Everyone can cruise in retirement, but the funds in the cruising kitty determine the lifestyle you can maintain after leaving the workforce. The main change is that pensions, annuities, social security, investment dividends, and interest provide the spendable income after retirement rather than a paycheck. Here are a few observations to help you around the shoals of deficit spending while charting your course along that dream of full-time cruising.
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.
Expenses While cruising, the types of expenditures are not a great deal different from those in your budget ashore. However, their magnitudes can be substantially different. Before retirement, the major monthly expenses are
- Living costs such as food, utilities, insurance, clothing, and sundries
- Property upkeep/repair
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.
Additional budget reduction typically occurs with changes in your standard of living after moving aboard. This may sound bad in the onset but the effect of these changes in social contacts, entertainment, and diet is actually quite positive. We knew one couple whose monthly cruising expenses were less than $300. Others had retirement cruising budgets 10 times greater, but their level of enjoyment of the cruising life was not significantly different. Sharing the shade of a tree on the beach with your loved one is priceless. Everyone in the anchorage enjoys beautiful sunsets and rainbows regardless of their budget level. Social strata are almost nonexistent within the cruising community, and at a potluck party on the beach, it's difficult to distinguish between former doctors and ditch-diggers. Cruisers are more interested in where you've been and where you're going than what you did while employed.
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 common means of extending the cruising kitty is to develop and apply maintenance skills aboard your own boat. By doing these tasks instead of hiring someone else at $50 or more per hour, substantial savings can be realized. Like many cruisers, we carry a sewing machine aboard and have made and repaired numerous items for Oui Si
. The DIY tasks can be viewed as paying yourself instead of someone else—albeit at a much lower hourly rate. In addition, an expanding awareness of the electro-mechanical intricacies of your floating home can increase the safety and self-confidence in your cruising. Developing proficiency in boat maintenance skills can also give you greater latitude when exchanging your talents for those of others in the anchorage.
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.
Most cruising sailboats actually spend less than 10 percent of their time underway, and populated areas are like money magnets. The money saved at sea can be quickly and easily spent after arrival in port. This logic is somewhat like that of a person on a diet: "I've been so good for so long that I can now afford to live a little." Our natural social tendencies provoke this response, and experienced cruisers often search for an anchorage near a village offering re-stocking possibilities, yet remote enough to help keep their budget under control. It is places like this where you will find some outstanding potluck get-togethers and have the opportunity to meet others who have chosen to enjoy this lifestyle.
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.
|Food and sundries ||24% (items bought in a supermarket) |
|Insurance and taxes ||24% (personal, medical, boat, etc.)|
|Fuel||9% (aux. and outboard)|
|Slip fees||8% (includes moorings)|
|Maintenance||8% (repair, replacement)|
|Communications ||8% (mail, phone, e-mail fees)|
|Navigation aids ||3% (charts, guides)|
|Entertainment ||3% (books, movies, dining out)|
|Contingency||10% (rainy day savings)|