Extreme Early Retirement

Billy and Akaisha Kaderli are old hands at retirement -- ask them anything about saving, spending or traveling. But one thing may surprise you: their age. Sixteen years after they retired, they are now both 54 -- almost old enough to satisfy the minimum age requirements of the active-adult community in Mesa, Ariz., they call home (when they're not traveling around the world).

When they were in their late thirties, Billy, a stockbroker, and Akaisha, a restaurant owner-turned-office manager, decided they were working too hard and paying too much in taxes. They vowed to save enough to quit in two years. "Every time I looked at a latte or a new pair of shoes, I decided I didn't need them," says Akaisha. "If you are clear about what you want, it becomes easier. You can either buy this or be days closer to your goal."

By 1991, they had accumulated about $500,000, including a $100,000 profit from the sale of their home. They put their belongings in storage and set out to see the world. After six months on a Caribbean island, they headed for South America. Returning to California a year and a half later, they bought an RV and wandered around the western states for two years. Then it was off to Mexico. They had planned to visit the Lake Chapala area for a few months and ended up staying four years. Since then, they've returned home from time to time to care for their parents, but have spent the rest of their time in Asia and the South Pacific.

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What's their secret? This might sound like an extravagant lifestyle, but Billy and Akaisha limit their expenses to about $24,000 a year. They eat well and enjoy themselves but don't buy much "stuff." Their few big expenses include Akaisha's extensive dental care in Thailand and a laptop computer they use to update their Web site (www.retireearlylifestyle.com), which attracts 12,000 visitors daily.

The couple invest mainly in low-cost index funds, withdrawing about 3% of the balance each year. They pay little in taxes because most of their income is from capital gains and dividends, which are taxed at a maximum of 15%. They haven't had to touch their IRAs, which would still cost them early-withdrawal penalties. "At this point in our lives, we are less worried about running out of money and more concerned about not having enough time to enjoy it," says Billy.

How to do it

• Simplify. A complicated lifestyle costs more.
• Look beyond the border. An attractive lifestyle can cost much less in many countries outside the U.S.
• Track your spending. And figure out where to cut. This is your life now, not a vacation.
• Pursue low-cost entertainment, such as hiking, bicycling and reading.