The Pain Begins

[BalthazarBeefheart]

I couldn't help but chuckle when watching CNBC this morning they reported that the Saudi inflation rate was running over 5% and was a major concern. Must be to expats there also.

An inflation rate of 5% for people who are in country for a limited period of time (usually 1 to 3 years) and who are most likely receiving a 'generous' local allowance, is a little different that inflation for people settled long term in a country on a fixed income.

In the case in question there is a possibility of perhaps 30 years or more of inflation impact.

Look back at the cost of living 30 years ago and then consider again.... You don't need to be no expert.

I am not being facetious but please I am most intrigued to know what your first language is ? I am starting to wonder if you may be of Indian descent.

Anyway, the point I am making is the same inflation impact can occur in any country and the link I posted was meant to show Thailand is adopting the same policies of control as UK USA and other developed countries.

Over the last 30 years these effective controls did not exist. What I don't understand is how the outlook for someone on a fixed income in the e.g. Uk is any different to their outlook in Thailand. Perhaps, I am just being thick but please enlighten me.

Cheers BB

[GuestHouse]

What I don't understand is how the outlook for someone on a fixed income in the e.g. Uk is any different to their outlook in Thailand. Perhaps, I am just being thick but please enlighten me.

A raft of social welfare and free at the point of need health care might have some impact. Not to mention inalienable rights of residence (read not being kicked out because you don't meet some arbitrary change in the rules - or regime).

I trust you'll understand when I say I rather like the idea of keeping my family history to myself. It is my observation that giving such details is only encouragement for people, who perhaps unlike yourself, are inclined to be facetious. The forum rule forbidding the posting of personal details is a good one I think.

Edited January 13, 2008 by GuestHouse

[kdvsn]

I am not being facetious but please I am most intrigued to know what your first language is ? I am starting to wonder if you may be of Indian descent.

Anyway, the point I am making is the same inflation impact can occur in any country and the link I posted was meant to show Thailand is adopting the same policies of control as UK USA and other developed countries.

Over the last 30 years these effective controls did not exist. What I don't understand is how the outlook for someone on a fixed income in the e.g. Uk is any different to their outlook in Thailand. Perhaps, I am just being thick but please enlighten me.

Cheers BB

It depends what you mean by "fixed income". When I used that term I was referring funding a retirement by investing in bonds and other debt instuments as opposed to investing in equities. When funding a retirement with your own money (as opposed to receiving an inflation adjusted income from a pension), the less your returns exceed the rate of inflation the faster your money will run out. Also, if your returns beat inflation by a constant x% and inflation is high, you will run out of money faster than if inflation is low. Therefore if you retire to a country where inflation rates are consistently higher than in your home country, your nest egg would need to be a greater multiple of your annual expenses than if you stayed in your home country. If the cost of living in the country you retire to is low enough you will come out ahead anyway, but the retirement plan may fail if the cheap country does not stay cheap for long enough.

Edited January 13, 2008 by kdvsn
Reduced quoted text. No need to quote multiple, nested posts - Maestro

[No beleeeeve!]

Businesses cycle, economies cycle, life cycles. You aren't used to this by now? Besides, your portfolio only lost value, not dollars, unless you panicked and sold.

What did you do when the US economy was driving world growth? B*tching then too?

And yes...I have a portfolio too. Then again, I've been in the game since the 80s so I don't panic easily.

[BEENTHEREDONETHAT]

If you can afford it retiring at 50 is great. If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal. That should handle most anything that comes along. You can't say it takes x amount of dollars to retire because it depends on the spending habits of the person retiring.

I retired on my 50th birthday and just celebrated (well I didn't really celebrate, I tried to ignore it) my 74th birthday. After 24 years of retirement I have more $ now than when I retired. So the saving 10% rule has worked nicely for me.

[Khun ?]

I don't know many if any that live retirement by how much time they have left.

99% of retiree's that I know live retiment by what they can afford or less than.

I know as many if not more people now days that will never see a pension, myself ioncluded and social seciruity does not look to great for the future. Times of working for a company most of your life is about gone unless

you are a government employee.

Somewhere around 10% is the average returns for the last 100 years in the U.S. stock market for investors.

It all comes down to invest or save in which way lets you sleep well.

Many managed investments that will make you money when the markets go down.

Risk is a managment skill that should be high on the list of most investors and retirees.

The more risk the possible more gain and in todays markets many of the developed nations may have the bigger risk.

[siamamerican]

markets are less impacted by the US economy than in the past. The US still accounts for roughly 19% of the world gross product

19% on a PPP basis, but a lot more on a nominal basis. PPP is a worthy leveller when discussing relative incomes and valuations, but a discussion involving trade flows should look at nominal values because trade occurs using todays money. On a nominal basis, the US share is around 27%.

Agree, didn't realize the International Monetary Fund was using PPP to determine world gross product. PPP is probably a better measure of standard of living, but that is off topic.

[siamamerican]

If you can afford it retiring at 50 is great. If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal. That should handle most anything that comes along. You can't say it takes x amount of dollars to retire because it depends on the spending habits of the person retiring.

I retired on my 50th birthday and just celebrated (well I didn't really celebrate, I tried to ignore it) my 74th birthday. After 24 years of retirement I have more $ now than when I retired. So the saving 10% rule has worked nicely for me.

I'm taking the same approach next year at 41. If the stock market performs as it has during your retirement, I'll die with much more in todays dollars than when I retired. The plan is to keep 125k in fixed inome investments and the rest in stocks. The fixed income investments will put me in the position to endure most market downturns.

[kdvsn]

If you can afford it retiring at 50 is great. If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal. That should handle most anything that comes along. You can't say it takes x amount of dollars to retire because it depends on the spending habits of the person retiring.

I retired on my 50th birthday and just celebrated (well I didn't really celebrate, I tried to ignore it) my 74th birthday. After 24 years of retirement I have more $ now than when I retired. So the saving 10% rule has worked nicely for me.

I'm taking the same approach next year at 41. If the stock market performs as it has during your retirement, I'll die with much more in todays dollars than when I retired. The plan is to keep 125k in fixed inome investments and the rest in stocks. The fixed income investments will put me in the position to endure most market downturns.

I'll try to ask this in such a way that you can answer without divuldging how much money you have in total. If your planning to retire next year, I presume that you must have a rough estimate of how much you expect your annual living expenses will be once retired. If you divide your present net worth by your estimated annual expenses (excluding income taxes) during your couple of years of retirement, what figure to you get? In case it matters, I'm not just being nosey, I'm interested because I'm also contemplating an early retirement but am unsure that I have enough money to do it.

Edited January 14, 2008 by kdvsn

[BalthazarBeefheart]

What I don't understand is how the outlook for someone on a fixed income in the e.g. Uk is any different to their outlook in Thailand. Perhaps, I am just being thick but please enlighten me.

A raft of social welfare and free at the point of need health care might have some impact. Not to mention inalienable rights of residence (read not being kicked out because you don't meet some arbitrary change in the rules - or regime).

I trust you'll understand when I say I rather like the idea of keeping my family history to myself. It is my observation that giving such details is only encouragement for people, who perhaps unlike yourself, are inclined to be facetious. The forum rule forbidding the posting of personal details is a good one I think.

Well I was thinking more on the financial side of things - personally, on the social welfare and health care I can forgo that in the knowledge that some more needy immigrant can benefit.

The biggest danger facing a retiree would have to be the uncertain political situation - I suppose anyone who invests in Thailand needs to know they can liquidate their assets speedily - thats why I will not be buying property.

Cheers BB

[Naam]

If you can afford it retiring at 50 is great. If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal.

in my view it is quite a big deal to use a part of the income as living expenses AND still be able to increase the principal by 10% each year. there might be years when this is possible but the average years do not provide double digit yields easily (the usual suspects of financial gurus and experts in TV-Forum are of course excluded from my assumption! ).

on top of the afore mentioned it is mandatory that the investment (all or parts of the capital depending on your wealth) that provides the income for retirement is diversified as far as risks are converned and provides a calculable stream of fixed income.

let's do the maths on a fictitious retiree who has a principal of one million dollars (pounds, insert applicable currency) out of which 75% is invested in moderate risk assets which yield nowadays not more than 6% and 25% in high yield / high risk assets which might yield (questionable) 15%.

750,000 @ 6% = 45,000

250,000 @ 15% = 37,500

------------------------------------

total income........= 82,500

assumed expenses per month 5,000 = 60,000 per annum = reinvestment 22,500 = 2.25% of principal (which is not even enough to cover inflation in most countries of this planet. these figures vary of course considerably depending on available capital and personal spending habits! some people are happy and content being able to live in a "cheap" country (no offence meant!) spending 30,000 Baht a month, others need for their life style 300,000 Baht a month.

this all in my [not so] humble opinion. if somebody finds a flaw in my kind of maths and assumptions i am willing to listen.

[LivinLOS]

None of this writing wasnt on the wall.. As a speculator its your job to watch the markets and decide where to bet.. Credit bubbles created post dot com have flooded real estate and equity markets with cheap money, created a booming derivitives market and also set the seeds for rampant inflation by the over creation of money supply..

So bet anti dollar, anti real estate, anti 'basket equity', anti risk and long reserve currency, long security, etc..

Pulled in 35%+ last year.. Done almost 10% so far this year.. I am fingers crossed for a real depression not just recession..

[BalthazarBeefheart]

I was just thinking after reading some of the other posts.

I will tell you from my own experience how I calculated whether I could take early retirement here in Thailand. I had spent quite some time here previously and came up with a maximum monthly budget - I projected that on an annual rate of return of investments of 3% and an annual increase of inflation of 5%.

I reconcile my assets on a monthly basis and decide how much I pay myself for the next month. For example, I am 30% off my maximum this month to preserve my Baht savings - easily achieved cos I have given up the booze for the month - but hey you can live cheap in Thailand far easily than the UK.

I am currently deciding on how to protect myself against further currency fluctuations - I calculate I may have to change some sterling by 2012 and would like to get a good rate.

Finally, before GH jumps on me about inflation - I have noticed at minimum a 100% increase over the last five years in temporary female companionship costs - the pemanent ones also seem far more demanding their marginal propensity to consume has risen alarmingly but I don't have such a large sample to draw on - all I am saying is female inflation looks to be running wild please factor this into your calculations.

Cheers BB

[siamamerican]

I'll try to ask this in such a way that you can answer without divuldging how much money you have in total. If your planning to retire next year, I presume that you must have a rough estimate of how much you expect your annual living expenses will be once retired. If you divide your present net worth by your estimated annual expenses (excluding income taxes) during your couple of years of retirement, what figure to you get? In case it matters, I'm not just being nosey, I'm interested because I'm also contemplating an early retirement but am unsure that I have enough money to do it.

I don't have any problem divulging how much I have, because I'm not wealthy. If I was, it might be taken as bragging. My first post, roughly 3 years ago, was in regards to moving to Thailand with $65k. Each year since that post I've thought about moving to Thailand and semi-retiring. Each year I've received financial incentives that convinced me to stay and this year is no different. This year will be my last ( LOL ) and I should have approximately $575k.

I've been fortunate with my investments the last few years and have made about 16% annually, not including my 401k (US tax free retirement account). I don't anticipate these returns in the future, but feel comfortable that I can achieve a 10% return over the long run. Taxes will be of little concern, because my only taxable income will be investment income and most of the earning will not be taxed after my tax exemptions.

I use a simple calculator to determine if I have enough savings ( http://www.youngmoney.com/calculators/reti...ement_shortfall ) . The applet in the link takes about 30 seconds to load.

In reality, I most likely will work a little, teaching English or do some consulting while in Thailand, but it probably won't be a necessity. It's hard to predict the future and I'm not one to prepare for the worst. I know the risks of moving to Thailand, but the rewards are greater. I don't buy into the argument that I'm leaving during my peak earning years. Sure, I could work a few more years and have a million or 10 more and have a couple million. I just don't need millions to enjoy my simple life ( no kids and a wife that isn't money centric ).

Edited January 14, 2008 by siamamerican

[siamamerican]

If you can afford it retiring at 50 is great. If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal.

in my view it is quite a big deal to use a part of the income as living expenses AND still be able to increase the principal by 10% each year. there might be years when this is possible but the average years do not provide double digit yields easily (the usual suspects of financial gurus and experts in TV-Forum are of course excluded from my assumption! ).

on top of the afore mentioned it is mandatory that the investment (all or parts of the capital depending on your wealth) that provides the income for retirement is diversified as far as risks are converned and provides a calculable stream of fixed income.

let's do the maths on a fictitious retiree who has a principal of one million dollars (pounds, insert applicable currency) out of which 75% is invested in moderate risk assets which yield nowadays not more than 6% and 25% in high yield / high risk assets which might yield (questionable) 15%.

750,000 @ 6% = 45,000

250,000 @ 15% = 37,500

------------------------------------

total income........= 82,500

assumed expenses per month 5,000 = 60,000 per annum = reinvestment 22,500 = 2.25% of principal (which is not even enough to cover inflation in most countries of this planet. these figures vary of course considerably depending on available capital and personal spending habits! some people are happy and content being able to live in a "cheap" country (no offence meant!) spending 30,000 Baht a month, others need for their life style 300,000 Baht a month.

this all in my [not so] humble opinion. if somebody finds a flaw in my kind of maths and assumptions i am willing to listen.

No flaws in your personal calcs. It really depends on your personal cost of living. Spending 5k a month and adjusting for inflation and investment income taxes(3.1% & 15%), you would be broke in 26.5 years. It will be a fun 26.5 years, but your kids will be left with nothing ( not a concern of my childless existance ).

Edited January 14, 2008 by siamamerican

[Naam]

I will tell you from my own experience how I calculated whether I could take early retirement here in Thailand. I had spent quite some time here previously and came up with a maximum monthly budget - I projected that on an annual rate of return of investments of 3% and an annual increase of inflation of 5%.

I reconcile my assets on a monthly basis and decide how much I pay myself for the next month. For example, I am 30% off my maximum this month to preserve my Baht savings - easily achieved cos I have given up the booze for the month

hmmm... Balthazar 3% return, 5% inflation and (according to another posting) principal growing 10% per year and you have now more dough than at the time when you retired because ? are you sure with that booze thing?

[Naam]

No flaws in your personal calcs. It really depends on your personal cost of living. Spending 5k a month and adjusting for inflation and investment income taxes(3.1% & 15%), you would be broke in 26.5 years. It will be a fun 26.5 years, but your kids will be left with nothing ( not a concern of my childless existance ).

it was not meant as a personal calculation but to prove ad absurdum the impossible claim of our good friend Balthazar Beefheart

quote: "If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal."

moreover, i have no idea what

quote: "investment income taxes(3.1% & 15%)"

are. unlike our very unlucky fellow americans none of us farangs in Thailand pay income tax (presently).

[Naam]

you would be broke in 26.5 years. It will be a fun 26.5 years...

i don't think one can have a lot of fun being (as in my case) 90 years old

[siamamerican]

you would be broke in 26.5 years. It will be a fun 26.5 years...

i don't think one can have a lot of fun being (as in my case) 90 years old

Wow! 90 and sharp as a tack. As for taxes, I only understand the US system. There are a lot of work arounds for avoiding capital gains taxes and most years I manage to pay no taxes on my gains.

Just curious, are you enjoying life as much as you did 20 years ago?

[BalthazarBeefheart]

I will tell you from my own experience how I calculated whether I could take early retirement here in Thailand. I had spent quite some time here previously and came up with a maximum monthly budget - I projected that on an annual rate of return of investments of 3% and an annual increase of inflation of 5%.

I reconcile my assets on a monthly basis and decide how much I pay myself for the next month. For example, I am 30% off my maximum this month to preserve my Baht savings - easily achieved cos I have given up the booze for the month

hmmm... Balthazar 3% return, 5% inflation and (according to another posting) principal growing 10% per year and you have now more dough than at the time when you retired because ? are you sure with that booze thing?

Sorry you have lost me there - the figures I quoted are what I budget by - using the rule of prudence where one over estimates expenses and under estimates income - as my income exceeds my expenditure I therefore have more than what I retired with.

Yes at times I am a very heavy drinker but never at home and when I quit my expenses fall dramatically - I do that periodically for health reasons.

I was just trying to give a practical example for those also contemplating early retirement here - as I look at it one should be working up from living costs to determine what sum is needed not vice versa.

Cheers BB

[LoveDaBlues]

I, for one, didn't have a very good week with a total of near to 4.5 percent wiped off my Australian income investments. Someone in the US mentioned the dreaded "R" word, the US stock market sneezed and the rest of the western world is getting pneumonia.

I fully expect a worse week to come. IMO it's about time the major world markets stop relying on happenings in the USA and starts looking at the overall situation. Let the Americans sort out their own problems.

Can you point me to your post where you were previously thanking the American markets for dragging up your backwater market and thereby your portfolios performance?

Exactly my first thought.

[fletchsmile]

My personal view is that 50 is too young to retire, being as it is for many of us a time when we are in our maximum earning years with falling outlay.

personal views differ. when i was 28 my target was to "retire" (sort of) at age 40. i retired when i was 46 but could have managed at age 40. now, looking back, i regret each and every single day i worked without the necessity to earn money by working although i quite liked my job.

i don't want to give smartassed advice and coax people into retirement if they can't afford it. but everybody should be aware that our lives are neither infinite nor does our last garment have any pockets in which we can stash any earnings when they cremate us or bury us 6 foot below the surface. you can't turn back the time! you can't do at age 60 what you could do at age 50 and you can't do at age 50 what you could have done at age 40. by the way, a severe illness or an accident and a brush with death helps to make up the mind.

p.s. the afore mentioned also applies to those who believe in reincarnation!

I was in my early 30's and coincidentally in Thailand when I first really started thinking of retirement . 40 was one of the first numbers I thought of. Since then I got married and now have a daughter. The financial calcs still work should I decide to retire, but it's nice to still be earning a little extra just in case. Kids also cost more than I planned for.

While I also enjoy my work to an extent, I'm pretty sure I'll have a pretty similar view to Naam on looking back. The longer I leave it, there are many things I enjoy even more which I could be doing more of, instead of working. 45 as a target seems a bit better balance with a little more hindsight. I wouldn't put money on it being earlier or later tho', as life changes

45 is a realistic option in Thailand, compared to the UK: 1) it's cheaper, and 2) savings outside the UK, compared to UK pension rules give more flexibility.

Edited January 14, 2008 by fletchsmile

[Naam]

you would be broke in 26.5 years. It will be a fun 26.5 years...

i don't think one can have a lot of fun being (as in my case) 90 years old

Wow! 90 and sharp as a tack. As for taxes, I only understand the US system. There are a lot of work arounds for avoiding capital gains taxes and most years I manage to pay no taxes on my gains.

Just curious, are you enjoying life as much as you did 20 years ago?

that's a misunderstanding of my german grammar SiamAmerican. i am 64 and added the 26 years you mentioned. that's how i arrived at 90

[LoveDaBlues]

Retired at 48. Saw too many friends die before age 45 (natural causes or accidents). Was making 150K USD with job and investments and walked away (actually flew to Thailand lol).

Naam is right.

My strategy: enjoy life now, try not to die too broke lol. I always like a challenge anyway; what better challenge than to try and make a business fly in Thailand?

[BalthazarBeefheart]

No flaws in your personal calcs. It really depends on your personal cost of living. Spending 5k a month and adjusting for inflation and investment income taxes(3.1% & 15%), you would be broke in 26.5 years. It will be a fun 26.5 years, but your kids will be left with nothing ( not a concern of my childless existance ).

it was not meant as a personal calculation but to prove ad absurdum the impossible claim of our good friend Balthazar Beefheart

quote: "If you can have enough money for your principle to grow by 10% per year you should do fine. I find that adjusting the spending to insure the 10% growth is not that big a deal."

moreover, i have no idea what

quote: "investment income taxes(3.1% & 15%)"

are. unlike our very unlucky fellow americans none of us farangs in Thailand pay income tax (presently).

You are really confusing me - what is my impossible claim ? Anyway thanks for highlighting to me I am getting very little out of this forum - I'll stick to professional wisdom in future.

Cheers BB

[jonniebkk]

The second issue is life changes - Particularly 'Marriage and Children'. A significant factor in guys wanting to retire to Thailand is the 'availability of young women', well young women come with the needs of young women. I'm working right now with a guy in his late 50s forced out of retirement by the costs of his young family.

Bogie...you hit the nail on the head!!! This is what leads most men in LOS to their financial ruin. For whatever reason (lonesomeness, "white-knight" syndrome, whatever) most men end up with a female companion of some sort (often, as you say, much younger than themselves) and the attendant financial drain any female causes to a male's bank balance. Add to that the fact that many of these women come with prior-birthed kids results in more heavy expenditures. Adding to the financial disaster is the fact that many of these Lotharios father additional Thai rug-rats and the circle of financial destruction is complete

[Lost in LOS]

I like the quote from W.C. Fields? I'm not sure exactly how it goes but : he stated that on his death bed he will have one last check left for his funeral and it will bounce.

As for Dr Naam. I have ridden in his chauffeur driven car.....to his rather large house......on a large piece of property being maintained by a gardener ......being served large, great, sandwiches with a good port wine by a friendly maid....having his beautiful wife stop in the den to say hello to me.... hen pecked..I doubt it and what a life.... he must be doing something right

[Naam]

my "hen" has no pecker. conclusion: i can't be hen pecked. case dismissed

[sonicdragon]

My personal view is that 50 is too young to retire, being as it is for many of us a time when we are in our maximum earning years with falling outlay.

personal views differ. when i was 28 my target was to "retire" (sort of) at age 40. i retired when i was 46 but could have managed at age 40. now, looking back, i regret each and every single day i worked without the necessity to earn money by working although i quite liked my job.

i don't want to give smartassed advice and coax people into retirement if they can't afford it. but everybody should be aware that our lives are neither infinite nor does our last garment have any pockets in which we can stash any earnings when they cremate us or bury us 6 foot below the surface. you can't turn back the time! you can't do at age 60 what you could do at age 50 and you can't do at age 50 what you could have done at age 40. by the way, a severe illness or an accident and a brush with death helps to make up the mind.

p.s. the afore mentioned also applies to those who believe in reincarnation!

Likewise, at 28 I had planned to retire at 40. I actually semi-retired at 38 - I now work in Hong Kong approximately half of the time, and live a retired life in Thailand the rest of the time. I have just recently turned 40, but having tasted the retired life I find myself less eager to fully retire, as I enjoy working very much. I also enjoy spending time in Hong Kong. My wife has some family in HK so it suits us both quite well - and we have an appartment there. The only thing I dislike about the current arrangement is travelling with 2 children twice a month.

[siamamerican]

The second issue is life changes - Particularly 'Marriage and Children'. A significant factor in guys wanting to retire to Thailand is the 'availability of young women', well young women come with the needs of young women. I'm working right now with a guy in his late 50s forced out of retirement by the costs of his young family.

Bogie...you hit the nail on the head!!! This is what leads most men in LOS to their financial ruin. For whatever reason (lonesomeness, "white-knight" syndrome, whatever) most men end up with a female companion of some sort (often, as you say, much younger than themselves) and the attendant financial drain any female causes to a male's bank balance. Add to that the fact that many of these women come with prior-birthed kids results in more heavy expenditures. Adding to the financial disaster is the fact that many of these Lotharios father additional Thai rug-rats and the circle of financial destruction is complete

This is not unique to Thailand. These same people you are referring to, are the same ones that are financial challenged in their home countries. Thailand has little to do with it - just a different story. Most would still manage to squander their savings back home and have to work into their early twilight years.

In Thailand or in Rome, live within your means. If not, you are living a dream that could turn into a nightmare.