lightly edited for clarity and length.

MarketWatch: Did you have any models or inspirations when you were preparing for this change?

Billy: I had a magazine of a couple that lived in a sailboat with a child and that was always an inspiration for me, as well as some friends.

MW: How many countries have you seen? Any favorites — and why?

Billy: Our favorite place is where we are now: Chapala, Mexico. It is the largest lake in Mexico.

Akaisha: We don’t really keep track or have a bucket list. We have always done a lot of travel. It was a passion of ours to see Central and South America, Europe, all through Asia. We have traveled the U.S. and Canada. We went to Bali and Vietnam.

Billy: We spent years in Chiang Mai, Thailand. Asia is a great example — it is so different than the U.S., and Mexico also has a different culture. We enjoy immersing ourselves in those cultures.

MW: From a retirement perspective, how do all of these countries differ from the U.S.? In positive or negative ways.

Billy: From a retirement viewpoint, Mexico is on sale. The cost of living is favorable to the U.S. dollar. The big question is health care. Everyone wants to know. The [doctors there] know just as much as the guys up north. If I want to see a cardiologist, I just go walk to his office in the morning. It’s not like a referral. If he’s in, he’ll see me. If not, tomorrow. We have Medicare as a backup if we happen to be in the U.S.

Akaisha: We pay for mostly everything out of pocket. It’s affordable. We did that in Thailand as well.

MW: It wasn’t called FIRE when you did it, but how has the concept or execution of early retirement changed over the years? Do you think it’s more common? Easier or harder to accomplish?

Billy: The investing side of the equation is easier than when we retired back in 1991. The internet hadn’t been widely used yet, so there was no online banking. There were ATMs but they were scattered.

Akaisha: Also no email, no WhatsApp, no Skype. We used to write letters.

MW: How did you weather the market’s ups and downs in the last 30 years?

Billy: You have to have faith in the economic model and the thing is not to panic out of the market. Know that this is a temporary situation and it can be painful and can take years to come out of, but the biggest thing is making an irrational move that could hurt you late in life. Now that we’re 67, the people starting out in early retirement have asset allocation more aggressive than ours, but we still have a 60-40 split with 10 years’ worth of cash.

Akaisha: In times like this, like in 2008, Y2K or 1987, we all had to jump in or out. The future is not bound to what the market is doing today. We can have market recovery and have our lives paid for.

Billy and Akaisha Kaderli
/zigman2/quotes/210599714/realtime
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