There’s a new form of status, and it’s not about the size of your house or the car you drive.
Whether you want to think in terms of digital nomads, expats, or simply location independent, the ability to live and work from anywhere in the world is a purer form of freedom than most Americans have ever had.
Now that more people have experienced remote work, more people see the possibilities. Maybe you’ve gotten your feet wet with a flexcation, where you travel to somewhere cool for a while to redefine “working from home.”
Being able to retire and travel the world is a common fantasy. But more and more, people are working while traveling, integrating purpose and adventure, paying the bills while exploring and enjoying.
These people quit their jobs not to retire, but to start location-independent businesses that enhance their freedom starting sooner rather than waiting for some arbitrary retirement age.
I think of this as a proactive form of “unretirement.” Or… unretirement planning.
A Better Outcome Than the Realities of Retirement
Originally, unretirement was a more literal concept. People who had already retired realized it wasn’t all they thought it would be, and went back to work.
Welcome to the land of the unretired — folks who thought they were leaving the work world only to return because they sorely missed something about it, besides the money. These people retired on pensions or savings — or both — but ultimately woke up to the fact there’s more to life than watching Florida sunsets.
Then, the meaning of unretirement began to shift to people nearing retirement age who began actively planning their next phase. More often than not that involves starting a small business that has a high probability of success, given that older entrepreneurs outperform younger ones.
I now use the term “unretirement planning” for anyone who wants to start living the life they want right now (or in the much nearer future). Working a job that you find unfulfilling until you can retire at 67 seems like a ridiculous strategy, and it’s actually the least secure position you can be in.
That scenario assumes you can save enough money to live without working for up to 30 years, and don’t lose your job in the crucial years leading up to retirement. That will not only impact your savings for late given an interruption in earning power, it will also force you to dip into your savings just to survive a period of unemployment where you may be forced to go out on your own under a great deal of stress.
Even if you make it to a traditional retirement, you may face a depressing existence lacking in purpose during a period of your life where you’re still more than capable. It’s completely unnatural to simply stop contributing economically at some arbitrary age.
While a large percentage of Gen Xers can’t afford to retire at all, those with “just enough” in retirement savings will spend their so-called golden years wracked with the fear of outliving their savings, or worse, losing everything in the next financial crisis.
Which option seems more risky? And which lifestyle seems more attractive?
Now, one could argue that starting up a business doesn’t require being location independent. Doesn’t taking control of your income source solve the problem?
It does, but one thing that needs illumination is the way fears about obtaining health insurance shackles people to jobs they hate and throttles the growth of small businesses in the United States. Add to that the high cost of living, and the pressure builds.
As we’ll explore in upcoming articles, the affordability of high quality healthcare in other countries is almost as big a shock to Americans as the lack of firearms. The U.S. health care system is irretrievably broken, and it’s very far from the norm.
Combine that with a reduction in the cost of living somewhere that’s likely more exciting and beautiful than where you are now, and it adds up to both a smart business decision and a lifestyle enhancement. In other words, the odds move even more in your favor.
Far from a pipe dream, a location-independent business alleviates the lunacy. When you build you expertise-based business with an eye toward being unconstrained by geography, you can also live an extraordinary life beyond work while developing multiple income sources in your later years.
The Little Known Benefits of World Travel
Travel is an activity that’s practically guaranteed to change your life for the better.
In fact, research establishes that Mark Twain was right when he said “travel is fatal to prejudice, bigotry, and narrow-mindedness,” as spending time in diverse locations really does broaden the mind and increase your acceptance of and trust in others.
Other research tells us that travel can help you live longer and enhances your personality in positive ways.
Still more research reveals that your experience of time slows down when you’re traveling, which allows you to better savor the adventure that is the third phase of your life.
I’ve been location independent for 19 years now, although far from what you would call a nomad. I’ve been fortunate to take my family on some amazing extended trips while still running my business, including one completely around the world adventure for seven months during 2018 into 2019.
But I’m really just getting started. Now that both kids are on their own, we plan to live in different parts of the world on a permanent basis.
If you’re like me, what you really want is the freedom to live and work from anywhere. And while that may sound like a dream, the ability to pick up and leave is also a pragmatic necessity given the current state of things.
If you’re rightfully worried about political violence, the unfathomable level of national debt, and the escalating cost of living in the US, you don’t have to move to Canada.
Instead, maybe spend the summer in Canada, then head to Costa Rica and Panama for the winter. Or spend six months down under, split between Australia and New Zealand, before popping over to Europe.
Traveling the world used to be a retirement dream that mostly didn’t come true for most retirees. But now, it’s more viable to create a location-independent life for yourself than it is to amass the kind of money it takes to quit working altogether for 30 years.
And you get to start living the life you want sooner, too.
Wait Until Retirement to Live Your Best Life?
Our whole lives, we’ve been fed a story. Go to school, get a good job, raise a family — and then when you’re 65, you can do what you want.
Take a moment to think about how crazy that sounds. And yet, that’s the script most people live by.
Luckily, there’s time to rewrite the story. To create a plan that gives you what we really want sooner, instead of the traditional retirement narrative that’s more of a fiction than ever.
Author James Clear succinctly summarizes a smarter approach:
Instead of working toward retirement, work toward your ideal lifestyle.
There is usually a path to get there in a few years instead of a few decades.
— James Clear (@JamesClear) November 12, 2020
Wise words, and they’re true. It’s much more feasible to start planning to live the life you want now in your 50s and get there in a few years than it is to save enough to live well for 30 years without working.
Unretirement became a thing thanks to retired Baby Boomers coming back into the workforce due to boredom and a lack of purpose. who aren’t retired yet.
Then it expanded to younger Boomers, who instead of working on their golf game in anticipation of retirement started side business and other ventures that will become their work once they leave the career they have.
So why not do the same at a younger age and enjoy the benefits for longer?
It may surprise you that the average age of a digital nomad is 38, and the second largest age group of nomads is 50-59. So it’s certainly not just for “kids” roaming around with backpacks and sleeping in hostels.
Beyond that, the thing that will blow your mind is that digital nomadism will increase exponentially going forward, with projections of a billion digital nomads by 2035.
If this lifestyle appeals to you, start putting your plan into action now. With the right mindset and revenue model, it’s perfectly doable.
And beyond the money, your time and quality of life amount to the most precious wealth of all.
Travel the World and Keep More of Your Money
Now, you may be thinking that all of this sounds expensive.
Sure, building your own location-independent business will give you the opportunity to make plenty of money, but are you going to blow it all on travel?
The good news is that not only can you live a less-expensive lifestyle in locations that look like paradise, you can basically save enough money in taxes so that airfare and other costs of moving around are more than taken care of.
First of all, building a digital business that allows you to work from anywhere opens up new opportunities for geographic arbitrage. What is that, exactly?
Geographic arbitrage means taking advantage of the differences in prices between various locations. You earn money in a market that allows you to make plenty of money (the U.S. and other western countries) and spend it in a less-expensive economy (Thailand or Panama, for instance).
If you’ve ever chosen a vacation spot based on the relative strength of your native currency, you’ve engaged in a form of geographic arbitrage. Even spending stronger U.S. dollars in Australia and Canada qualifies as a win.
For example, I know a diverse group of internet entrepreneurs who spend much of the year in Medellin, Colombia. These folks sell their products and services in lucrative western markets, while enjoying the “eternal spring” weather and low cost of living in Medellin, all while contributing to the local economy.
A less exotic trend spurred by the pandemic is for people with jobs based on the expensive coasts of the U.S. to work remotely, which allows them to live somewhere vastly less expensive than Silicon Valley or New York. People moved to Texas and Florida, both because of the lower cost of living, and notably, a lack of state income tax.
Let’s talk about taxes next. Because as a former resident of Texas, I know the state gets its money from property taxes that effectively equal what I pay in state income taxes in beautiful Colorado. And of course you can’t avoid federal taxes at all.
In short, it’s literally more prudent to travel the world than to stay in the U.S. when it comes to taxes. So it’s simple… you just up and leave.
But there’s one big problem. The U.S. taxes your worldwide income whether you reside in the States or not. That’s right — good ol’ Uncle Sam wants you to keep paying taxes even if you leave the country and never set foot on American soil for the rest of your life.
Now, I’ve never had a problem paying my fair share of taxes. In fact, I’ve paid millions of dollars in taxes over the last decade alone. But if I’m no longer benefiting from what we pay taxes for because I’m not physically present in the country, that doesn’t seem fair.
The United States is unique in this sense. For example, if you’re Canadian and decide to relocate to a different county with much lower tax rates, you can opt out and just do it. The same applies to Australians and the British when leaving their home countries for greener pastures.
Fortunately, U.S. citizens do have a way around this worldwide taxation, at least up to a point. It takes an understanding and compliance with certain tax laws, but if you get it right, you can reduce your taxes significantly while living the dream.
For U.S. citizens, the Foreign Earned Income Exclusion gives you a substantial tax break just for being in other countries for the majority of the year. In 2025, the exclusion allows you to earn $130,000 tax-free while living overseas. And if you include your spouse in your business, you can double the exemption for the two of you combined and make $260,000 a year while paying no federal income taxes on that amount or less.
And this is before you start exploring the benefits of second residencies, second passports, golden visa programs, international corporate entities, and foreign investment opportunities. You need to make sure you understand the rules and work with competent professionals, but again, this is totally doable with a location-independent approach.
How do I know?
Because I’m currently setting these things up for myself. My wife and I will travel the world continuously while establishing one or more new home bases, which will definitely not be in the United States.
Intel on Destinations to Consider
Over the coming weeks, I’ll share the research we’ve done and our thoughts on various “home base” locations, including:
- Mexico
- Costa Rica
- Panama
- Portugal
- Uruguay
There are other popular expat locations as well, such as multiple locales in Southeast Asia and Eastern Europe. There’s even a popular strategy that allows you to perpetually move around in Western Europe with only an American passport.
Notably missing is Canada, which is often the place Americans threaten to flee to. Unless you just really desire to live in Canada, it’s not really an advantageous place to set up shop. Same with Australia and the U.K. given the cost of living and strict immigration policies.
No matter your travel objectives, you’ll be richer in both life experience and net worth with the right strategy. In other words, when it comes to dreams of travelling the world, it’s more financially prudent to begin establishing the life you want now than it is to wait until the mythical day you can blissfully retire.
This is the essence of unretirement planning. And it all begins with a business you can run from anywhere – but as great as that is, it’s really only the beginning of the opportunities ahead of you.
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