Retire At 45

[chiang mai]

One factor to consider in the equation is that, from the time we start work (in the West) until the time we retire we are inevitably striving to improve our quality of life, a bigger house, a newer car and all such things. It's not too difficult at age 60 or so to realize that those are just material toys and to buy a comfortable place to live and to live out your life doing other things. I suspect however that it's probably more difficult to forsake the "toys" at age 45, especially when you see your peer/age group indulging in those so called luxuries. I therefore think that the things you believe today will change, as you grow older. As for the Poster who says he is semi-retired at 30 - if you have really done that, you have missed out on a huge learning experience and an important part of your life and I feel sorry for you. After all what is the objective in life - it surely isn't to sit back and relax until the day you die. For me it's about experiences, challenges, suffering defeats as well as wins and about gaining knowledge. Oddly enough, I find that work in itself has provided me with most of those things.

[Moe]

As long as you tailor your lifestyle to fit your budget (which is definitely more than enough IMO) than why not do it? Be nice to have some kind of back up plan in case you decide it's not for you though. Maybe try it for a year first while keeping options open.

I don't see paid work as the only way one can stimulate the brain. It is entirely up to the individual. I'm 34, not working and am supporting wife and 1yr old baby with less than half of the capital the OP has and am generating through investments less than half of what he intends to make per year in income. Despite this am more than happy materially and mentally.

Go for it!

[Jingthing]

But if you take the average and look at the Actuarial numbers it suggests we will all live, on average to age 84 years or something similar.

In the US, the figure for white men is 75 years (69 for black men), not 84, and there have been recent reports that the age is declining probably because of obesity rates and poor access to health care. It is prudent for people considering retiring to look at their personal prospects. In my case, I noted the longevity of my parents and grandparents, considered my health history, and took some of those online tests of health history, family background and lifestyle, they give you an actual number to work with. Though an inexact science, these differences matter. If you have four grandparents who are alive at 100, I wouldn't retire at 45. Or if both your parents died of organic diseases at 40, have dessert first.

Another point for thought is if you are a farang and you move to Thailand at 45, your environment is now Thailand, so your life expectancy is probably less here than in the west.

Edited January 19, 2008 by Jingthing

[chiang mai]

But if you take the average and look at the Actuarial numbers it suggests we will all live, on average to age 84 years or something similar.

In the US, the figure for white men is 75 years (69 for black men), not 84, and there have been recent reports that the age is declining probably because of obesity rates and poor access to health care. It is prudent for people considering retiring to look at their personal prospects. In my case, I noted the longevity of my parents and grandparents, considered my health history, and took some of those online tests of health history, family background and lifestyle, they give you an actual number to work with. Though an inexact science, these differences matter. If you have four grandparents who are alive at 100, I wouldn't retire at 45. Or if both your parents died of organic diseases at 40, have dessert first.

Another point for thought is if you are a farang and you move to Thailand at 45, your environment is now Thailand, so your life expectancy is probably less here than in the west.

Ah yes but you see we Brits are a healthy and hardy bunch. In 2002 the average life expectancy for a male was 82 http://www.statistics.gov.uk/cci/nugget.asp?id=881 - I wouldn't be at all surprised to learn that in 2008 it is well into three figures!

[Jingthing]

I'm surprised when people talk of pensions - because most of my friends and I pretty much assume they will no longer exist in the not too distant future - by the time we are supposed to benefit.

This totally depends on your current age and country. If you are talking about the US and you are over 40, there is no major crisis at all. Only minor tweaking is required (stop the social security tax welfare for the rich). Also, the US, unlike western European countries, is not an aging country.

I would also second that you still need to be somewhat aggressive and continue to take at least moderate investment risks if you are going to retire early without millions.

Edited January 19, 2008 by Jingthing

[LivinLOS]

One factor to consider in the equation is that, from the time we start work (in the West) until the time we retire we are inevitably striving to improve our quality of life, a bigger house, a newer car and all such things. It's not too difficult at age 60 or so to realize that those are just material toys and to buy a comfortable place to live and to live out your life doing other things. I suspect however that it's probably more difficult to forsake the "toys" at age 45, especially when you see your peer/age group indulging in those so called luxuries. I therefore think that the things you believe today will change, as you grow older. As for the Poster who says he is semi-retired at 30 - if you have really done that, you have missed out on a huge learning experience and an important part of your life and I feel sorry for you. After all what is the objective in life - it surely isn't to sit back and relax until the day you die. For me it's about experiences, challenges, suffering defeats as well as wins and about gaining knowledge. Oddly enough, I find that work in itself has provided me with most of those things.

Well if you feel sorry for those enjoying thier time I feel sorry for those trapped in an unfulfilling job.. I retired full time at 28 and have no regrets, I travel, have my pass times and pleasures, my time is my own, I can get up and decide to go anywhere and or do anything and I dont have to keep anyone elses schedule or meetings etc.

As for pleasures in work.. I was not suited to work for others and early 20's formed a corporation that I then took multinational etc in just a few years.. I have had what could only be described as a roller coaster of a working life but I cant think of any time I actually enjoyed those 100 hour work weeks.

Edited January 19, 2008 by LivinLOS

[Jingthing]

Just to add some balance. Although I am solidly in the do it if you want to camp and don't listen to those who don't understand your desire or even pass moral judgements on you, there is a dark side if you fail. In the US, men are judged by their work and jobs. If you drop out of this early and "retire" for 5, 10, 20 years, and then realize you want or more likely need to go back into workforce, it is probable you will be facing a hellish time. And I agree many farang suicides can probably be linked to this: farang moves to Thailand thinking they have enough money, money now gone, going back to farangland to start over too much to bear. But before blaming this on Thailand, older people commit suicide all the time because of economic woes, even in their home countries. Failed businesses, age disrcimination in the workplaces, etc. take their toll.

I have another friend who stopped out of work for many personal reasons at about 45 (not an expat) and now years later needs to go back into the workforce. Previously he was high level management in high tech. Now he is thinking he might have to bag groceries, and he might just have to. He thinks that people will think he is a total loser, what happened to him, and they would, even though he previously was a high achiever. Of course, I am worried about him now.

Early retirement isn't for everyone, but for those that it is for, and sometimes that takes doing it to find out, it can be wonderful. Or a horrible mistake. But staying and working can also be a horrible mistake. Like someone else said, life is not a rehearsal.

Edited January 19, 2008 by Jingthing

[chiang mai]

early 20's formed a corporation that I then took multinational

Bl**dy he11, that makes you what, 80 something, you're getting on a bit aren't you?

[LivinLOS]

In 'my' early 20s..

Basically I bummed around the world and realized that hitchiking about with a backpack is great when your a teenager, but it would be much better with a fat wallet.. So in my early 20's when that settled into my thick head I knuckled down and started working.. 5 years later I had 400 employees and a multinational..

Ultimately it all went tits up but was fun living fast while it lasted. Being an idiot when your young is almost permissible, crashing porsches and acting the fool. Hopefully I have changed a little.

Edited January 19, 2008 by LivinLOS

[tornado40]

Interesting topic - as this is on my mind also

I am 49 and considering retiring to Thailand at 50. My TGF and I have a house paid for in Samui and Sakon Nakhon - no children yet on either side but maybe (hopefully) in the future

I should have £200,000 after the sale of my UK house and 'toys' - and a bank pension worth about £12,000 per year at present, inflation linked which will start when I'm 60

Have been coming to Thailand for 10 years - 3 times a year and have stuck it out in the UK with 50 in mind

Decision day is now looming - as returning to the UK could be very difficult. Should I wait till 55 or 60?

[Jingthing]

Should I wait till 55 or 60?

If you want to. Sounds like you don't need to.

[kdvsn]

I'm surprised when people talk of pensions - because most of my friends and I pretty much assume they will no longer exist in the not too distant future - by the time we are supposed to benefit.

This totally depends on your current age and country. If you are talking about the US and you are over 40, there is no major crisis at all. Only minor tweaking is required (stop the social security tax welfare for the rich). Also, the US, unlike western European countries, is not an aging country.

I would also second that you still need to be somewhat aggressive and continue to take at least moderate investment risks if you are going to retire early without millions.

If you are talking about Social Security, you are probably right that's safe for people over 40 though I wouldn't put it past to government to put "means testing" on the payouts at some point. It's different for private pensions though and I know this from personal experience. I worked more than 20 years for a large company that had what appeared to be a generous pension plan that one could start collecting on when they reach 50 years of age. The company cashed out the pension plan when I hit 45 years of age, effectively gving me 25 cents on the dollar compared to what I would have gotten at age 50 had they not tampered with the pension plan. And it was all perfectly legal. By now, few private companies in the US offer defined benefit pernsions at all, meaning that the only guaranteed payouts that most retiress get are from Social Security, and the fact of the matter is that Social Security is not a very generous program, it's basically poverty wages. Couple that with the negative savings rates that most Americans have, and it becomes hard to imagine that their will not be a retirement crisis when the post-baby boom generation reaches retirement age.

Edited January 19, 2008 by kdvsn

[jbaldwin]

I am in a fairly similar situation to the OP.

I am 42, have investments of about $1 million and retired five years ago.

I would not be happy with the level of risk associated with an 85% exposure to equities. I have about 55% in equities and therefore have a lower overall return. I assume that I can take an income of 3.5% per year and still have an income that rises in line with inflation. This gives a spending limit of around 100,000 baht per month. I have been spending 50,000-60,000 per month, which give a reasonable cushion.

[yorkman]

Interesting topic - as this is on my mind also

I am 49 and considering retiring to Thailand at 50. My TGF and I have a house paid for in Samui and Sakon Nakhon - no children yet on either side but maybe (hopefully) in the future

I should have £200,000 after the sale of my UK house and 'toys' - and a bank pension worth about £12,000 per year at present, inflation linked which will start when I'm 60

Have been coming to Thailand for 10 years - 3 times a year and have stuck it out in the UK with 50 in mind

Decision day is now looming - as returning to the UK could be very difficult. Should I wait till 55 or 60?

Well..... at 60 you will be fine hopefully. But £200,000 invested gets you next to nothing, even in Thailand. Especially if you are planning for kids.

It was said earlier in this thread, you are approaching the peak earning point in your life. Just hang in a bit longer and build up your capital IMHO

[cclub75]

Inflation and exchange rates are an ever present risk of which I am aware.

And what about... equities losses ? !

I mean you have 595 000 USD in equities... in which market ? Which fields ?

The income you speak about is dividends, right ?

Again, we have had some very good years as for growth worldwide and companies results, but what about a recession now ?

What could happen to the bulk of your income if companies's dividends are going down ?

Edited January 19, 2008 by cclub75

[tornado40]

Thanks Jingthing and Yorkman - I can see the merits in both comments

Perhaps wait a bit - unless 'push' comes to 'shove' then press the escape button!

Cheers

[PCA]

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

hi niebla,

why not enlighten us all? You sound like a helpful person

[kdvsn]

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

As of 2003, the average annual expidenture of the average family of 2.5 people in the US was a shade over $40,000 excluding income taxes, so I suppose that it must be true to it's possibile to live on $30,000 in the US. But whether there is something wrong with the people who spend more than $30K or something wrong with the finances of those who spend less than $30,000 or something wrong with the finances of someone who spends more than $30,000 is open to interpretation. You can live plenty cheap in a slum but yet slum dwellers are seldom the most financially saavy people.

[chiang mai]

Here's an exercise for you:

When we talk about retirement the mindset needs to change from, "I'll take a gamble on this investment because if it fails I can always replace the income through work", to " this investment represents all my available funds so I need to be cautious because I can't replace the income stream". Having 85% of your investments in equities doesn't match with that mindset shift. Maybe the balanced portfolio for a retiree suggests something like, 30% in equities and the remainder in corporate bonds etc, I don't know what that mix should be. But given that foregoing is largely correct (and 85% in equities is surely not correct) how does that affect the income flow of say $30,000 a year? Fixed income returns are likely to be in the 5-6% (and declining) range and my guess is that reduces the income stream quite a bit.

Having done the latter, factor in the effects of inflation of what, 8%, 10% per year, you decide what it will be but take a look at the bottom line after 10 years.

Finally, look at an exchange rate of 33 per USD or 64 per GBP and then compare the effect of that against one of say 50 or even 45 (against GBP) or 20/25 against USD in ten years time.

Doing the above is not rocket science and is easily dooable by most people. I do the above on a regular basis with my holdings to determine a worst case scenario and the results are often scary. If you're happy with the numbers resulting from the above then retire early, if you're not, don't, simple as that.

Edited January 20, 2008 by chiang mai

[ronz28]

You can make that work. Keep that 85% in equities and diversified with a few exchange traded funds (diversification is the key). Keep the withdrawal at no more than 4.25% per year. Try not to make your annual withdraw during the low of the market cycle like now, but make the annual withdrawal as close to market tops for the year as you can stand it. Make sure you have good health insurance, etc. and don't do anything wild and crazy or it will be back to work for you.

[naka]

The following simplistic table shows how inflation has a drastic effect

on your capital, even when you are earning more in percentage terms

than inflation.

The following table uses 5% pa interest and 3.5% pa inflation and assumes expenditure

initially of US30,000 and increased each year to provide for inflation.

Note how your capital plummets in the later years.

year capital spend interest

0 700,000 30,000 35,000

1 705,000 31,050 35,250

2 709,200 32,137 35,460

3 712,523 33,262 35,626

4 714,888 34,426 35,744

5 716,207 35,631 35,810

6 716,386 36,878 35,819

7 715,328 38,168 35,766

8 712,926 39,504 35,646

9 709,068 40,887 35,453

10 703,635 42,318 35,182

11 696,498 43,799 34,825

12 687,524 45,332 34,376

13 676,568 46,919 33,828

14 663,478 48,561 33,174

15 648,091 50,260 32,405

16 630,235 52,020 31,512

17 609,727 53,840 30,486

18 586,373 55,725 29,319

19 559,967 57,675 27,998

20 530,291 59,694 26,515

21 497,112 61,783 24,856

22 460,184 63,945 23,009

23 419,248 66,183 20,962

24 374,027 68,500 18,701

25 324,229 70,897 16,211

26 269,543 73,379 13,477

27 209,641 75,947 10,482

28 144,176 78,605 7,209

29 72,780 81,356 3,639

30 -4,938 84,204 -247

Naka.

[billaaa777]

You did not really do that table did you? Why don't you try saving 1/15 of your disposable income from the first year forward and see what you table looks like then?

[stickman]

I am 45 and considering my options regarding retirement. I hope to to retire in Pattaya or Chiang mai. I have total assets of $700,000 of that about 85% equities 12% bonds 3% cash. These pay an annual income of about $30,000.

Any self funded retirees happy to tell me if this a comfortable position from which to retire?

Bearing in mind I will have to pay for visa runs probably to Malaysia every 3 months.

Currently I have the option of working which obviously means I will have more assets if I retire at a later date.

I know you were not asking about investment info, but you're currently making a very low return on your assets. You could put your money into a New Zealand bank, for example, which is totally safe and earn 8.5%, about twice what you're currently earning. OK, you're then subject to exchange rate fluctuations and the NZ dollar moves around a fair bit... But for sure, your return on your assets should be much better than what you are currently earning.

Personally, I think I would get bored if I retired at your age, but we're all different.

Whatever you decide, good luck!

[kdvsn]

You did not really do that table did you? Why don't you try saving 1/15 of your disposable income from the first year forward and see what you table looks like then?

Point taken. But actually that's a pretty good example of why retirement planning is so difficut. When you are looking out over a 30, 40, or 50 year period, even a small lack of accuracy in estimating either your annual returns, the annual inflation rates, or your annual rate of spending can have a dramatic effect on whether your retirement plan will work or whether you will be destined to be sky-diving off a balcony of a 20 storey building in Pattaya.

[lazeeboy]

I am 45 and considering my options regarding retirement. I hope to to retire in Pattaya or Chiang mai. I have total assets of $700,000 of that about 85% equities 12% bonds 3% cash. These pay an annual income of about $30,000.

Any self funded retirees happy to tell me if this a comfortable position from which to retire?

Bearing in mind I will have to pay for visa runs probably to Malaysia every 3 months.

Currently I have the option of working which obviously means I will have more assets if I retire at a later date.

its enough now ,so what if in 10 years its not ,enjoy while your young ,theres a lot of people in there graves too early leaving family there monies ,i say enjoy what you have ....

[think_too_mut]

have total assets of $700,000 of that about 85% equities 12% bonds 3% cash. These pay an annual income of about $30,000.

If I had that kind of money, i would turn it all into cash and deposit to StGeorge Bank in Australia into "Direct Saver Account".

It would be about 780K A$, 7% interest rate would bring in 55,000K a year, 1.55 mil baht, or almost 130K baht per month. Minus 10% that they take as tax for non-resident citizens, still makes it nice money. Rate fluctuations have been 5.45 (the lowest I remember) and now 7%. If the income dropped to 100K a month it's still more than I would spend anyway.

For now, i need a few years of pushing the stone uphill, hope I get there before I am 55. In fact, with that kind of money I can live even better in tropical Queensland (Carns and around).

[Jingthing]

There are retirement calculators all over the web. Use them and you will see if the OP can get a moderately decent return and keep the spending sane, he is indeed in the chips for life. Also, it is true it is best to start the withdrawal about 4 percent, but you can also INCREASE THAT AMOUNT every year to account for inflation. The idea is to enjoy your money and your life and have ENOUGH and SOME money when you die. No need to double and triple your money in retirement for you heirs. If you do that, you have failed big time.

Edited January 20, 2008 by Jingthing

[Artamus]

There are retirement calculators all over the web. Use them and you will see if the OP can get a moderately decent return and keep the spending sane, he is indeed in the chips for life. Also, it is true it is best to start the withdrawal about 4 percent, but you can also INCREASE THAT AMOUNT every year to account for inflation. The idea is to enjoy your money and your life and have ENOUGH and SOME money when you die. No need to double and triple your money in retirement for you heirs. If you do that, you have failed big time.

Too right. As my parents are always telling me, they are enjoying their retirement and spending my inheritance...... can't argue with that.

[bendix]

Rather worryingly, I find myself in agreement with Jingthing. I need to sit down because I feel dizzy.

There are two debates here - the philosophical debate about retiring early (long time to do nothing versus you might die next year) and I side with those who have the balls to just do it and enjoy themselves. I wish I had the balls to do it myself. Perhaps it's one of those philosophical positions which apply better to someone else.

As for the dollars, I can't help thinking 30k is a pitiful return on a capital sum of $700k and a bit of shopping around (either better stock picking with an eye on dividends or some better yielding bonds or cash accounts would make a world of difference). By way of comparison, I'm currently generating around 137,000 interest from $730-$740k with absolutely no risk whatsoever (except currency). 700k generating 7% would give you 130-135,000 a month. That is more than enough to ensure not only a half decent lifestyle, but also (and this is crucial in my view) a buffer for emergencies and enough to reinvest so that your investment income stream keeps pace with inflation over a relatively long retirement.

Having said all that, I do have some sympathy for the 'take a year off' argument too.

[cclub75]

If I had that kind of money, i would turn it all into cash and deposit to StGeorge Bank in Australia into "Direct Saver Account".

It would be about 780K A$, 7% interest rate would bring in 55,000K a year, 1.55 mil baht, or almost 130K baht per month. Minus 10% that they take as tax for non-resident citizens, still makes it nice money.

I would do the same... But in Singapore. You get between 6 and 7 % on AUD time deposits. But without any TAXES.

Edited January 20, 2008 by cclub75