Five Years Of Nomadic Retirement

Katie and I recently hit our 5 year nomadic retirement anniversary. In the last half decade, we have traveled to 4 continents, visited 19 foreign countries, and lived in 39 different cities. During this time we experienced multiple typhoons and earthquakes, a major wildfire, and an ice skating mishap that resulted in a broken wrist. We’ve shopped at dozens of local markets, enjoyed numerous museums, and taken countless pictures of street art. And after paying for all of these adventures, our portfolio is larger than when we started, despite us not earning a single dime. 

After one year of retirement, I wrote an expectations vs reality post. No matter how much planning went into this, and there was a lot, it was impossible to foresee everything that would happen following such a major life change. Many of the issues were known, like having an abundance of free time, but how we would react to them was a wildcard. While most of the major things were about as we expected, there were still a few surprises. The biggest one being a massive global pandemic.

The Impact Of COVID

It was less than a year into our retirement when COVID disrupted everything and our new exciting travel lifestyle came to a screeching halt. We were in Danang at the time and Vietnam decided to close their borders in an effort to squash the spread of this infectious coronavirus. We were faced with the choice of staying there for an indefinite amount of time or fleeing back home in the middle of a pandemic with no US health insurance. Our decision to stay turned out to be a good one, at least as far as health goes. Despite their close proximity to the virus epicenter, Vietnam ended up handling the pandemic better than just about every other country in the world. 

But that indefinite amount of time turned out to be a lot longer than we ever thought. Initially we hoped maybe it would take a few months, never guessing how widespread and disruptive COVID would become. Overall we ended up living in Danang for 470 days. Even after 5 years, this lengthy stay still amounts to 25% of our entire retirement. 

During our time there we went through long periods where daily life existed in a COVID-free bubble. But when it popped, we endured multiple lockdowns, had our blood drawn by the government, and were even barred from going to the beach. It was tough at times to not go stir crazy, as I’m sure many people can relate to. But we did stay physically healthy, and as far as I know, neither of us have contracted COVID to this day.

Travel Style Shifts

When we first started, we moved locations every week or two. After a few months, we decided to try moving slower, so we lengthened our average stay to four weeks. That took a bit of adjustment, but it seemed to fit us pretty well. Of course the pandemic turned everything upside down. We stayed a few months in Budapest when we were finally able to travel again in 2022, but after that we went right back to 4 weeks per stop. Then the thought occurred to us that after being stuck for so long in Danang, we might actually appreciate moving faster again. 

So we tried an experiment with a series of short stays in the Balkans when we went to Pula, Zadar, Mostar, and Budva. Those towns are smaller and seemed like good places for a travel pace test, but it only served to confirm that the slower pace is better for us. 4 weeks is definitely our minimum now. In large cities where we anticipate lots to do, like Mexico City, we consider staying even longer. The truth is that we don’t really like packing and moving all that much. That may seem like a strange thing for a couple of nomads, but it’s true. It’s always fun to be in a new city, but it’s rarely fun to get there. As they say, traveling is the worst part of travel. 

These longer stays place more emphasis on the importance of selecting the right apartment. And whether it’s age or experience, we are also getting pickier over time. When I look back at some of the places we stayed during our first year, like Penang, I can say with certainty that there’s zero chance that we’d book that apartment now. And we even liked it at the time! Our mantra used to be that we’re adaptable and can make do with just about anything. While that is still true in some respects, we are becoming much more discerning about the apartments we rent.

I’ve come to the realization that our apartment choice has an outsized effect on our enjoyment in any given place. At this point, I’d much rather stay in a great apartment in a mediocre city than a mediocre apartment in a great city. Even the best location can end up disappointing if we don’t like where we’re staying. At the end of the day, despite being nomadic travelers, we still spend most of our time at “home”. 

Some of this trend of selecting nicer accommodations is due to the fact that our early retirement has been financially successful so far (more on that below). There’s less pressure to keep our spending low when our portfolio has grown. But also it’s just cumulative experience. The longer we travel, the more importance we’ve placed on picking apartments that are larger and more comfortable. And I think we suffer more than we used to when we choose poorly.

Location Preferences

Aside from selecting a good apartment, we’ve also adjusted our climate preferences. Even with an ocean breeze, neither of us really enjoy hot weather anymore. We aren’t the type of nomads to chase perpetual summer. I’d much rather have to wrangle an extra suitcase with our winter coats than sit in a puddle of my own sweat. So we now do our best to avoid travel to places during seasons where temperatures might approach 100F (37C). And after our extended time in Danang, I’ll be perfectly happy if we never visit another beach again.

Air quality is also important to our choice. When we first started our travels, I didn’t even think to check. But after our time spent in Southeast Asia, I now know that AQI measures above 100 definitely have a negative effect on my quality of life. My sinuses and throat get irritated and I generally just don’t feel 100%. We still risk it sometimes, like our visit to Lima, but we try our best to pick places with less smog now. That’s probably good for our long term health too.

Minimal Taxes

We’ve basically paid $0 in taxes in the last 5 years, and I don’t see that streak ending anytime soon. We make yearly conversions from our pre-tax traditional IRA to a post-tax Roth IRA in the amount of the standard deduction ($29,200 in 2024). This conversion is taxed at regular income rates, but since it matches the standard deduction amount, $0 is due. Eventually we’ll withdraw that money tax free as well, since Roth withdrawals are not taxed. In fact, one of the other main benefits of this conversion is that the converted amount is fully accessible without any early withdrawal penalties 5 years after the conversion. As such, it’s not only a way to move pre-tax money to post-tax money at a 0% tax rate, it also grants penalty-free early access. That’s pretty hard to beat. 

In the meantime, we pay our living expenses from our taxable brokerage account. This also costs us nothing in taxes because there is a massive 0% tax bracket for long term capital gains and qualified dividends. In 2024, we’d have to have income over $94,000 to qualify for a rate greater than 0% on capital gains, which at our spending levels, we’ll never even come close. When I don’t have to control my paper income (more below), I can even tax gain harvest by selling more than I need and “paying” taxes on that sale in the 0% bracket. Then I simply immediately re-buy the same investments since wash sale rules don’t apply to gains. This raises my cost basis in case tax laws change in the future or I ever need to raise a large amount of money for a major purchase. And as South Dakota residents, we don’t have any state income taxes to worry about either.

Free US Health Insurance

Even better than paying nothing in taxes is getting fully subsidized US health insurance thanks to the ACA. Since we only visit the US periodically, we don’t need to carry a policy every year. This allows me to distribute our income unevenly to our advantage. In years we have no ACA policy, I can build up our cash balance to spend from during the years that we need one. The extra cash allows us to keep our income artificially low during the years when we’re planning to visit the US. This low income makes us eligible for generous ACA subsidies. By picking less expensive plans with higher deductibles, the subsidies have been enough to cover our entire premium costs. So we’ve actually paid $0 for our US health insurance policies that we held in 2021 and 2023. When we return for a visit to the US in 2025, I expect it’ll be similar.

For the record, I don’t feel the least bit bad about taking advantage of the system in this manner. In my experience, everyone does their best to minimize their tax bills and maximize their subsidies within the confines of the law. Especially people taking advantage of a lot larger benefits than this. Even though we would normally just need coverage for a couple of months, these ACA policies are only available on a yearly basis. They also offer zero coverage outside of the US where we spend most of our time. As such, without min-maxing our income in this way, we’d be stuck paying a monthly premium for a policy that offers us no benefit most of the year. And since it’s insane to be in the US without health insurance, we can either opt for an expensive and shitty non-compliant policy, or let the government subsidize our much better one. The latter seems like a superior option. Maybe someday the US will adopt rational health care policies like the rest of the developed world and save all of us some money. Then we won’t have to worry about this.

International Health Insurance And Health Care

While we only carry a US policy every other year, we buy an international health insurance policy anytime we are outside of the US. When we first set off, I wrote a post about my search for an insurance policy to cover us globally. My reasons behind choosing a policy haven’t changed since then, and I still look for policies that offer high deductibles and low premiums. We can afford to see a doctor for routine stuff. Nowhere else in the world is like the US, where even the smallest issue requires insurance. What we are insuring against is a massive emergency with extended hospital stays. None of these international policies cover pre-existing conditions anyway, so opting for catastrophic coverage policies makes the most sense. 

At that time 5 years ago, I chose a policy through Tokio Marine, but we didn’t continue with them because of their lack of coverage for COVID related illnesses. Since then, we have cycled through IMG Global, GeoBlue, and Cigna for our coverage abroad. So is one international insurer better than another? I’m not really sure.

We have been mostly healthy during our retirement so far, with our only real mishap coming when Katie broke her wrist while ice skating in Budapest. To treat that, we chose a private clinic in the city and the care we received was excellent. She saw the English-speaking doctor 5 times, had 3 x-rays, and was fitted with 2 different casts. The total cost for the entire accident was $831, which seemed unbelievably cheap. That’s like the price of 2 aspirin in a US hospital. 

I filed the reimbursement claim with IMG Global, our insurer at the time. The amount was well under our $5000 deductible, but it was early in our policy period so it might have mattered if we had another claim later. My experience with the claims process at IMG was not great. 

First, I had to fill out 6 pages of forms for each of the 5 appointments. Even though I had already supplied the same information after the first visit to the doctor, they required it to be included with every subsequent submission. It was kind of ridiculous. Nevertheless, I dutifully sifted through the enormous amounts of red tape and submitted all of the paperwork they requested. And then I waited. And waited some more. Eventually our policy expired. The claim never advanced from “pending” status, but since we had no other claims that year and the amount was below our deductible, I just let them proceed at their pace and never followed up. 

It’s possible that they were still waiting for even more information from me, but I didn’t receive any notification of that. I recently checked to see if they ever actually finished the processing of this claim. What I found was that IMG now has no record of the claim on their website, despite still showing the expired policy. So at some point, the claim went from pending to non-existent. 

This entire process further cemented my thinking that opting for the highest deductible possible is the best choice. It results in the smallest premiums and has the lowest risk of needing to deal with any of these companies. While my only claim experience was with IMG, I have little doubt that they are not the only insurer who tries to bury you in bureaucracy in the hopes of not having to pay. And if we ever need to actually get reimbursed, I can be more of a squeaky wheel. But I’d rather avoid that when possible. 

Continuity of Care

While we haven’t been on the receiving end of much health care, I can tell that continuity of care is a major drawback to our nomadic lifestyle. Even with routine care, we’re basically starting from scratch every time. Researching and finding a competent dentist to see twice a year is a major pain in the ass. We have not been able to consistently repeat our success in Malaysia. Our current strategy is picking the most expensive one in the area, figuring that they are less likely to try to upsell us on unneeded procedures if we’ve already paid a higher than average rate. That doesn’t always work though, and it’s still somewhat of a crapshoot. On the other hand, we’ve had two good experiences versus zero bad ones at the dermatologist. So maybe the problem is just with dentists?

If one of us were to actually require serious ongoing health treatment, we’d have to consider settling down somewhere. Or at the very least, plan to return to the same city often. I don’t think it’d be possible to continue switching cities and starting over forever in that case. But that’s a potential problem for future me to solve. For now, the lack of continuity of care is an annoyance but isn’t enough of a downside to make any lifestyle changes.

Investment Portfolio Trajectory

I’ve written before about how my goal is to frontload lower spending years at the beginning of our multi-decade retirement. The idea is to give us better odds of portfolio growth, since spending less now leaves more money to compound for later. So far that’s working out. These ~5 years (6/27/2019 – 8/11/2024) have cost us $140,230, or about $28,050 per year on average. Some of that spending is artificially low due to COVID travel restrictions and our extended time in Vietnam, but we play the hand we’re dealt. 

After paying for all of our living expenses, knuckling down through the COVID flash crash in 2020, and suffering through the third worst year in history for a balanced 60/40 portfolio in 2022, our portfolio has grown by about 20% after inflation adjustments. That’s pretty good! According to retirement planning guru Michael Kitces, the highest correlation between real portfolio balance and retirement success occurs at the 10 year mark, so while it’s a little too early to pop the champagne, the preliminary results are encouraging. Our expanding balance also gives us more flexibility in choosing our locations for the future.

What’s Next?

Next we have our eyes set on France. We were approved for a year-long French visa, the VLS-T (visa long séjour temporaire). The visa is a simplified version of their residency visa, the VLS-TS, which means that we’re absolved from registering or paying taxes. The process was mostly straightforward, at least as far as getting a visa for the country that’s the origin of the term bureaucracy. 

We just needed to fill out an application, prove that we had enough money to cover our stay, provide a copy of a year-long insurance policy, visit a consulate in the US, and pay some fees. Two weeks later we got our passports back in the mail with a gorgeous new visa. Now we just get to show up and live in France for a year. We can even travel to other European countries if we want, subject to the normal 90/180 Schengen rules. Although at this point, I don’t think we have plans to do so. Being able to stay in France without doing the Schengen Shuffle for the next 12 months is very exciting. And avoiding air travel all year will be the cherry on top.

Aside from health insurance, the most common question I receive is how long are we going to keep up this nomadic lifestyle. The honest answer is I don’t know. There may be a 10 year post or there may not be. When we have a good apartment that we like, it seems like we could keep going forever. When we don’t, it feels like we’re nearing the end. But we have no definitive plans to stop. We don’t even know where we’re going to stay in France in a few months, let alone after. So much planning went into our lifestyle to begin with, it’s somewhat freeing to have a wide open future. For now we’re going to keep moving around slowly and I’ll occasionally write about it.