Can I Retire In Pattaya

[gk10002000]

also,

if he put 200k into philip morris and kraft he would get a dividend of roughly 3k U.S. per month

If those 2 go out of bizness we are in more trouble than money can solve

The dividend yield for both of those companies is roughly 3.8% a year at the moment. That means USD 200K would yield about USD 7600 per year. That is just over USD 600 per month, not USD 3000. Maybe you are looking at out of date dividend rates or need a new calculator. Also, Im calculating before tax is deducted. After tax the yield will be much lower and as the tax is deducted automatically there is no obvious way to escape it.

I have a portfolio worth literally exactly $400,000 USD. About $250,000 USD of that of that is in my brokerage account, the rest is in either my Traditional IRA, Roth IRA, or 401-k accounts. I assure you, that taxes are NOT automatically deducted when one gets dividend income. No taxes are taken out automatically. The dividend distribution is paid by the fund or company. Yes, dividends are in general taxable and depending on whether they are "qualified" distributions or not, they are taxed a bit differently than other ordinary income. I own dividend paying stocks (AT$T mostly), dividend paying mutual funds, and individual "taxable" bonds in my IRA accounts.

I have a large part of my regular brokerage account monies in Tax Free Municipal Bond funds or Individual Municipal bonds. Most are also exempt from any AMT considerations.

OK, I forgot about you Yanks and your retirement accounts. The question then is what tax rate you will pay when you draw from your account when it comes to using it.

Irrespective, you aren't getting USD 3000 per month from USD 200 K in Philip Morris and Kraft, not anywhere close and that was the claim you made.

It wasn't me that made the claim about 3000 and the 200k in Phillip Morris and Kraft. That fellow didn't understand quarterly versus yearly dividend payments.

As for taxes, and tax rates, here goes. The ROTH IRA monies that we withdraw are tax free, every penny of it is not taxed, neither the base amount we put in or any Profits or gains that come out. The Traditional IRA withdrawals, whatever amount is taken out, is counted as "ordinary" income. So in the year we take them out, that is when we are taxed on them. Tax rates go up as we have more income. So the nice thing to do is withdraw the money when retired in small amounts, so that you are taxed at a lower rate, than the rate you would have had those monies taxed at when you were working. "tax defer" monies at say 28% tax rate which is fairly common for middle class America, then withdraw them when paying a 20% tax rate at retirement. Of course many people spend as much in retirement as they do when working, so they really don't get a tax savings from the traditional IRAs. 401-ks work basically the same way. Note that in the USA, we have states, and most states have different state income taxes on top of the Federal income taxes. Some states have no tax, some don't tax Social security benefits, or military pensions, etc. Highly variable and can be significant. So bottom line suggestion is: (1) retire in a tax free state, or leave all states completely. (Leaving entirely is doable but has complications if you want a US mailing address, state driver's license, have US business interests, etc.

[gk10002000]

I have no idea what you are talking about

and i have no idea why you are telling us the story of your life. this thread is called "Can I Retire in Pattaya?" the opening poster was asking whether his income respectively his capital of $ 400k will suffice to retire. as you mentioned an identical amount i mistook you for that poster.

i did not draw any conclusions but asked a valid question pertaining to the discussions of this thread.

Well, you used the words "Slave to the IRS". Hardly a positive comment, soI thought I would detail how I work around and within the IRS, thereby leaving me more disposable income and more net worth to be able to retire in Thailand.

[Jingthing]

Another point about the differing policies of US states. Yes, that can be potentially messy. One way to reduce the odds of complications if you choose to repatriate to the US is to move back to a different state than you used to live in, if it was a taxing state and there is potential they will question your past as an expat taxwise.

[Naam]

I have no idea what you are talking about

and i have no idea why you are telling us the story of your life. this thread is called "Can I Retire in Pattaya?" the opening poster was asking whether his income respectively his capital of $ 400k will suffice to retire. as you mentioned an identical amount i mistook you for that poster.

i did not draw any conclusions but asked a valid question pertaining to the discussions of this thread.

Well, you used the words "Slave to the IRS". Hardly a positive comment, soI thought I would detail how I work around and within the IRS, thereby leaving me more disposable income and more net worth to be able to retire in Thailand.

to judge a comment like "Slave to the IRS" one has to take the prevailing perspective of a retiree living in Pattaya into consideration who, only some years ago, escaped from being enslaved by the German taxman and the United States IRS. of course the comment is not positive but does anybody consider taxes positive? especially paying them to the taxaman of a country where one does not draw any benefits?

it was definitely not meant in a derogatory way but used with sympathy looking at the unfortunate constellation my american friends living abroad have to cope with as opposed to those of us who don't have to bother with income tax.

I thought I would detail how I work around and within the IRS, thereby leaving me more disposable income and more net worth to be able to retire in Thailand.

but that does not change the basics. "more disposable income/net worth" is still less than "gross = net disposable income/net worth", in other words the "slavery" still exists.

[Naam]

All that matters is that each contribution to the distribution of estimates is genuine, i.e., sincere.

The last two aren't.

don't bet the ranch on your claim

I'm not doubting the sincerity of your contributions because of the relatively large amounts of several million, but because of the sarcastic number of decimal places you have both used...could it possibly be that you are mocking me?

the estimate which ends with "cents" is obviously meant more jokingly than sarcastic. the figure i posted is a real figure and actual background of a person i know. but of course it has no real relevance to the question "how much does one need...".

[Naam]

Ok morphic here;s my estimation

As a capital sum that needs to be invested at 3-4% per annum you need a min of $700,000

in my view that is by far not enough for a 45 year old because it does not factor in any inflation for the remaining statistical lifetime.

yield of 3.5% on $ 700k = $ 24,500 p.a. = THB 61,250 p.m = sufficient today to finance a comfortable but moderate lifestyle for a single male who does not waste to much money in bars.

assuming the above-mentioned amount is spent without using a part for re-investment combined with a rather conservative estimate of only 3% inflation rate the future looks quite bleak:

age 45 .......... expenses 61,250

age 55 .......... expenses 82,315

age 65 .......... expenses 110,600

age 75 .......... expenses 148,700

age 85 .......... expenses 199.800

the picture looks of course quite different assuming a constant inflation of 3%, constant yield achieve of 6.5%, expenses limited to 3.5% and re-investment of 3% in order to compensate fully for inflation.

[morphic]

All that matters is that each contribution to the distribution of estimates is genuine, i.e., sincere.

The last two aren't.

don't bet the ranch on your claim

I'm not doubting the sincerity of your contributions because of the relatively large amounts of several million, but because of the sarcastic number of decimal places you have both used...could it possibly be that you are mocking me?

the estimate which ends with "cents" is obviously meant more jokingly than sarcastic. the figure i posted is a real figure and actual background of a person i know. but of course it has no real relevance to the question "how much does one need...".

ok, but im not sure the net worth of your friend is relevant to the question of how much is needed for a 45 yr old to retire in pattaya

[Thailaw]

but that does not change the basics. "more disposable income/net worth" is still less than "gross = net disposable income/net worth", in other words the "slavery" still exists.

American citizens that are outside the United States more than 330 days in a year are entitiled to claim an exclusion from income for Federal tax purposes of $91,500 in 2010. So, for most American retirees living in Thailand, their after tax," disposable income" is equal to their "gross income". Indeed, for Americans, that is at least a part of the calculus to live outside of the US. Where they choose to live outsdie the US is another issue.

[Naam]

but that does not change the basics. "more disposable income/net worth" is still less than "gross = net disposable income/net worth", in other words the "slavery" still exists.

American citizens that are outside the United States more than 330 days in a year are entitiled to claim an exclusion from income for Federal tax purposes of $91,500 in 2010. So, for most American retirees living in Thailand, their after tax," disposable income" is equal to their "gross income". Indeed, for Americans, that is at least a part of the calculus to live outside of the US. Where they choose to live outsdie the US is another issue.

incorrect information. applies only to those who work. Americans with income derived from investment do not enjoy that exclusion.

p.s. using the Foreign Earned Income Exclusion is actually an "elegant" way to "cheat legally" as far as U.S. Income Tax is concerned. however, it takes considerable time and a rather sophisticated setup to convert capital generated income into foreign earned income. child's play a dozen years ago, now getting more and more difficult with every day that passes.

Edited April 27, 2011 by Naam

[Naam]

Naam time 06.12: the estimate which ends with "cents" is obviously meant more jokingly than sarcastic. the figure i posted is a real figure and actual background of a person i know. but of course it has no real relevance to the question "how much does one need...".

morphic time 09:24: ok, but im not sure the net worth of your friend is relevant to the question of how much is needed for a 45 yr old to retire in pattaya

what part of my posting "it has no real relevance to the question "how much does one need..." is it you did not understand?

[morphic]

Naam time 06.12: the estimate which ends with "cents" is obviously meant more jokingly than sarcastic. the figure i posted is a real figure and actual background of a person i know. but of course it has no real relevance to the question "how much does one need...".

morphic time 09:24: ok, but im not sure the net worth of your friend is relevant to the question of how much is needed for a 45 yr old to retire in pattaya

what part of my posting "it has no real relevance to the question "how much does one need..." is it you did not understand?

Yes, I saw what you said but thought I'd hammer home anyway the irrelevance of your post. By the way, what was the point of posting the net worth of your friend, this having absolutely no relevance to anything under discussion? Very strange.

[sotsira]

Ok morphic here;s my estimation

As a capital sum that needs to be invested at 3-4% per annum you need a min of $700,000

in my view that is by far not enough for a 45 year old because it does not factor in any inflation for the remaining statistical lifetime.

yield of 3.5% on $ 700k = $ 24,500 p.a. = THB 61,250 p.m = sufficient today to finance a comfortable but moderate lifestyle for a single male who does not waste to much money in bars.

assuming the above-mentioned amount is spent without using a part for re-investment combined with a rather conservative estimate of only 3% inflation rate the future looks quite bleak:

age 45 .......... expenses 61,250

age 55 .......... expenses 82,315

age 65 .......... expenses 110,600

age 75 .......... expenses 148,700

age 85 .......... expenses 199.800

the picture looks of course quite different assuming a constant inflation of 3%, constant yield achieve of 6.5%, expenses limited to 3.5% and re-investment of 3% in order to compensate fully for inflation.

If you read my post again you will see that i put min (MINIMUM) $700,000 minimum being also the 3-4% yield.

Anything over that would be beneficial towards a better lifestyle but not a necessity.

[scoobyguy]

Ok morphic here;s my estimation

As a capital sum that needs to be invested at 3-4% per annum you need a min of $700,000

in my view that is by far not enough for a 45 year old because it does not factor in any inflation for the remaining statistical lifetime.

yield of 3.5% on $ 700k = $ 24,500 p.a. = THB 61,250 p.m = sufficient today to finance a comfortable but moderate lifestyle for a single male who does not waste to much money in bars.

assuming the above-mentioned amount is spent without using a part for re-investment combined with a rather conservative estimate of only 3% inflation rate the future looks quite bleak:

age 45 .......... expenses 61,250

age 55 .......... expenses 82,315

age 65 .......... expenses 110,600

age 75 .......... expenses 148,700

age 85 .......... expenses 199.800

the picture looks of course quite different assuming a constant inflation of 3%, constant yield achieve of 6.5%, expenses limited to 3.5% and re-investment of 3% in order to compensate fully for inflation.

Working on these figures ie $2000 a month you need $800,0000

The caluations are based on 3% inflation and 4% yield on balance

of course you better hope you die on or before 85

Required Income (Current Dollars) $ 24000

Required Income (Future Dollars) $ 24000.00

Number of Years Until Retiring 0

Number of Years After Retiring 40

Annual Inflation (on Required Income) 3 %

Annual Yield on Balance 4 %

You will need $ 800100.95

Year Beg Bal Withdraw Interest End Bal

1 800100.95 24000.00 31044.04 807144.99

2 807144.99 24720.00 31297.00 813721.99

3 813721.99 25461.60 31530.42 819790.80

4 819790.80 26225.45 31742.61 825307.97

5 825307.97 27012.21 31931.83 830227.59

6 830227.59 27822.58 32096.20 834501.21

7 834501.21 28657.26 32233.76 838077.71

8 838077.71 29516.97 32342.43 840903.17

9 840903.17 30402.48 32420.03 842920.71

10 842920.71 31314.56 32464.25 844070.40

11 844070.40 32253.99 32472.66 844289.07

12 844289.07 33221.61 32442.70 843510.15

13 843510.15 34218.26 32371.68 841663.57

14 841663.57 35244.81 32256.75 838675.51

15 838675.51 36302.15 32094.93 834468.29

16 834468.29 37391.22 31883.08 828960.15

17 828960.15 38512.95 31617.89 822065.09

18 822065.09 39668.34 31295.87 813692.61

19 813692.61 40858.39 30913.37 803747.59

20 803747.59 42084.15 30466.54 792129.98

21 792129.98 43346.67 29951.33 778734.64

22 778734.64 44647.07 29363.50 763451.08

23 763451.08 45986.48 28698.58 746163.18

24 746163.18 47366.08 27951.88 726748.99

25 726748.99 48787.06 27118.48 705080.41

26 705080.41 50250.67 26193.19 681022.93

27 681022.93 51758.19 25170.59 654435.32

28 654435.32 53310.94 24044.98 625169.36

29 625169.36 54910.26 22810.36 593069.46

30 593069.46 56557.57 21460.48 557972.37

31 557972.37 58254.30 19988.72 519706.79

32 519706.79 60001.93 18388.19 478093.06

33 478093.06 61801.99 16651.64 432942.71

34 432942.71 63656.05 14771.47 384058.13

35 384058.13 65565.73 12739.70 331232.10

36 331232.10 67532.70 10547.98 274247.38

37 274247.38 69558.68 8187.55 212876.25

38 212876.25 71645.44 5649.23 146880.04

39 146880.04 73794.80 2923.41 76008.65

40 76008.65 76008.65 -0.00 -0.00

I think you could probably live an ok modest life on about £1700 a month that would bring the sums down abit

http://www.banksite.com/calc/retire

[morphic]

So far 7 data points:

2 x 1.5 million, 1 million, 800K, 700K, 500k, 400K

Any other contributions of your personal estimate of how much is enough for a man (or woman) of 45 to retire in Pattaya, never work again and live off his/her capital and returns on that capital.

[Rimmer]

According to a 2009 Thai Visa Market Survey yearly income in Thai Baht at that time by percent of the responders was as follows:

-200,000 baht 7.4%

200,000 - 300,000 THB 5.7%

300,000 - 500,000 THB 10.6%

500,000 - 1,000,000 THB 25.5%

1,000,000 - 2,000,000 THB 23.6%

2,000,000 - 3,000,000 THB 10.5%

3,000,000 - 5,000,000 THB 7.8%

5,000,000 + THB 8.9%

[ronz28]

There is a need to plan for the fat tail events too like the financial events of 2008 when virtually everything went down in value. Even though many investments have fully recovered since then...some went to zero or remain impaired.

Most pension funds have assumed a long term investment rate of return of about 8% but they are fully diversified and not 100% in real estate in Oklahoma, etc. What if a tornado wipes out your town like happened in Alabama or some other infrequent economic risk people choose to ignore? Its like building multiple nuclear power plants in an area that has been struck by Tsunamis periodically over the last 600 years just not recently.

Diversification and quick response is a must to mitigate the damage possible when those fat tail risk events happen and planning is needed.

[Naam]

Yes, I saw what you said but thought I'd hammer home anyway the irrelevance of your post. By the way, what was the point of posting the net worth of your friend, this having absolutely no relevance to anything under discussion? Very strange.

the only very strange thing is that you repeatedly "hammer home away" like a little boy who's mother refuses to buy him some sweets when waiting at the cashier in a supermarket.

not too strange, even acceptable, is that you don't understand subtle hints. now tell us again something about irrelevance otherwise we might get bored.

[Naam]

ronz28: Diversification and quick response is a must to mitigate the damage possible when those fat tail risk events happen and planning is needed.

wholeheartedly seconded! but a very broad diversification hampers a quick response when facing a "Lehman" like in 2008. since i am investing i have never experienced a crisis during which most markets became so illiquid that for many assets no bids existed even when offered at utmost distressed values.

[morphic]

Yes, I saw what you said but thought I'd hammer home anyway the irrelevance of your post. By the way, what was the point of posting the net worth of your friend, this having absolutely no relevance to anything under discussion? Very strange.

the only very strange thing is that you repeatedly "hammer home away" like a little boy who's mother refuses to buy him some sweets when waiting at the cashier in a supermarket.

not too strange, even acceptable, is that you don't understand subtle hints. now tell us again something about irrelevance otherwise we might get bored.

Ummm, no, I got your "subtle hints" but I don't think they were intelligent, relevant or interesting. Thus, I ignored them. Nothing strange about that. But it was strange to say the least for you to suddenly post the irrelevant net worth of your friend. Tell us why please, answer my question, I'm fascinated.

I noticed that you have made huge numbers of posts on this forum and the ones I have noticed often seem not be constructive, well written or interesting. I suppose you just like posting and don't have much else to do with your time. May I suggest you think of the quality of what you say as opposed to just the quantity. Think it out first, post less, but post better.

Meanwhile, the results of the requests for retirement estimates seem to be :

2 x 1.5 million, 1 million, 800K, 700K, 500k, 400K.

This means most people think 500K to 1-million is enough, at least amongst posters on this forum. I think the answer is it reflects the net worth of the average person in the US in that age bracket. The link below shows bet worth statistic and for a 45 year old it is about 600K, right in line with what we have found. So people generally think if they have 400K then that is enough, if they have 500k then that is enough, if its 1-million then that is enough. Personally my estimate was 1.5 million, I have a lot more, but I don't think I will really need it unless we keep getting smacked by "fat tail" events that caused the trend of life getting dramatically more expensive to continue. I don't think these events are really predictable by the way, you just need to remember they happen and react, most won't though.

https://www.networthiq.com/explore/net-worth-statistics.aspx

[morphic]

Yes, I saw what you said but thought I'd hammer home anyway the irrelevance of your post. By the way, what was the point of posting the net worth of your friend, this having absolutely no relevance to anything under discussion? Very strange.

the only very strange thing is that you repeatedly "hammer home away" like a little boy who's mother refuses to buy him some sweets when waiting at the cashier in a supermarket.

not too strange, even acceptable, is that you don't understand subtle hints. now tell us again something about irrelevance otherwise we might get bored.

Ummm, no, I got your "subtle hints" but I don't think they were intelligent, relevant or interesting. Thus, I ignored them. Nothing strange about that. But it was strange to say the least for you to suddenly post the irrelevant net worth of your friend. Tell us why please, answer my question, I'm fascinated.

I noticed that you have made huge numbers of posts on this forum and the ones I have noticed often seem not be constructive, well written or interesting. I suppose you just like posting and don't have much else to do with your time. May I suggest you think of the quality of what you say as opposed to just the quantity. Think it out first, post less, but post better.

Meanwhile, the results of the requests for retirement estimates seem to be :

2 x 1.5 million, 1 million, 800K, 700K, 500k, 400K.

This means most people think 500K to 1-million is enough, at least amongst posters on this forum. I think the answer is it reflects the net worth of the average person in the US in that age bracket. The link below shows bet worth statistic and for a 45 year old it is about 600K, right in line with what we have found. So people generally think if they have 400K then that is enough, if they have 500k then that is enough, if its 1-million then that is enough. Personally my estimate was 1.5 million, I have a lot more, but I don't think I will really need it unless we keep getting smacked by "fat tail" events that caused the trend of life getting dramatically more expensive to continue. I don't think these events are really predictable by the way, you just need to remember they happen and react, most won't though.

https://www.networthiq.com/explore/net-worth-statistics.aspx

wrong link used, this is the one http://allfinancialmatters.com/2006/10/09/how-does-your-net-worth-compare/

[sotsira]

Thats fair enough morphic,

Obviously everyones perception on what standard of living they would expect also plays a part in what the right amount should be.

As you say between 500K - 1M is sufficient as a starting guide, but the investment would need to be consistent and efficient.

[ronz28]

ronz28: Diversification and quick response is a must to mitigate the damage possible when those fat tail risk events happen and planning is needed.

wholeheartedly seconded! but a very broad diversification hampers a quick response when facing a "Lehman" like in 2008. since i am investing i have never experienced a crisis during which most markets became so illiquid that for many assets no bids existed even when offered at utmost distressed values.

Right, I have learned the hard way to avoid or limit to 5% of portfolio any investments in potentially illiquid instruments or counterparties like high yield bonds, options, partnerships in real estate development, etc. I am just a small investor and I think those are more appropriate for very large or institutional investors that can invest a small percentage of their total portfolio on a short term asset allocation to say high yield bonds during a market recovery. I remember that people on bear market websites were calling structured products- toxic waste, before Lehman went down, so it pays to listen to what they say and consider that information as an extra risk since the bears will be all over it when the time comes.

I believe I get sufficient diversification in Russell 2000 type ETFs as they are not concentrated in one company but I do worry over the potential counter party risk with some of the leveraged bull ETFs I use so I use several different funds and brokers.

To further limit risk as small caps go down faster than they go up, I flip between ETFs and cash equivalents based on targets, short term moving averages, trend lines and double Bollinger bands. I don't use stops to avoid getting taken out at the bottom like in a flash crash event. Not an easy task.