Thailand - No Longer A Cheap Retirement Destination

[bprinceuk]

Good post Steve thank you for taking the time and effort. Lots of useful information which will help in my future decisions. Presently I am still working overseas and spend my vacation time here in Thailand, but eventualy hope to be able to retire in Thailand, it now looks like I will have to work a few extra years ???

Brian

[PattayaParent]

Yeah, hard to avoid paying tax here when all your money comes from out of the country. One benefit is to get a new "home" state. I use Nevada and pay no state income tax. I have many friends who do that. Just get a PO box and there are even services that will scan your mail and email it to you...then mail it if you want. Not that much to have this service.

Why do you need to have a 'home state' can't you just be a non-resident and then only be subject to federal taxes?

[PattayaParent]

Triple wammy - Thai inflation, changes in the exchange rate and low interest rates back home. All of these argue for investing in real assets in Thailand. Inflation is neutralized by investment in real assets. If prices go up, then the price of the real asset goes up too. Exchange rates do not matter if the returns are in Batt. Low interest rates back home are from monetary issues and a lack of growth in the home economy. They are a good reason to change the engine driving part of your returns to the Thai economy.

Assuming by 'real assets' you mean real estate there's a few problems with this thinking.

Real estate, especially condos that Farang can own, are overpriced in Baht terms, the exchange rate with your home country currency is low making real estate even more expensive, and once you've bought it you can't sell it as there's an oversupply, unless you drop the price to a reasonable level ie less than you paid..

Talk about a triple whammy eh?

[trogers]

Triple wammy - Thai inflation, changes in the exchange rate and low interest rates back home. All of these argue for investing in real assets in Thailand. Inflation is neutralized by investment in real assets. If prices go up, then the price of the real asset goes up too. Exchange rates do not matter if the returns are in Batt. Low interest rates back home are from monetary issues and a lack of growth in the home economy. They are a good reason to change the engine driving part of your returns to the Thai economy.

Assuming by 'real assets' you mean real estate there's a few problems with this thinking.

Real estate, especially condos that Farang can own, are overpriced in Baht terms, the exchange rate with your home country currency is low making real estate even more expensive, and once you've bought it you can't sell it as there's an oversupply, unless you drop the price to a reasonable level ie less than you paid..

Talk about a triple whammy eh?

Investing in real property as a hedge against inflation has been observed as a correct strategy for over 5 decades. If you are not comfortable with real estate in Thailand, you can limit it to your home country.

But I am surprise that there are people thinking that retirement pension should also pay for the rent of a roof over their head. If they have paid up for a home during the time they had worked, this home can either be cashed out for a new home in their retirement destination, or rented out, and the rental income pays the rent of their retirement home. Either way, pension is not used to pay for the rent.

Edited July 4, 2010 by trogers

[meom]

So there you have it – For all western tourists and retirees buying Thai Baht with foreign currency, the prices of everything purchased after arrival in Thailand have increased by at least 65% over the last 5 years

...and for the poor Brit pensioner, prices have effectively nearly doubled.

Well at least Thai Immigration haven't picked up on this by increasing the monetary requirements to qualify for a pension visa.

800,000 in the bank is a nuisance so how about 1.3 mil?

[craigt3365]

Not sure about that home state thing....I am back in the States fairly often visiting family and friends...about 3 months out of the year. So, I don't really qualify as being "out" full time. That may be what is getting me?

trogers is right on...property is a great protection against inflation. I know many folks in California who could not afford to live there if they hadn't bought 20 years ago or so. But since they did, they are living very comfortably with housing being taken care of...and paid off...

[PattayaParent]

Triple wammy - Thai inflation, changes in the exchange rate and low interest rates back home. All of these argue for investing in real assets in Thailand. Inflation is neutralized by investment in real assets. If prices go up, then the price of the real asset goes up too. Exchange rates do not matter if the returns are in Batt. Low interest rates back home are from monetary issues and a lack of growth in the home economy. They are a good reason to change the engine driving part of your returns to the Thai economy.

Assuming by 'real assets' you mean real estate there's a few problems with this thinking.

Real estate, especially condos that Farang can own, are overpriced in Baht terms, the exchange rate with your home country currency is low making real estate even more expensive, and once you've bought it you can't sell it as there's an oversupply, unless you drop the price to a reasonable level ie less than you paid..

Talk about a triple whammy eh?

Investing in real property as a hedge against inflation has been observed as a correct strategy for over 5 decades. If you are not comfortable with real estate in Thailand, you can limit it to your home country.

But I am surprise that there are people thinking that retirement pension should also pay for the rent of a roof over their head. If they have paid up for a home during the time they had worked, this home can either be cashed out for a new home in their retirement destination, or rented out, and the rental income pays the rent of their retirement home. Either way, pension is not used to pay for the rent.

But if you have to sell your property for less than you paid for it how does that classify it as a hedge against inflation? Unlkess inflation was a larger negative figure?

And would you believe there are a lot of pensioners that have never been able to afford to buy their own home and so have to pay rent out of their pension.

[gennisis]

To have a reasonable standard of living, 50,000 a month is approx what is needed, many will say you can live on less, yes you can if you stay in a small fan room and eat noodles till they come out your ears...that isnt a decent retirement. A small bungalow at 8,000, electric, water, transport, health insurance, dvds, televison, phone, internet, socialising, food, books and the ocassional holiday and there wont be much if any change from 50k, thats £1,100 a month and tax is payable on a U.K. pension over £6,400 p.a. at age 65, So anyone without a half a decent private/company pension will not be able to retire comfortably in Thailand at the moment. Food has gone through the roof the last few years with many items 50% more than only 2 years ago. 5 years ago I stayed here comfortably on 30,000...that was only £400......so with the figures now thats almost 3 times a much needed. I aint retired but I know of so many guys that needed to go home or elsewhere as it really isnt cheap here anymore.

NONESENSE.....Of course you can live well on less that 50,000baht/month.

I have been here 4 years now....rent a new single story house.....eat all MY foods from Tops and Rimping......smoke....drink and generaly do what I like.

Only things I dont have is a car and any desire to spend every night in a bar.

You are also wrong about UK tax...I am 71 yrs old, have to pay no tax on my pensions of 9,000 odd BGP. so I can spend about35,000Baht/month without touching any capital

I can well believe that everything is now dearer than in the past....thats the same the worldover,,,but,for me to be living in the UK on just my pensions ....unbearable I would think.

[trogers]

Triple wammy - Thai inflation, changes in the exchange rate and low interest rates back home. All of these argue for investing in real assets in Thailand. Inflation is neutralized by investment in real assets. If prices go up, then the price of the real asset goes up too. Exchange rates do not matter if the returns are in Batt. Low interest rates back home are from monetary issues and a lack of growth in the home economy. They are a good reason to change the engine driving part of your returns to the Thai economy.

Assuming by 'real assets' you mean real estate there's a few problems with this thinking.

Real estate, especially condos that Farang can own, are overpriced in Baht terms, the exchange rate with your home country currency is low making real estate even more expensive, and once you've bought it you can't sell it as there's an oversupply, unless you drop the price to a reasonable level ie less than you paid..

Talk about a triple whammy eh?

Investing in real property as a hedge against inflation has been observed as a correct strategy for over 5 decades. If you are not comfortable with real estate in Thailand, you can limit it to your home country.

But I am surprise that there are people thinking that retirement pension should also pay for the rent of a roof over their head. If they have paid up for a home during the time they had worked, this home can either be cashed out for a new home in their retirement destination, or rented out, and the rental income pays the rent of their retirement home. Either way, pension is not used to pay for the rent.

But if you have to sell your property for less than you paid for it how does that classify it as a hedge against inflation? Unlkess inflation was a larger negative figure?

And would you believe there are a lot of pensioners that have never been able to afford to buy their own home and so have to pay rent out of their pension.

If you have to sell your property for less, then you most likely have been speculating rather than investing. This case is most probably due to property cycles. Bought near the peak and sell during the downturn. Property cycles in many countries have a duration of 9-12 years. The recent cycle in Thailand can be trekked at peaking in 1996 before the Tom Yum Kung crisis and then a pickup in 2003 and another crash in 2008. And we know property prices can crash up to 40%, between peak and bottom prices.

But if you are to gauge comparative prices over 20 years, or two property cycles, you will find that subsequent peak prices (or bottom prices) will always be higher than the previous peak (or bottom). That's your hedge against inflation.

[PattayaParent]

But if you have to sell your property for less than you paid for it how does that classify it as a hedge against inflation? Unlkess inflation was a larger negative figure?

And would you believe there are a lot of pensioners that have never been able to afford to buy their own home and so have to pay rent out of their pension.

If you have to sell your property for less, then you most likely have been speculating rather than investing. This case is most probably due to property cycles. Bought near the peak and sell during the downturn. Property cycles in many countries have a duration of 9-12 years. The recent cycle in Thailand can be trekked at peaking in 1996 before the Tom Yum Kung crisis and then a pickup in 2003 and another crash in 2008. And we know property prices can crash up to 40%, between peak and bottom prices.

But if you are to gauge comparative prices over 20 years, or two property cycles, you will find that subsequent peak prices (or bottom prices) will always be higher than the previous peak (or bottom). That's your hedge against inflation.

It sounds like you've never heard of negative equity, and it's effect on a great number of home owners, as opposed to speculators.

And when it comes time to sell up to fund your retirement and the property prices drop 20-25% making it impossible, it's really no consolation that you are better off than the last recession, when you weren't able to retire either.

And you again fail to take into account people that can't afford to own property.

[Jingthing]

Not all retirees own their homes. Usually, it is desirable, but everyone's goals in life, yes later life also, are different. For example, some retired people like to be more mobile and owning an illiquid property would restrict that freedom. Also, in places like Thailand, it is still rather cheap to rent and retirees are only promised permission to stay one year at a time, with no longer term promises.

[trogers]

But if you have to sell your property for less than you paid for it how does that classify it as a hedge against inflation? Unlkess inflation was a larger negative figure?

And would you believe there are a lot of pensioners that have never been able to afford to buy their own home and so have to pay rent out of their pension.

If you have to sell your property for less, then you most likely have been speculating rather than investing. This case is most probably due to property cycles. Bought near the peak and sell during the downturn. Property cycles in many countries have a duration of 9-12 years. The recent cycle in Thailand can be trekked at peaking in 1996 before the Tom Yum Kung crisis and then a pickup in 2003 and another crash in 2008. And we know property prices can crash up to 40%, between peak and bottom prices.

But if you are to gauge comparative prices over 20 years, or two property cycles, you will find that subsequent peak prices (or bottom prices) will always be higher than the previous peak (or bottom). That's your hedge against inflation.

It sounds like you've never heard of negative equity, and it's effect on a great number of home owners, as opposed to speculators.

And when it comes time to sell up to fund your retirement and the property prices drop 20-25% making it impossible, it's really no consolation that you are better off than the last recession, when you weren't able to retire either.

And you again fail to take into account people that can't afford to own property.

Negative equity will not affect homeowners who do not over borrow. In my generation, we have never thought of buying an over-expensive place at 90% financing with 25-30 years mortgage period.

We were max at 80% for 15 years. Yes, I am in my 50s. We were able to pay back the loan through one property cycle. My first condo in Bangkok was bought in 1994 at 65% and 10-year mortgage. Tom Yum Kung crisis hit in 1997. Never had a problem with my installment even with negative equity, though the quantum of negative equity was less than 5% due to borrowing only 65%.

[reefsurfah]

But if you have to sell your property for less than you paid for it how does that classify it as a hedge against inflation? Unlkess inflation was a larger negative figure?

And would you believe there are a lot of pensioners that have never been able to afford to buy their own home and so have to pay rent out of their pension.

If you have to sell your property for less, then you most likely have been speculating rather than investing. This case is most probably due to property cycles. Bought near the peak and sell during the downturn. Property cycles in many countries have a duration of 9-12 years. The recent cycle in Thailand can be trekked at peaking in 1996 before the Tom Yum Kung crisis and then a pickup in 2003 and another crash in 2008. And we know property prices can crash up to 40%, between peak and bottom prices.

But if you are to gauge comparative prices over 20 years, or two property cycles, you will find that subsequent peak prices (or bottom prices) will always be higher than the previous peak (or bottom). That's your hedge against inflation.

It sounds like you've never heard of negative equity, and it's effect on a great number of home owners, as opposed to speculators.

And when it comes time to sell up to fund your retirement and the property prices drop 20-25% making it impossible, it's really no consolation that you are better off than the last recession, when you weren't able to retire either.

And you again fail to take into account people that can't afford to own property.

Negative equity will not affect homeowners who do not over borrow. In my generation, we have never thought of buying an over-expensive place at 90% financing with 25-30 years mortgage period.

We were max at 80% for 15 years. Yes, I am in my 50s. We were able to pay back the loan through one property cycle. My first condo in Bangkok was bought in 1994 at 65% and 10-year mortgage. Tom Yum Kung crisis hit in 1997. Never had a problem with my installment even with negative equity, though the quantum of negative equity was less than 5% due to borrowing only 65%.

Agree. Negative equity or being "under water" only works against you when you can't make the mortgage payments. If you are looking to live in and not invest/speculate, then it shouldn't really matter what price you paid for it since you are using the place to live and can afford it. I'm kind of surprised by all these new condos that are taken up by speculators, I guess its money chasing money..I wouldn't want to buy from these speculators anyways, just gives them more reason to buy and sell. TIT

[craigt3365]

Hey, don't knock buying from speculators! Hate to take advantage of somebody, buy you can get some really good deals from these guys as they are hurting financially right now. That's what I did....

Agree with you about not wanting to own a property. It really does tie you down. I was "homeless" for 5 years and loved it. I kinda miss not having any responsibility!

I went to Argentina last year. Met a good friend of mine who is a doc at a hospital there. Talking about the housing crisis, he mentioned pretty much everybody there pays cash...so no crisis!

[chainarong]

Don't know about the other countries BUT try living in AUSTralia on a pension, Thailands fuel and power prices are pretty crappy, foods great , rent leases are on the up, don't know how the ordinary Thai's manages though.

[Pib]

Thailand - No Longer A Cheap Retirement Destination

i fully agree and claim that Thailand is not only extremely cheap for those who would pay 45% (or more) of their income to the taxman in their home countries but live a very comfortable life in Thailand without spending a single penny as all expenses (and much more) are covered by their savings on income tax.

:jap:

I am not yet retired, but soon I hope to be on a US public sector pension. My expectation is that I will have to pay US income taxes wherever I live. I don't know of anyway to avoid this.

Also, since my pension will always be in US dollars, I will always face the exchange rate risk. Over 20 years the downside could have a really significant impact. The solution here seems to be to invest early as much as possible in Thailand. Buy a condo or long term lease.

Exactly my sentiments. I plan on retiring to Thailand on a Virginia state law enforcement pension and social security. I fully expect to continue paying US federal and Virginia state income tax while living in Thailand. I am fortunate because my wife is a Thai citizen and has a permanent resident card for the USA. She owns a house and another piece of property in Thailand free and clear. We jointly own another parcel of land for which I've already been offered nearly double what I paid for it only three years ago so I completely agree with you about investing early.

Why pay Virginia state tax after you set up residence in Thailand? Just file a close-out return with Virginia since you have a new residence which is not in Virginia anymore. If you moved to Maryland, would you continue to pay Virginia state tax? You would probably have to start paying Maryland state taxes. And moving to Thailand, you are basically no longer a residence of any state unless you have something that forces you to keep a legal residence in Virginia.

[gregb]

Triple wammy - Thai inflation, changes in the exchange rate and low interest rates back home. All of these argue for investing in real assets in Thailand. Inflation is neutralized by investment in real assets. If prices go up, then the price of the real asset goes up too. Exchange rates do not matter if the returns are in Batt. Low interest rates back home are from monetary issues and a lack of growth in the home economy. They are a good reason to change the engine driving part of your returns to the Thai economy.

The biggest issue for most is a lack of trust in the Thai legal and financial system - especially as it impacts farangs. I have seen many times in these forums "don't invest more in Thailand than you can afford to loose." If this is the case, use the Western system to safeguard your investments, but tie a significant portion to the Thai economy and Batt. Its a different set of risks, but it will take the triple wammy out of the picture for the remainder of your retirement. However, it may not be something you want to do if you see retirement in Thailand as a temporary thing.

Average price of gold in 2005, about $445/oz. (8400 Baht/baht weight). Average price of gold this year, about $1200 USD (18,400 Baht/baht weight).

Don't need to say anything else here. This trend will continue. No need to invest in Thai real estate or any other questionable asset. Buy gold. It's rising in all currencies. Only the AUD still has a few specific time frames over the last 5 years where gold would not have been the right bet. The Thai legal system is irrelevant and farang distrust of all things in the LOS is also irrelevant. Just say no, and buy portable yellow rocks.

The real problem is the declining real value of currency from the West, and therefore the declining real value of pensions. Living in Thailand is actually cheaper that it was 5 years ago when calculated in oz. of gold. Hedge your pension and buy gold futures.

[hansnoi]

Feels good to be here with people who are willing to sacrifice everything out of love for Thailand. And their Thai partner of course

[Buckeye911]

Thailand - No Longer A Cheap Retirement Destination

i fully agree and claim that Thailand is not only extremely cheap for those who would pay 45% (or more) of their income to the taxman in their home countries but live a very comfortable life in Thailand without spending a single penny as all expenses (and much more) are covered by their savings on income tax.

:jap:

I am not yet retired, but soon I hope to be on a US public sector pension. My expectation is that I will have to pay US income taxes wherever I live. I don't know of anyway to avoid this.

Also, since my pension will always be in US dollars, I will always face the exchange rate risk. Over 20 years the downside could have a really significant impact. The solution here seems to be to invest early as much as possible in Thailand. Buy a condo or long term lease.

Exactly my sentiments. I plan on retiring to Thailand on a Virginia state law enforcement pension and social security. I fully expect to continue paying US federal and Virginia state income tax while living in Thailand. I am fortunate because my wife is a Thai citizen and has a permanent resident card for the USA. She owns a house and another piece of property in Thailand free and clear. We jointly own another parcel of land for which I've already been offered nearly double what I paid for it only three years ago so I completely agree with you about investing early.

Why pay Virginia state tax after you set up residence in Thailand? Just file a close-out return with Virginia since you have a new residence which is not in Virginia anymore. If you moved to Maryland, would you continue to pay Virginia state tax? You would probably have to start paying Maryland state taxes. And moving to Thailand, you are basically no longer a residence of any state unless you have something that forces you to keep a legal residence in Virginia.

Good point, Pib. We need to maintain a residence in the states so my wife does not lose her permanent resident status. If I should die before her, she would not be able to collect my social security benefits if she is no longer a permanent resident. I will obviously research further but I am also assuming that I will have to pay Virginia state tax because I will be receiving a state government pension from Virginia.

[geriatrickid]

Thailand - No Longer A Cheap Retirement Destination

i fully agree and claim that Thailand is not only extremely cheap for those who would pay 45% (or more) of their income to the taxman in their home countries but live a very comfortable life in Thailand without spending a single penny as all expenses (and much more) are covered by their savings on income tax.

:jap:

Provided that the foreign resident assumes the status of a non-resident of his/her homeland. Considering the political climate around the world and the problems of accessing affordable health care, a prudent person would do the cost -benefit analysis first. Today,many financially successful people are not prepared to sever all ties back to their homelands. If I am going to rely on my pensions and tax deferred retirement savings plan from my homeland, then I am still liable for the witholding tax back in my homeland.(in the case of my country.) So whether I am in Thailand or back home, I get hit with that tax. I have lots of savings, but considering the ROI (I am conservative) , the tax savings would be insignificant. Now, with a move to similar tax systems and foreign tax treaties, the tax advantages are not as good as they once were. I am sure that when you came to Thailand in the last century, the tax savings was fantastic. My point is that they aren't as seductive today.

In respect to someone else's comments about pay packages for expats, when is the last time they had a look at some of the compensation agreements? Ever since the world economy took a hit, most sectors have seen frozen or reduced compensation packages. More specifically, a great many companies have eliminated foreign positions. I know from my friends in financial services, that the high paying positions started geting slashed several years ago. Where there might have been several foreign execs, there may only be 1 or 2 now. Even the energy sector (executives) got hit hard when oil prices dipped 2 years ago. The prevailing view is that why send an "expat" when there is plenty of local talent available that will work for a lot less. I know that my former employer found it cheaper to bring over foreigners, train them a year and send them back. It is also important to differentiate between contract employees and full time personnel. MNEs account for these people differently when it comes to pay and headcount. A foreigner can still score a nice short term contract, but what happens after the 1-2 years?

My salary has been frozen for the past 2 years and my bonus slashed. My investment income went from 20% of my gross income to less than 5%. And yet, the basket of goods and services I purchase in Thailand has increased significantly. The end result? My bum hurts.

[cloudhopper]

Hedge your pension and buy gold futures.

Good advice IMO but buying physical (Thai 965) gold may prove to be more useful here in the event (of capital controls, currency crisis, windfall taxation etc.) than futures.

[el jefe]

Not sure about that home state thing....I am back in the States fairly often visiting family and friends...about 3 months out of the year. So, I don't really qualify as being "out" full time. That may be what is getting me?

trogers is right on...property is a great protection against inflation. I know many folks in California who could not afford to live there if they hadn't bought 20 years ago or so. But since they did, they are living very comfortably with housing being taken care of...and paid off...

You can be an expat with no state of residence (back in the US) and completely avoid state taxes. State laws vary from state to state but what most of them have in common is that in order to terminate your former state residency you must establish residency someplace else, whether that be another state, or another country. There are more obstacles if you continue to own or rent property in your former state of residence.

[trogers]

Average price of gold in 2005, about $445/oz. (8400 Baht/baht weight). Average price of gold this year, about $1200 USD (18,400 Baht/baht weight).

I remember gold prices were once in the 800s and then fell below the 400 point. What hedging will you make that prices are 1200 today and will not fall below 800 by year end?

[Naam]

Thailand - No Longer A Cheap Retirement Destination

i fully agree and claim that Thailand is not only extremely cheap for those who would pay 45% (or more) of their income to the taxman in their home countries but live a very comfortable life in Thailand without spending a single penny as all expenses (and much more) are covered by their savings on income tax.

:jap:

I am not yet retired, but soon I hope to be on a US public sector pension. My expectation is that I will have to pay US income taxes wherever I live. I don't know of anyway to avoid this.

Also, since my pension will always be in US dollars, I will always face the exchange rate risk. Over 20 years the downside could have a really significant impact. The solution here seems to be to invest early as much as possible in Thailand. Buy a condo or long term lease.

unfortunately you are a U.S. citizen and therefore taxed no matter where you live on this planet. a number of other nationalities [still] enjoy being tax free when not resident in their home country.

[Naam]

Thailand - No Longer A Cheap Retirement Destination

i fully agree and claim that Thailand is not only extremely cheap for those who would pay 45% (or more) of their income to the taxman in their home countries but live a very comfortable life in Thailand without spending a single penny as all expenses (and much more) are covered by their savings on income tax.

:jap:

Provided that the foreign resident assumes the status of a non-resident of his/her homeland. Considering the political climate around the world and the problems of accessing affordable health care, a prudent person would do the cost -benefit analysis first. Today,many financially successful people are not prepared to sever all ties back to their homelands.

what is there to analyse? anybody who is financially successful does not rely on some shitty public/government health care system but has taken things into his/her own hands and maintains private insurance. and if the situation in the host country changes he/she moves to another country. the worst case scenario is returning back to ones home country and pay through the nose for each and everything on top of paying taxes. there is no such thing like "severing all ties" when moving abroad as one always has the right to return any time.

no doubt dozens of reasons exist why people who could afford to live abroad prefer not to move such as old parents to take care of, family, friends, etc., etc., etc.

by the way, what you call a "prudent person" would be considered by most others as a "person without significant financial means" who has no other choice than relying on public health care, unemployment insurance, welfare, dole or you name it. for those who have the means it is just a matter of comparing advantages / disadvantages and then make a decision. that individual results will differ considerably goes of course without saying.

[MrE]

This is the normal trend for all developing nations. As more currency flows in, the local population becomes more aware of what they are worth, demand better, although still abominable wages, the cost of living for everyone goes up and so forth. I remember staying for months in Spain and Greece for almost nothing decades ago. The faster the speed of international communications and accompanying education, the quicker the days of Empire, exploitation and substandard pay scales will disappear.

I have had so many consultations with farang business owners, for instance, who come to me to ask how they can get more productivity out of their employees, whom they portray as ignorant, lazy and irresponsible. In nine out of ten cases, they are paying below the minimum daily wage and requiring that the employees spend twelve hours a day on their premises. Both of these practices are not only illegal but counterproductive as has been proven by almost every major conglomerate around the world. Over time, the local population learns what they should be earning and will eventually want it, or will accept the lower wages and not perform efficiently or loyally.

People looking to use their hard earned cash to live "cheaply" (at four or five times the earnings of what a Thai lives on) while the locals live worse, will find such locations harder and harder to find. I believe it's still possible to live like royalty in Sudan, Colombia and Burma. And I remember Afghanistan being warm this time of year.

[PattayaParent]

Not all retirees own their homes. Usually, it is desirable, but everyone's goals in life, yes later life also, are different. For example, some retired people like to be more mobile and owning an illiquid property would restrict that freedom. Also, in places like Thailand, it is still rather cheap to rent and retirees are only promised permission to stay one year at a time, with no longer term promises.

Very true, most of the people I know back home don't own a home, in fact there are entire streets and blocks that are owned and rented out by Housing Associations, the residents of which don't own property, and I suspect every city in UK has the same.

[badge]

Thailand - No Longer A Cheap Retirement Destination

Agreed.

[gregb]

Average price of gold in 2005, about $445/oz. (8400 Baht/baht weight). Average price of gold this year, about $1200 USD (18,400 Baht/baht weight).

I remember gold prices were once in the 800s and then fell below the 400 point. What hedging will you make that prices are 1200 today and will not fall below 800 by year end?

You don't, because that won't happen. This isn't the 80's. If you think it is, then do nothing, keep holding your fiat and you can join the chorus with everyone else about how expensive Thailand is becoming.

For people who think in terms of gold, the cost of living in Thailand (and indeed every other country in the world) has gone down for 5 years and will continue to go down. Gold is the strongest currency in the world today and it will continue strengthening for the forseeable future. A smart person would use whatever financial derivatives are available to them to try and hedge their weakening pensions against gold. It is really the only move left.

For people like myself, who have no money anyway and are still decades from retirement, it doesn't really matter one way or the other. I know what is coming, and I am just screwed no matter what I do. Those of us in our 30's and 40's who aren't already wealthy never will be...at least not without serious risk. The days when you could make a sound, safe investment and count on retirement are long since passed. But *IF* I had something to protect, I would be doing so aggressively, and you'll find that protection in a shiny yellow rock.

Again, the cost of living in Thailand is entirely dependent on the currency you view it in. If you insist on using dollars or euros, yes, it is getting expensive. If you use a more modern currency like gold, it is actually getting cheaper. I suggest to everyone it is time to change your perspective rather than complaining about rising costs.

[badge]

When another country that Im interested in starts pricing real estate, utilities, goods and services in Gold, perhaps it would be worth considering. Until then, I will continue to compare THB to currencies used in the real world, such as the much maligned USD, EUR, GBP etc.

Incidentally advocating buying derivatives in Gold instead of bullion is a rather poor idea to me; long dated contracts are extremely illiquid, short dated contracts require constant roll and therefore costs(spread, comm.).