My Darkest Thoughts About Early Retirement Are Coming True
All systems are failing.
Courtesy Of Author, xijian, EpicStockMedia | Canva I decided to retire early at 49 in December 2023. People think that when you retire early you have it made. They think you dance with glee and sip margaritas. Technically yes, I was celebrating with margaritas, but that was before the solid foundation started to crack. In my case, I retired because I was tired to the bone. There was an unquenchable fatigue behind my eyes. That exhaustion told me to slow down, and I had ignored it for years.
A celebratory marg before things fell apart | Image from author
We all know what happens to people who don’t rest. They end up sick or dead. In a different career, there might have been medical benefits or other paid leave options. Since I was a contractor, resigning was my best option. We have a sizeable nest egg and have reached the magic "work optional" or "financially independent" status. We were hoping to wait until 2025 to start de-cumulating. Though we can liquidate part of it now, our tax situation is complex since we lived in three countries during the tax year.
My husband and I had backup plans A, B, C, and D. Just in case. It’s only been a few months, but we need a plan E. Yes, E for Emergency. You hear about things falling apart, and here’s what that looks like for us.
Here are the unexpected challenges we faced in early retirement:
1. Canada housing
Though we can dip into our savings, our tax situation is complicated as I mentioned above. We have been counting on selling an income property in Canada and using the proceeds to fund our lives for a few years. We notified the tenants last spring that we planned to occupy the house. We don’t have anywhere to live in Canada and have been stuffed into my mom’s condo.
The house we own is a three-bedroom, two-bathroom house with a yard, but my husband, me, and our two dogs had been living with my mom in her two-bedroom, one-bath condo. It is a little too cozy, to say the least. However, the tenants refused to move. This is pretty common in Ontario, and we have a hearing with the Landlord and Tenant Board this April. Yes, it’s taken nearly a year of waiting for our hearing. The system is backed up. Unfortunately, I’ve been on a Reddit bender and am anxious about what might happen.
Though we’re in a small city, in some of the larger cities, owners are being forced to pay tenants thousands of dollars to vacate. Our case is pretty clear-cut, but we hadn’t planned for the carrying costs of taking over the mortgage. We also had not factored in additional legal fees, which might run in the thousands. Since the tenants trashed the house, it needs to be gutted before we sell it. We’re looking at 10% interest on the loan to complete the renovations.
Since so much time has passed, we don’t want to live in the house anymore. We want to sell it, but based on the hearing result, we might be forced to live in it for a year. That means we’ll be on the hook for thousands in furniture costs because we don’t own anything anymore. At nearly 50, it never occurred to me that I’d end up living like a college kid in a low-income neighborhood. If we’re forced to live there, we’d try and make do with the minimum: a bed, TV, air fryer, and a fridge because we don’t plan to stay long.
When we lived in Dubai, we had a luxurious life and a beautiful villa. Before that, in Canada, we owned a waterfront home. We both drove Audis. The prospect of camping in our rental is humbling, to say the least. We don’t have a car anymore, and it doesn’t make sense to buy one. We’d need to work out an arrangement with my mother to share her car.
2. Canada costs
I had estimated $11,000 of carrying costs and interest payments for the renovation with the intent of selling the house within six months. The actual cost might look like $43,000 which is $32,000 more than planned. This is the worst case where we are forced to live in the house for a year before we sell it. The wild card in this scenario is the legal fees to evict the tenants.
- Furniture: $5,000 / one time
- Utility setups: $1,500 / one time
- Carrying costs: $1,500 / month x 12 = $18,000
- Potential legal fees: $1,000 — $15,000
- Renos: $35K at 10% interest: $3,500
- Total: $43,000
3. Mexico housing
In Mexico, our condo was supposed to be ready to occupy in January 2024. Due to construction delays and election promises like the Mayan train, we’ve received notice that the condo won’t be ready until April 2025. That’s a 16-month delay. We were counting on the late payments that the developer contractually owes us, but the builder is pulling the ‘Force Majeure’ clause which means we likely won’t see a cent. It’s with the lawyers now, so we will wait and see.
This means we need to rent. Playa del Carmen has exploded in popularity and cost. You’d be hard-pressed to find a 1-bedroom for less than USD 2000 / month. Electricity costs are also a hundred dollars or more. The peso is strong which means our measly Canadian dollars don’t go far.
- Mexico condo developer late fees lost: $500 x 9 months = $4,500
- Rental costs: $2,150 (rent + electricity) x 7 = $15,050
- Additional rent costs/fees lost: $19,550
4. Job insecurity
While we were waiting for the hearing about our house, my husband decided to take a contract to tie us over. We’d use his salary as bridge money until the house could be sold. But now his company is laying off. He’s on pins and needles with the looming threat of losing his job. The project was supposed to be a sure thing, but they laid off hundreds of employees leading up to Christmas.
I suspect this is to clean the books for year-end, but rumor has it that they’re still trimming the fat. I’d included his salary as a key source of income until May, but we are going day-by-day. We might now be short thousands in income.
I’m not alone. Here in Playa del Carmen, the expat community is fabulous. Out of all the places I’ve lived, I think this is the strongest community. People are incredibly welcoming and my dance card is always full. There are ladies’ events, coffee dates, fitness classes, excursions, meet-ups, book swaps — you name it, there’s a group for it here.
Last night, I joined the walking group. We walked the stadium circuit for over an hour. The energy is incredible during the evenings. It’s a public space with basketball courts, tennis courts, an outdoor gym, a dance/ yoga palapa, and an indoor gym. At night the space is full of kids, adults, families, and groups all exercising. It’s a nice spot. I was walking with two other Canadians who I’d never met before. Like me, they both have housing challenges in Canada.
Diana is 55. She and her husband sold their home in Ontario and moved to British Columbia a few years ago. They bought a condo, but the fires last summer scared the bejesus out of them. They sold at a loss and returned to Ontario. With interest rates and housing prices soaring, they can’t afford to get back into the housing market. They are in Playa del Carmen for now. When they return to Canada in the spring, they will bunk with their daughter.
Binul is 34. He’s here with his parents hoping to convince them to retire in Playa del Carmen. They can’t afford to live in Toronto anymore. Binul recently completed an MBA but none of his classmates have gotten jobs. He got an offer for $50K but there’s no way anyone can survive on that. Besides the role was very junior, and he had student debt to pay off.
As we walked the track, I found it fascinating that the three of us, all Canadian, would come together to walk. Strangers. Yet we all have the same issue: Housing. All of us are at different stages in our lives. None of us could have predicted that we’d be in this situation. I am grateful to know that I’m not alone.
Lessons learned:
It’s been two months since I resigned. I’m trying my best not to freak out because the foundation is collapsing. Since I track everything, I’ve already made several Excel sheets with various financial scenarios. At best, we break even and don’t touch our savings. At worst, if all the dominos fall, this could run us over $60K in unexpected costs. That’s not including living costs, like, you know, food.
I've learned that life can go sideways in the blink of an eye. It can happen to anyone. It’s happening to us. I’m praying the worst-case scenario doesn’t play out. It probably won’t, but you never know.
If it does, we’ll need to double down on expense cutting, and we’ll likely delay our return to Mexico until 2025. This will negate the need to fund double housing costs in both Canada and Mexico.
- Though I’ve always been an extreme planner, nothing could prepare me for the reality that we might be out of pocket $60K or more in unexpected costs for 2024.
- Worrying about things that are out of my control makes me feel like crap. I cannot control the Tenant Board, and I cannot control our tenants.
- I never expected it to take a year or more to sell a house that we own. Though I am grateful to have a nest egg, counting on the sale of a house for a cash cushion was a mistake.
- Now more than ever it is imperative to save for an uncertain future.
- The panicked part of me thought about working again, but I couldn't do it. Full-time employment is off the table. If the first 60 days of retirement are any indication of what’s to come, my early retirement is more likely going to be a gap year.
- I have to trust that things will work out.
When it’s all said and done, we have the nest egg to tap into, but the worst-case scenario will decimate our yearly target spend. It’s these outlier years that are truly frightening. I’ve been watching the balls drop one by one over the last two months. They are hard lessons that with even the most careful planning, sometimes life has other plans.
Tracy Collins is exploring retirement at 49. Splitting her time between Canada and Mexico, she writes about travel, food, midlife, mindfulness, and financial independence.