(MONEY Magazine) – Back in 1988, MONEY introduced you to the Terhorsts, then both 39 and in the fourth year of a dream retirement in Buenos Aires. At the time, Paul, formerly a partner in San Francisco with the accounting firm Peat Marwick Main, and Vicki, a painter, were living comfortably in a one-bedroom condo. They spent only $24,000 a year -- 53% of the payout from their portfolio of $500,000 in U.S. CDs, which yielded an average of 9%. The couple banked the rest of their income, including the $12,000 a year in royalties from Paul's book, Cashing In on the American Dream: How to Retire at 35. Fast-forward to 1993: The Terhorsts, now 44, are still living comfortably in a one-bedroom apartment -- but in a funky neighborhood of Austin. The couple left Argentina in early '92 because the U.S. dollar's slide against the peso since the fall of 1989 had raised their cost of living 300%. Though the couple have plenty of money, they settled in Austin partly because its low cost of living suits their frugal habits. (''We cherish a favorite coffee cup instead of a coffee table,'' says Vicki.) For example, their apartment costs them only $435 a month. Another attraction: Texas is one of seven states with no income tax. All together, the Terhorsts figure they live on about the same amount as when they first retired. That leaves them free to spend about $4,000 pursuing their favorite pastime: overseas trips to destinations ranging from Thailand to England. In fact, their willingness to travel led them to adopt an unconventional approach to health insurance. The couple decided to risk paying health costs out of their own pockets, unless one of them needs surgery or major medical care. In that case, they intend to fly to Buenos Aires, where they maintain a $100-a-year HMO membership. As U.S. CD rates have tumbled to about 4%, the Terhorsts have had to overhaul their portfolio. They now have 55% of it in stocks and stock funds, 20% in cash and CDs and the remaining 25% in taxable bond funds. The Terhorsts' original $500,000 stash has grown 70% to about $850,000, including $50,000 from Paul's book. Any regrets about retiring so young? Nope. Says Vicki: ''In our 20 years together, the nine since we retired have been the best.''