The following is a guest post by FMF reader Amanda S.
Ever caught yourself saying “I would love to retire to some faraway tropical island and spend my days in the sun doing absolutely nothing”? Lots of people daydream about visiting exotic locales in retirement; we found a way to do just that for less money than you think – we bought a boat. Sure, it sounds crazy. When we told our friends and family about our idea we got a lot of incredulous looks, as we both loved traveling but had never done much sailing. But we put together a plan, saved up some additional money before retiring, and educated ourselves beforehand by taking a week-long sailing course and then chartering a boat just to be sure we could “do it” on our own.
My spouse and I have been blessed with good-paying careers; each year we have maxed out our retirement accounts and invested any additional savings in index funds. We did not end up having children so that meant we could put even more money in savings and investment accounts. Most importantly, we have lived very frugally for our income. When we started out on our cruising adventure we knew we had the finances to do this indefinitely but we wanted to keep our options open, so we rented out our modest two-bedroom house. We also didn’t have specific goals like circumnavigating the globe, although some couples do set these kinds of goals. For us it wasn’t really about the sailing; we just wanted to spend an extended amount of time traveling in the Caribbean, an area we’d never been to before. Living aboard a sailboat was a cost-effective way to accomplish our goal.
If your priority in retirement is travel and you want to minimize costs you might consider retiring aboard a boat. Although we don’t plan on staying aboard forever, we have met plenty of couples who intend to live out their golden years in what is essentially a floating RV. Here are some of the lessons we learned:
1. Buy Used. Lesson number one: A Boat is Not an Asset. It’s worth repeating: A Boat is NOT an Asset. If you buy a well-used boat, the depreciation curve will be at a gentler (but still downward-trending!) angle than if you buy new. The key point to remember is that in a corrosive saltwater environment, boat parts will constantly be breaking down whether your boat is a $4M mega-yacht or an $80K sailing sloop. So you will save a lot of money at the outset by buying used over buying brand new. That said, do your research! We bought a ten-year-old sailing catamaran. The price tag for our boat was a bit higher than most monohulls but the catamaran had additional amenities that were a priority for us like more space, no heeling over, a watermaker, large fridge/freezer and other comfort upgrades. However, we also met many other people who were just as happy with less costly and less-equipped monohulls. Know what kind of day-to-day comforts you can (and cannot) do without, and then shop around until you find a used boat that meets most or all of your needs.
2. Pay Cash. Just like buying a car, it is generally much better to pay cash than take out a loan. If the boat of your dreams costs more than you can afford, consider waiting to retire for a few years to save up so you can own it free and clear. You will have a ton of unbudgeted repairs and maintenance items once you live aboard (more on that in a minute) so minimizing any ongoing expenses is important. If you or your spouse is handy with woodworking or D-I-Y repair, you can save even more by buying a boat that needs a little work at a reduced price. While our boat did not need any major repairs when we purchased it, we have made some nice improvements (a cherry dining table, installing a single side-band radio) that have increased the comfort level of the boat. We also paid cash and are very glad we did. Not having a monthly payment means you aren’t wasting valuable cruising dollars on interest. Every penny counts, especially when you consider my next point.
3. Make a Budget and Include Contingencies. A typical cruising budget can run anywhere from 20K to 50K per year depending on where you take the boat, and what you plan to do when you get there. With a decent galley (kitchen), you can save a lot of money by eating most meals (especially dinners) aboard. We saved a lot of money this way and we were able to explore the Caribbean island chain as tourists without incurring costs for airfare/hotel, and minimizing the costs of dining out. Looking at Quicken, our biggest annual expense by far was actually the category of “Boat Maintenance and Repair”, averaging 8K per year. Those big-ticket repairs can come out of the blue, like when our generator broke down and needed a refit in St. Maarten, or when we had the rigging replaced in Grenada. The rest of our budget probably looks a lot like a typical retiree’s budget but this one category is unique to owning a boat. You can really put a crimp in your travel plans if you don’t budget enough.
4. You Don’t Have to be Rich. We had a pretty sizeable net worth before we set out to do this. We’re fairly conservative and risk-averse. But we have met cruising couples and families of every age and socioeconomic stripe since we started this adventure. We befriended a family of five, living aboard a catamaran, with three kids under the age of 12 being homeschooled. What an education! We also know a retired couple in their late 60’s who invite their teenage grandchildren, one at a time, to sail with them for the summer. That’s a fantastic summer vacation. We have an artist friend who teaches outdoor beginner art classes to other cruisers for a fee. And we knew a Canadian couple in their late 20’s who owned their own boat but worked as captain/crew for other boats during the charter season – a great way to finance the lifestyle. If it’s really something you want to do, you don’t need a ton of money, just a well-thought-out plan.
5. Be Prepared for Culture Shock. If you travel to the Bahamas or the Caribbean, you will experience all the joys and frustration that come with living abroad. Unlike the typical tourist, the first question you will ask when you arrive in a new place will be something like “where is the grocery store/hardware store/laundromat?” instead of “which way to the beach?”. Service in a restaurant will probably be slower, much slower, than you are used to in the States and you will have to ask for the bill at the end of your meal. You will probably notice more trash littering the roadways and the non-tourist areas. The car in front of you may stop without warning so that the driver can have a ten minute conversation with the guy waiting for the bus. It can be exasperating. On the other hand, strangers will greet you with a smile and a “Good Morning” as you pass by on the street. If you appear to be lost someone will notice and give you directions, or – and this has happened to us several times – they may just offer to take you where you need to go. You may be invited to someone’s home to have a drink or share a meal. The average tourist doesn’t usually get the opportunity to experience anything other than the resorts and tourist attractions because they simply don’t have time in a one- or two-week vacation. When you live on a boat, you control the schedule and can spend as much or as little time getting to know one place as you like.
6. Be Willing to Make Do. This lifestyle is not for everyone. It can be inconvenient and even heartbreaking at times. It can be especially difficult to be away from family and friends for extended periods of time. You “miss out” on some of the big holidays and life events back home. For some, a trip home once a year to see the grandkids is not enough. Video Skype, while a great tool for keeping in touch, is a poor substitute for face-to-face interaction with loved ones. To add to the frustration, sometimes an ordinarily simple task (like buying groceries) can become an ordeal that takes all afternoon – lowering the dinghy, finding a secure place ashore to lock the dinghy, walking to the grocery store in the heat, ferrying back all the groceries back to the boat without smashing the bread or getting everything wet, raising the dinghy, and unloading everything only to discover you forgot the milk. And let’s face it, there are lots of things that are completely out of your control. Sometimes the supply ship doesn’t arrive on time and an entire island will be out of gasoline, tomatoes, propane, or batteries, and your mail won’t arrive as expected. You will just have to make do with what you have on board or borrow what you need from a neighbor (as a group cruisers are very generous and will usually help out someone in need). It helps to be the type of person who can go with the flow, otherwise you are setting yourself up for some major disappointments.
7. Love and Respect Your Partner. Honestly, this is the most important tip of all. You will be spending nearly 24 hours a day together in a confined space. So if you and your spouse are the type of couple who argue constantly or sweat the small stuff, this lifestyle may not be for you. We were uniquely suited to spending inordinate amounts of time together – we had lived together, commuted together, and worked in the same department while we were dating. We had already learned to work as a team to accomplish our goals, to support each other emotionally , and to settle disagreements without arguing. For a typical American couple, going from living in a 3000 square foot home to sharing a living space roughly the size of a 2-car garage can be quite an adjustment in and of itself. If your marriage adds a lot of day-to-day stress to the equation, it can spell disaster.
Everyone has different ideas of what their “ideal retirement” would look like. We chose to travel and now have five years of cruising and over 12,000 miles of ocean behind us. Spending your retirement traveling to exotic locations may not be for everyone but it is a completely achievable financial goal. The same holds true for any retirement goals you may have – planning and preparation are the keys to success.
Sounds like it will be an incredible experience!
Plus since you bought a used boat, if after a year or 2, you decide that you change your mind... You can sell the catamaran and get out of it without losing much money!
Sounds like a grand adventure!!!
Good Luck!
Posted by: Money Reasons | April 16, 2010 at 08:09 AM
How do you prepare for hurricanes?
Posted by: Seth | April 16, 2010 at 08:41 AM
Great story. Just curious, how do you deal with health issues while your on a trip like this?
Posted by: Venkat | April 16, 2010 at 10:08 AM
Sorry for the delay, we were on a passage from the Dominican Republic to the Bahamas and none of the out islands had internet.
Thank you for the comments and good questions! For hurricanes we have generally moved the boat outside the hurricane zone while we were living aboard (for us that has meant summers in Rhode Island, Annapolis, and Grenada). We've also hauled the boat out into dry storage for two summers while we went home to visit and do some consulting work.
For health issues, we have kept our US private health insurance (Blue Cross/Blue Shield -- it is the second most expensive item on our budget). We try to schedule routine care and checkups around our visits home, but a recent trip to the emergency room in Puerto Rico was covered by BCBS (I think we would be covered in the USVI as well). We have gone to dentists and doctors in Grenada and St. Vincent for minor problems and had no issues paying out of pocket for one-off doctor visits and medications. You'd be surprised at the level of care you can get outside the US, but the facilities may appear different than what most Americans are used to. The clinic in Grenada was state-of-the-art (they do have a med school there), while the clinic on Union Island in St. Vincent/Grenadines was very bare bones. But both visits ended with a successful outcome, so we are content with going local for minor issues but keeping our health insurance to cover anything major where we might want to return to the US for care.
Posted by: ACS | April 19, 2010 at 04:05 PM
How much are bandits/pirates a concern on the open water?
Posted by: jclimber | April 20, 2010 at 11:32 AM
Well property theft can be a problem anywhere, so locking the boat up when you are ashore and locking your dinghy at the dinghy dock is a must. In five years we've never had anything stolen but we've always been conservative and locked up our hatches/doors even at night when we are on the boat.
Pirates are not really a concern in the Eastern Caribbean. Further south of the EC, there have been armed boardings and incidents, particularly in Venezuela. We did not go that far south. In other parts of the world, piracy can definitely be a problem (ie. the Malacca straits) but there are still people cruising over there. Those brave cruisers organize large groups of boats and then they all cross through known piracy areas at the same time, hoping that safety lies in numbers. Not sure we would do that because we're pretty cautious. But if you have money in the budget and are trying to get your boat safely from the South Pacific to the Med, you could always use a shipping company like Dockwise that would actually load the boat on a cargo ship and deliver it for you. That way you don't have to deal with going through areas known for pirates.
Posted by: ACS | April 21, 2010 at 02:56 PM