The draw on your assets while working is not constant and this will not change after retirement. We have observed that the cash outflow of the typical cruiser seems to vary, for numerous obscure and unexplained reasons, in cycles of three—three weeks, three months, three years. For example, food provisioning might last three weeks, an expensive tank of fuel for three months, and a budget-busting haulout and refit comes along every three years. It is therefore important that assets be allocated into groups according to liquidity so that you can maximize the appreciation of investments while satisfying financial obligations as they arise. Estimate asset appreciation by using the 72 rule which states that your expected annual rate of return divided into 72 indicates the number or years required for the principal to double. For example, at six percent, your funds would double in 12 years whereas a nine-percent return doubles the principal in eight years.
After retirement, items in category one should drop slightly as clothing and utility needs are reduced on board. The cost of maintaining and repairing a land-based dwelling is not substantially different from that for a sailboat of equal value when amortized over 10 to 20 years. The operative phrase is of equal value; thus category two will not change a great deal unless your boat has different value. Your total tax liability will be lower because it reflects an absence of employment income. If you were to remain on the beach in your present location after retirement, it is conceivable that you might see a 10 to 25-percent reduction in monthly expenses. On the other hand, keep in mind that more money is needed to maintain and repair both sailboats and their owners as they get older.
Personal income taxes, real property taxes, and those for personal property vary drastically from one locale to another. Thus, cruisers often establish residency in areas with a lower tax burden such as Florida or Nevada. To minimize tax liability, it is advantageous to investigate this option before retirement.
By eliminating land-based real estate and durable goods, assets are increased and costs are reduced, further reducing income needs. Most cruisers also sell or downsize their home-base and its contents to reduce their financial and emotional burden. When we left to go cruising, we sold our house and personal belongings to the point where all our belongings fit into one steamer trunk. Before weighing anchor, sell your automobiles to eliminate their cost and depreciation while you are cruising. Full-time cruisers often share the cost of a rental car when they need wheels.
While cruising full-time, our average monthly outlay was nearly $1,000 with an annual increase of seven to10 percent due to inflation, equipment attrition, and changes in geographic affluence. The cost of cruising in Mexico and Central America is about 15 percent less than in the US, while costs in the West Indies are about 10 to 20 percent above the US. You will find wide variations in cruising costs even along the US coasts, with the Carolinas and the Gulf of Mexico being less expensive than the SE coast of Florida and Long Island Sound. As a rule, cruising is more expensive the farther south you go along the Pacific coast of the US.
Income Supplements After assessing your income against the cruising budget, you may find that you need to supplement the former. Within the cruising community, talents in greatest demand are diesel, outboard, and refrigeration mechanics as well as cruisers with electrical or electronic skills. Many cruisers with writing and photographic abilities often find that they are strongly challenged to uncover markets for their talents, and with few exceptions, the rewards of such efforts are minimal. The legal implications of working in a foreign country generally discourage most cruisers from any employment other than labor bartering with other cruisers, but there are exceptions if you have a particular skill needed by that country.
A viable alternative to the supplemental income option is to reduce your expenditures. That is what retirement cruising is all about anyway—to enjoy yourselves, the boat, and the world about you by not spending all your time working. The food locker can be easily supplemented with the fruits of the sea—catching fish with homemade lures provides sport as well as extra cash. Growing sprouts to replace lettuce, baking bread and your own flour tortillas, and getting a portion of the protein in your diet from beans and rice are all healthy changes that also reduce food costs. Those excessive cravings for sugar-loaded sweets just seem to disappear after you start enjoying the fresh air and exercise.
The bonds of shared experiences produce friendship among the cruising community that are rarely based on income level. This camaraderie withstands the test of time and distance. With effective preparation, your cruising experience will be like a fine wine—it gets better with time—and you will wonder why you didn't set off sooner.
Unless you are one of the few who possess a high degree of self-discipline, your expenditures will usually equal your income. Since those living their retirement cruising dreams have a wide range of incomes the following itemized costs are listed as percentages.