Working Remotely, Living Anywhere
Will you live in your current city forever? I’m not the only one who’s ever pondered this in Los Angeles gridlock, yet the vast majority of us keep the same home base even after our career obligations are over. So what would it look like to actually leave? Take Paul and Seth, who just moved to Asheville, North Carolina. Was it the traffic? The pandemic?
Paul and Seth aren’t at retirement age yet, and they didn’t move due to Covid-19, traffic, smog, drought, or anxiety about the next big earthquake (although those would be incredibly fine reasons for leaving California). Paul is a part-time real estate agent who runs an online design store. Seth produces music and is a licensed physical trainer. They both have autonomy, and their nest egg is large enough to keep them comfortable. Any income they generate simply enhances their lifestyle. While they left many friends in LA behind, they do stay connected through social media and the occasional visit.
So why did they leave? They felt like it was time to live a simpler, quieter, less expensive life.
Downward Cost of Living
Asheville is a beautiful and trending city, but the overall cost of living is still well below Los Angeles or San Francisco. Paul and Seth figured they’d only spend about 70% of what they were spending in Los Angeles, and they weren’t too far off.
Right now they’re saving about 40% on car insurance, 50% on gas, 20% on utilities, and 30% on dining out. Where they are really stretching their dollar is with real estate. After selling their LA house and buying a newly constructed home in one of the hottest parts of Asheville, they doubled their square footage and still added an extra $200,000 to their nest egg.
What does this mean for your own planning? For the sake of this exercise, let’s imagine you could reduce your own costs by 30%. If your portfolio needs to cover $100,000 of annual spending in your current city, and relocating would convert that need to $70,000, what would your nest egg have to be worth?
Assuming you want to limit portfolio withdrawals to 4% of your nest egg balance at the time of relocation, you would need $2,500,000 saved. At a 30% reduction, you’d need just $1,750,000 saved, a difference of $750,000. To put it another way: What would you do if your current city tried to levy a $750,000 tax on you to stay there forever?
Should stress be a factor? If you live in a big expensive city, odds are good you experience more stress than people in small quiet towns. I just learned I’m writing this blog from the most stressful city in America (sorry New York, but we beat you). Blame congestion, pollution, car horns, sirens, leaf blowers — take your pick. Even the pressure to engage socially can affect a sense of well being. So if you care about your physical and mental health, you might reduce the chances of developing anxiety or a mood disorder if you relocate to a simpler locale.
Planning Now for This Future
The pandemic has already caused a shift in employee attitudes about telecommuting. According to getAbstract, more than 40% of full-time American employees want to work remotely more often once life returns to semi-normal.
If your job allows you to work from anywhere (or is about to), it might be worth exploring these possibilities sooner than later. If you need to remain in the big city for now but are interested in leaving it in the future, talk to your advisor today to see how this impacts your saving and investing needs.
Having a less expensive relocation plan should allow you to either spend more while remaining in the big city, or accelerate your financial freedom date by a few years. Most importantly, if you’re a friend of mine, please make sure to pick a city my partner and I wish to visit. We might even follow your lead at some point. For a bit longer, I need a Six Flags and an ocean nearby.