Retiring In Thailand - How Much Did You Plan For?

[ebcal]

Hi All,

I am starting to think about when I can retire and going through some numbers on some retirement planning sites on estimating amounts I will need. I might also consider retiring in Thailand or maybe live part-time in Thailand and part-time in the USA. I like the Chiang Mai area of Thailand and have a GF there and have visited there and Thailand many times. I will try places out first on an extended basis before making anything permanent however.

But, my question is more for those that have retired in Thailand or are planning to, what kind of amounts you have planned for your retirement there.

1. What total savings target are you shooting for or did you have? And if you care to share, what different investment types do you use or plan to use - social security, IRA / 401K, real estate, stocks, mutual funds, pension or other deferred or immediate annuities, other, etc.

2. What your age is (if you care to share) since your life expectancy impacts how much you will need.

3. What your monthly expenses are or planned for? I have asked on an earlier thread what people's monthly expenses are and got some interesting feedback. Of course, the numbers are all over the map depending on what lifestyle people have, but it was good to get an idea on that. And good to add that into this, since that is related to the target retirement savings. And is this for only you or for a family?

As some ballpark figures I am starting to throw around, I am trying to think about planning to live on somewhere close to $4,000USD / month in expenses, if in Chiang Mai, but plan for maybe something like $6,000 - $7,000 USD / month income in retirement, so I have a buffer for inflation and any unexpected costs.

My net worth target is about $2 million USD, which should provide enough to meet/exceed my monthly income target plan. However, the recent market drops have set me back a little on reaching this target and the recent volatility has made me realize I need to rebalance my portfolio and reduce some exposure in stocks.

I currently have the following types of investments that I plan to generate the retirement income from, although I am thinking of shifting some of my stock holdings into an annuity.

1. 401k / IRA - mostly in stocks and small percentage in bonds

2. real estate - a couple of properties generating rental income

3. stocks - focused on dividend paying stocks

4. pension - can be a lump sum or taken as annuity

5. social security

Thank you.

[Jingthing]

You do realize you are in the top layer of Americans as far as retirement planning? You could afford to retire almost anywhere including the US. You might qualify for the hard to get into retirement programs like Australia if you like. Retiring in Thailand should be a cinch for you. I'll let other advice on the details, but congratulations to you.

[Dancealot]

Are you sure you didn't put too much zero's on there? Congratulations is my answer also. Good work!

[london]

I too would like to say "Well done".

Looking at the practical side of what you are asking, if you expect to have a nett income of $6,000 USD every month, and a total portfolio of $2 million USD, then you are looking at an overall yield of 3.6% TAX FREE. If you can get it, thats great.

Now onto my experience:

I'm in my 50's.

NO plan to retire at present, but that said, I always have it as a contingency in case things change.

Now, I can only comment on my experience and planning and the information that you have provided about your own circumstances.

Firstly, where and in what style are you going to live ? You have mentioned Chiang Mai, which isn't the most expensive part of the country to buy or rent. So the first thing I would suggest is to work out how much your accommodation is going to cost you. Are you going to buy or rent? I don't like renting and have always bought...thus saving myself the hassle of (perhaps) rising rentals, BUT tying up significant capital to do this. Certainly, for me, if I was renting, the style of the apartment I live in (and own) in BKK would be around $3,000 + per month. Electricity is not a big headache here, BUT that may change. Water is another issue, but again, it isn't going to break the bank.

Really, it is food and entertainment that will be your biggest expense...and this includes holidays.

My food and entertainment expenses (I am NOT a bar person, so my lifestyle is not that different here than it is in London or the other places I live) are always around 40,000 baht + per month....so say $1500 - $2000 USD.

Really, apart from that, you only have day-to-day expenses.

My only warning is that I don't expect prices in Asia as a whole to remain low. I see the trend continuing upward as the standard of living rises. This has caught many off guard already, but I would invest IN the country/ies you want to live in, then the currency fluctuations won't be a major issue for you.

Not much more I can really add except to say that everyone has different ideas on what their own particular needs are. Just compare what you have at present and AT LEAST try and replicate that.....but ideally, try to improve on it.

Also, consider closeness to medical facilities. Not an issue now perhaps, BUT that may change (hopefully not!).

Good luck !

[Lefty]

I retired a little over a year ago and split my retirement assets into 3pieces-1. immediate annunities which cover my monthly expense of about $3,ooo-2.Cash reserve 3. Rest in high dividend stocks which are generating about $40,000/yr a return of 8% +. Having immediate anunities that cover the monthly nut let's me sleep at night without worring too much about the ups and downs of the stock market, in my case I am married and the anunities will continue until both I and my wife die.

Lefty

[ExpatJ]

Ebcal

Was glad to see your questions as i have been thinking about this as well. Im in my early forties and currently deciding whether to go for early semi retirement age 55 or wait until 65.

I am aiming for the following combination pension- (all figures are in current prices) :

Annuities- the returns are not as good as they were a few years ago- the latest figures after i researched are that 200,000 US$ worth of annuities will give you an income of 1,100 US$ per month for the duration of your life. What makes it attractive to me is that this is a guaranteed income stream- no need to worry about market crashes etc. For extra security i recommend using several companies just incase one goes bankrupt in worst case scenario (i would put @100,000 USD per annuity provider).

Company pension- i estimate this could be anything from @3,300 $ per month if i retire in mid 50s or @7,000 US$ per month if retire at 65- i would not choose a lump sum option in either case- better to get that guaranteed monthly income stream.

Rental property- i hope (ha!) to have 3-5 rental properties (bought and paid for) by my mid 50s and estimate that would yield 2,000- 7,000 $ per month depending on how many are rented out. (I also see this as abit of a post retirement 'useful activity/pastime' too, flying around to take care of these condos (most of which will be in Asia) in between tenants (though i factor in the costs of hiring an agent to take care of everything in my financial planning in case i become lazy and dont want to or cant spend time doing that).

Dividend paying stocks/bonds- i would put any remaining cash into these- because i have kids i may minimise the annuities and put the money here- more risky for me, but greater inheritance for my kids.

I am not eligible for state pensions of any type.

So i hope to have btw 4,000-9,000$ in 'safe' income streams - company pension/annuity and then 2,000-8,000 $ from rentals & stock dividends.

[PattayaParent]

Ebcal, it all depends on how old you are and how many kids you will have.

A net worth of about $2 million USD sounds fine on paper but will get eaten up quickly when you have a family to support.

[ExpatJ]

<br />I retired a little over a year ago and split my retirement assets into 3pieces-1. immediate annunities which cover my monthly expense of about $3,ooo-2.Cash reserve 3. Rest in high dividend stocks which are generating about $40,000/yr a return of 8% +. Having immediate anunities that cover the monthly nut let's me sleep at night without worring too much about the ups and downs of the stock market, in my case I am married and the anunities will continue until both I and my wife  die.<br />Lefty<br />

<br /><br /><br />

What did you pay for you annuity stream of 3K- may i ask?

[Darrel]

Annuities- the returns are not as good as they were a few years ago- the latest figures after i researched are that 200,000 US$ worth of annuities will give you an income of 1,100 US$ per month for the duration of your life. What makes it attractive to me is that this is a guaranteed income stream- no need to worry about market crashes etc.

And you can always hope that your USD 1100 is still worth something worth having in 20 years' time, and not just enough to buy a plate of noodles and a bottle of Leo.

Personally I would never buy an annuity that wasn't index-linked and therefore guaranteed to rise with inflation, which should at least keep it somewhere close to the Baht value.

And with things (interest rates) where they are at the moment, annuities are the last thing I would buy (after gold and magic beans, of course).

[Patronus]

The Thai authorities set 800,000 Baht capital or 65,000 Baht of income to qualify for a retirement visa extension.

That is sufficient to live on.

[ebcal]

Hi All,

Thanks for all the replies.

1. Yes agree that $2 million may sound ok, but as one poster mentioned, it can go faster than one thinks, and given the financial instability in recent years, one's investments can really get hit. And has me thinking about putting another chunk into an annuity, so I have multiple guaranteed income streams besides my company pension. I agree with the comment to put it into several annuity companies, if you put more than $100k, since the state guarantee insurance is only up to $100k per, if the annuity company would default.

2. I am 50, but want to retire early. How early depends on when I feel comfortable to pull the trigger. If the relationship continues to go well with my GF, I hope we can get married, which means have to factor in her and her 8 yr old son. My GF works at a low paying government job. She doesnt spend much or does not ask for anything is fine to live very modestly.

3. I am not into the bar scene, but enjoy going out to eat at restaurants and some travel. I dont need a big lavish place, but want a fairly nice place, like maybe a nice two bedroom condo in CM. I would not buy at first, but would consider renting in CM. After renting for some period of time, if I really planned to settle down there permanently, then might consider buying, or maybe will keep renting even long term to keep more flexibility. I have looked at rental prices in CM online and see a huge range from reasonable to quite expensive. From scanning things online, I would figure on around $15k -$18k baht / month for a fairly nice 2 BR condo in CM.

4. my previous company pension is not very good and will only pay out about $2200/month starting when I am 62. My rental incomes are about $3600 gross, but only about $2100 net. properties net worth is about $1 million.

It sounds like the couple of posters who are planning or have retired are set up pretty well. $7,000 / month pension sounds great, although you have to consider if you will want to work until 65. If you do, then you will be well set with that pension amount.

[maxman71]

Nice job on your planning. Especially since the average 50-something Yank in the US has saved a measly USD 29,000 for retirement; they are in a heap of trouble.

6 years ago when I first moved here, I was targeting 1.1 - 1.3 million USD in total net assets and figuring on a return before taxes of between 5-7% on those assets. I've achieved that target already, but I have good business lined up for the next couple of years, so I am going to keep working. I also trade the markets with my IRA and that has been going quite well; I am up 23% this year so far.

With the demise of the USD since I moved here, I've raised my target to USD 1.5 million, at least. I am 52 now and I've set the goal of attaining that target by the time I turn 55. Like you, I want to be able to spend time both in the US and in Thailand during retirement, or also maybe check out somewhere in Central America. Who knows; I want the flexibility.

I've looked into various retirement calculators and the best one I've found is one by CNN Money:

http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp

Anyway, you are in very good shape. Enjoy your retirement!

[moe666]

I retired a few years ago and have 3 retirements and a ira I donot touch just letting it ride for rainy day also stocks that I trade and take some money out of. I donot live fancy but comfortable pay 7,000bahi a month for room include cable. refrigerator and furnished, my girlfriend lives with me when I am in Thailand, she has her own job, and when I come home she gets her own room until I return.

My biggest expense is food, feeding two is not cheap when the girlfriend likes sushi. We splurge once or twice a week and then just eat Thai food the rest of the week. I do like to go to the local bar and chat with friends and have a few drinks but this is not every night.

I live in Chiang mai and get by on about 3,000US a month and sometime less just depends on what the girlfriend want to do and what we are up for. I think this time will look for a house or shop house to rent and can have a few meals at home.

If you can swing 7,000dollars a month you can live like a king and I do just fine on 3,000 a month. In the end it all depends on how you want to live eating out a lot will run up the bill especially in a half way decent place. Drinking is the other budget killer. Large leo at 7/11 45 baht a bit cheaper at Mackro. At my small local bar 70 baht for large leo, at least when I left.

Even with prices going up 7,000 a month should see you by. How much you spend will depend on your need for western food as this is a big expense. If you can eat Thai at home you will be dollars a head. Even the Thai food in restarurants isn't as cheap as a few years ago. Having said that there are still bargans to be found especially in Chiang mai.

Good luck on what you decide donot waste to much time deciding what to do. If you like thailand retirement here is great

Edited September 4, 2011 by moe666

[Naam]

Personally I would never buy an annuity that wasn't index-linked and therefore guaranteed to rise with inflation, which should at least keep it somewhere close to the Baht value.

And with things (interest rates) where they are at the moment, annuities are the last thing I would buy (after gold and magic beans, of course).

BINGO!

[Naam]

including the price of beer in budget planning =

[NovaBlue05]

"............It sounds like the couple of posters who are planning or have retired are set up pretty well. $7,000 / month pension sounds great, although you have to consider if you will want to work until 65. If you do, then you will be well set with that pension amount.

Note the figures in Table 1 before choosing to work until 65

http://atpayplan.natca.net/livelongandprosper.htm

[Lefty]

<br />I retired a little over a year ago and split my retirement assets into 3pieces-1. immediate annunities which cover my monthly expense of about $3,ooo-2.Cash reserve 3. Rest in high dividend stocks which are generating about $40,000/yr a return of 8% +. Having immediate anunities that cover the monthly nut let's me sleep at night without worring too much about the ups and downs of the stock market, in my case I am married and the anunities will continue until both I and my wife  die.<br />Lefty<br />

<br /><br /><br />

What did you pay for you annuity stream of 3K- may i ask?

Split $500,000 among 5 anunities about 18 months ago; rates were a little better then today.

Google immediate anunities for current rates.

Lefty

Edited September 4, 2011 by Lefty

[bushwacker]

I have been retired for 8 years and in Thailand for 3 (full time) and I am the sole supporter of a family of 3. Just a few comments based on the info you have provided:

1. the only people that make money with an annuity are the annuity companies. IMHO, as a professional financial planner, Annuities are never a good idea. With the current interest rates and projected interest rates, they are even more of a bad investment.

2. If you read the many many articles out there talking about sustainable capital you will see that if you have a well diversified asset mix (stocks and bonds) at say 50/50 or 60/40, and we are talking quality blue chip not junk, crap, speculative stuff, then you can withdraw up to 4% of your capital each year and your money will NEVER run out. That is $6,700 a month. Food for thought.

3. If you have good quality stocks, NOW is not the time to sell them!!!!

4. What you spend will depend on how you live. If you have come to Thailand to live like a rich farang then you need lots of money. If you have come to live like a rich Thai then $2000 is enough. $3000 is very good. $4000 will have many people looking at you and talking about how much money you spend.

Up to you.:jap:

[THAIPHUKET]

Some numbers regarding higher life expectancy due to medical advances ought to be considered.

Allianz Insurance calculates that as of today a man of 65years will live until 86. However, if he manages to live until age 80 or the year 2026, then his life expectancy will be 90,1 years.

By which time life expectancy will have gone up even more.

Medical expenses , be it in cash or in insurance premiums will go up disproportionally to cost of living indexes.

This should influence the question of annuity versus lump sum too.

[ExpatOilWorker]

If your savings = $4,000 x (90 - your curent age) x 12, you are good to retire.

[fatfather]

I'd like to have the OP's problems...

fatfather

[PattayaParent]

If your savings = $4,000 x (90 - your curent age) x 12, you are good to retire.

No adjustments for inflation?

I already spend more than $4,000 a month and can only see it getting more expensive in the next 38 years.

[ExpatOilWorker]

If your savings = $4,000 x (90 - your curent age) x 12, you are good to retire.

No adjustments for inflation?

I already spend more than $4,000 a month and can only see it getting more expensive in the next 38 years.

No adjustment for inflation. The interest of the principal you haven't spend yet will take care of that.

Sure you spend $4k in 2011 and $10K in 2030, but have the same purchasing power.

[55Jay]

4,000 USD/mo would be sufficient, depending on lifestyle, as rightly noted by others. 6-7,000/mo would be more than sufficient, depending on what the US side of your half year in/out plan looks like, kids, ex-wives, and Thai GF/wife/family support issues. Not forgetting how much of your capital amount you would use for the initial "dump" of funds to relocate and establish the Thai camp; so you may be right to put another 1/4 mil USD to preserve round figure of $2m as your income generating pot of funds?

Approaching mid-40's, I've planned on 2,000 USD/mo to live in reasonable comfort (around 60,000 Baht/mo at current sucky FOREX) without reducing any of my accrued capital in US savings/investments. Available interest at the moment is around $700/mo however plan to stick to the $2,000/mo pension budget. Would pull off some interest once a year or so for a trip to the US or regional vacation spot, emergencies, etc.

The 2,000/mo, at present 29 Baht to USD FOREX, still exceeds the monthly income for a spouse visa (at current regulations) for me, w/o needing to pull over any of my USD capital into a Thai bank for annual visa 'show' money. No doubt you are or will read up on visa scenarios as they apply to your own situation, amounts involved, etc.

As you go through your planning, and before you execute (if you do), recc reading up on the best methods of cash management found in a few posts on here, specifically alternate credit cards to use and US banking institutions which offer overseas friendly business practices and also medical and insurance issues, etc. I've taken much of the banking/consumer advice already, even though Thai wife and I are not here full time yet (come over a few times a year). What I've done so far is working very well, as advertised by the lads on this forum who live here full time. Not doing as they've suggested, to me, was foolishly throwing money out the window bit by bit with every transaction in Thailand (even if you can 'afford it').

Best of luck to you.

J

[PattayaParent]

If your savings = $4,000 x (90 - your curent age) x 12, you are good to retire.

No adjustments for inflation?

I already spend more than $4,000 a month and can only see it getting more expensive in the next 38 years.

No adjustment for inflation. The interest of the principal you haven't spend yet will take care of that.

Sure you spend $4k in 2011 and $10K in 2030, but have the same purchasing power.

But 10k per month is emptying the fixed pot much quicker than 4k a month.

[ExpatOilWorker]

If your savings = $4,000 x (90 - your curent age) x 12, you are good to retire.

No adjustments for inflation?

I already spend more than $4,000 a month and can only see it getting more expensive in the next 38 years.

No adjustment for inflation. The interest of the principal you haven't spend yet will take care of that.

Sure you spend $4k in 2011 and $10K in 2030, but have the same purchasing power.

But 10k per month is emptying the fixed pot much quicker than 4k a month.

Correct, but say you get $3K in interest in 2011, then you just draw down the pot with $1K in your early years while at the end in 2030 you only get $1K in interest and draw down the pot a lot faster.

In reality you will always have $4K in 2011 purchase power as long as your investment is matching inflation. Simple and easy.

[NovaBlue05]

I was planning on having an inflation adjusted disposable income of 100k baht/month assuming the exchange rate drops to 25 baht/$$. Probably move to Udon Thani area. It seemed pretty safe a few years ago. Now I'm not so sure 25 isn't optimistic

[thrilled]

2 mil at 5% A year is 100 grand,figure taxes on it ,maybe 75000. Stickman says about a million baht a year in bangkok,so if in thailand 6 months ,I would say 500000 baht and then the rest for the us and traveling.

[flying]

I was planning on having an inflation adjusted disposable income of 100k baht/month assuming the exchange rate drops to 25 baht/$$. Probably move to Udon Thani area. It seemed pretty safe a few years ago. Now I'm not so sure 25 isn't optimistic

That seems to be a variable that may screw up a lot of folks planning

[gk10002000]

You do realize you are in the top layer of Americans as far as retirement planning? You could afford to retire almost anywhere including the US. You might qualify for the hard to get into retirement programs like Australia if you like. Retiring in Thailand should be a cinch for you. I'll let other advice on the details, but congratulations to you.

Wait a minute. Don't jump to conclusions. The orginal poster never said he HAD 400,000 or had all that monthly income. He said it was a target. The way he wrote the article, it seems like BS to me.