How Much Dosh Needed To Retire At Age 50?

[The Skipper]

Annuities are certainly not compulsory in the US. It is being much more common for Americans to have NO pension from their employer at all. Thus, most are left to cope with a combination of savings in taxable investment accounts, savings in tax deferred retirement accounts (self funded 401Ks and IRAs), and social security (government pension). Some people do purchase annuities privately, of course, I don't know how popular they are.

Tax deffered Annuities are OK after you max out your other retirement accounts like IRAs and 401ks

One disadvantage of the Annuity is the withdrawls are taxed as income, not capital gains.

[teej]

It's a good time to bring back a thread like this that was born of times when the world economy was booming and we were just on the verge of bursting (although many didn't know it)

I considered reviving the Expat Net Worth Thread, but that one was too recent and was more indirect in asking the question that many people come to the Jobs Forum to ask, "How much money do I need to retire in Thailand?"

It's a good exercise to go back and re-read the thread. There are many instances of people quoting the inflation "rule" of 4%, seemingly "guaranteed" returns of 7%, etc. etc.

The thing is, relying on these "retirement calculators" just doesn't represent risk appropriately. People who base their retirement income on the bare minimum in the best conditions are going to get hosed. Period. That's why the more experienced and perhaps wealthier members comment the way they do. (OK, the AUD/USD interest rate play would have kicked ass, I admit (but there was still FX risk, it just happened to go in the right direction))

I've said before: take what you think you need to retire. Double that (because you've most likely understated many things). Double it again (to account for large corrections, volcanos, wives, children, Force Majeure, whatever you don't think will happen, because it probably will happen, etc.). That's the number you'll need to be able to sleep comfortably at night. If you're at the bare minimum, you're always going to be nervous of the crash around the corner.

We all know what happened over the past year. Had you retired last year on that bare minimum number, it is most likely you got hurt -- perhaps decimated. Getting blown out in the early year(s) of retirement is the WORST thing that could happen.

Gererally, I'd say, most of the hopeful retirees are not investment guys (pension, stocks, little cash, etc.), they're prob just regular guys sick of their job wanting a way out. That's fine, but unless you want serious financial pain, you've gotta get real with yourself.

Then when the people with money come in with their 2 cents, they get bashed for being rich and "patting each other on the back." Isn't it more plausible that the guys with higher net worths may have a better idea on what it takes to retire, how to live, how to save, how to make money, etc.?

I voted 40 million back then, and I'd vote 60-80 now. How many threads on retiring in Thailand did we have back then? A lot. Hey, things were good. But shit happens - and it did. And if you're not cashed up to make it through when the shit hits the fan, you will wish you had waited just a few more years to retire. Ask all of the members who are no more.

I really can't stress enough the amount of expenses that come up in retirement. At only 30, I don't even have the MASSIVE potential expense that is health care, which can put a serious run on your account. But shit happens. Expenses come up. The only way I can live comfortably and not constantly check to see if I'm on the verge of being broke is to have way way more than I think I need. And I don't even think that's enough sometimes.

Yes, some people will always claim to be able to live on less. But do you really want to?

Lastly, why was backflip banned?

[AFKAFSinLOS]

It's a good time to bring back a thread like this that was born of times when the world economy was booming and we were just on the verge of bursting (although many didn't know it)

I considered reviving the Expat Net Worth Thread, but that one was too recent and was more indirect in asking the question that many people come to the Jobs Forum to ask, "How much money do I need to retire in Thailand?"

It's a good exercise to go back and re-read the thread. There are many instances of people quoting the inflation "rule" of 4%, seemingly "guaranteed" returns of 7%, etc. etc.

The thing is, relying on these "retirement calculators" just doesn't represent risk appropriately. People who base their retirement income on the bare minimum in the best conditions are going to get hosed. Period. That's why the more experienced and perhaps wealthier members comment the way they do. (OK, the AUD/USD interest rate play would have kicked ass, I admit (but there was still FX risk, it just happened to go in the right direction))

I've said before: take what you think you need to retire. Double that (because you've most likely understated many things). Double it again (to account for large corrections, volcanos, wives, children, Force Majeure, whatever you don't think will happen, because it probably will happen, etc.). That's the number you'll need to be able to sleep comfortably at night. If you're at the bare minimum, you're always going to be nervous of the crash around the corner.

We all know what happened over the past year. Had you retired last year on that bare minimum number, it is most likely you got hurt -- perhaps decimated. Getting blown out in the early year(s) of retirement is the WORST thing that could happen.

Gererally, I'd say, most of the hopeful retirees are not investment guys (pension, stocks, little cash, etc.), they're prob just regular guys sick of their job wanting a way out. That's fine, but unless you want serious financial pain, you've gotta get real with yourself.

Then when the people with money come in with their 2 cents, they get bashed for being rich and "patting each other on the back." Isn't it more plausible that the guys with higher net worths may have a better idea on what it takes to retire, how to live, how to save, how to make money, etc.?

I voted 40 million back then, and I'd vote 60-80 now. How many threads on retiring in Thailand did we have back then? A lot. Hey, things were good. But shit happens - and it did. And if you're not cashed up to make it through when the shit hits the fan, you will wish you had waited just a few more years to retire. Ask all of the members who are no more.

I really can't stress enough the amount of expenses that come up in retirement. At only 30, I don't even have the MASSIVE potential expense that is health care, which can put a serious run on your account. But shit happens. Expenses come up. The only way I can live comfortably and not constantly check to see if I'm on the verge of being broke is to have way way more than I think I need. And I don't even think that's enough sometimes.

Yes, some people will always claim to be able to live on less. But do you really want to?

Lastly, why was backflip banned?

Agree with a lot of things you said. Times like these are a great opportunity to re-evaluate and re-test your theories. Hopefully before you retire rather than after... although there's nothing wrong with back-testing...

I wouldn't exactly double it and double it again, although that's a reasonable concept. I'd take my net worth at the lowest point in the last cycle. Then factor in the same loss again or the worst one I've had in my life-time, on top of that...

4% and 7% are reasonable long term averages to use, although I use slightly different myself. I wouldn't say that recent events have caused me to change the long term averages, but recent events are good reminders that long term averages are not guaranteed annual returns...

Just voted for THB 40mio+... . THB 50-60mio-ish for me please and perhaps THB 20,000 for a vasectomy...

Edited July 16, 2008 by AFKAFSinLOS

[BEENTHEREDONETHAT]

teej

I'm with you on having more than you think is necessary. I retired at 50 and that was 24years ago. I'm in much better shape now than I was then (financially that is). I don't think it needs to be that complex to work out. Three basic rules to follow.

Pay minimal interest. Don't charge anything, if you can't pay for it don't get it.

Pay minimal taxes.

Save 10% or more of your earnings and add to principal every year. If you can't live on 10% less you are running way to tight a budget.

How much it cost to live in LOS is all over the place depending on what life style you choose to follow. We own our condo and car and all furnishings etc. and find we can live a comfortable life style on 50,000B per month. That is not counting travel and occasional new TV etc. To old to get health insurance but have very few health problems. So self insuring is not a problem and will be OK as long as the problem occurs while we are in LOS and not visiting the US or Australia.

Presently 74 and sincerely believe that I will live well into my 90's unless in a serious accident. My wife is 9 years my junior and in excellent health she should live well over 100. So we need to have funds to last another 40 or so years. By saving 10% and adding to our principal each year I don't visulize that being a problem. We have spread our money around a bit so if one country has problems we can take from another until the problem is resolved. Our $$ are in aaa rated term deposits and earn on the average over 8%. Our tax load on the earnings is in the vacinity of 5%.

Even though inflation in Thailand is presently 8.9% and I immagin it will go higher, we can without to much trouble adjust our life style (if necessary) to continue adding the minimum of 10% to our principal. By owning everything inflation does not impact us as much as it does those who are renting or making payments.

I must say that retiring at 50 is fantastic and have not regretted it for a minute. Hope this approach will help someone who is considering retiring. Perhaps the hardest part is keeping the government from getting the lions share of your money. Good luck.

[AFKAFSinLOS]

Make that THB 60,000 for the vasectomy... wouldn't like to have underestimated that one...

[AFKAFSinLOS]

teej

I'm with you on having more than you think is necessary. I retired at 50 and that was 24years ago. I'm in much better shape now than I was then (financially that is). I don't think it needs to be that complex to work out. Three basic rules to follow.

Pay minimal interest. Don't charge anything, if you can't pay for it don't get it.

Pay minimal taxes.

Save 10% or more of your earnings and add to principal every year. If you can't live on 10% less you are running way to tight a budget.

How much it cost to live in LOS is all over the place depending on what life style you choose to follow. We own our condo and car and all furnishings etc. and find we can live a comfortable life style on 50,000B per month. That is not counting travel and occasional new TV etc. To old to get health insurance but have very few health problems. So self insuring is not a problem and will be OK as long as the problem occurs while we are in LOS and not visiting the US or Australia.

Presently 74 and sincerely believe that I will live well into my 90's unless in a serious accident. My wife is 9 years my junior and in excellent health she should live well over 100. So we need to have funds to last another 40 or so years. By saving 10% and adding to our principal each year I don't visulize that being a problem. We have spread our money around a bit so if one country has problems we can take from another until the problem is resolved. Our $$ are in aaa rated term deposits and earn on the average over 8%. Our tax load on the earnings is in the vacinity of 5%.

Even though inflation in Thailand is presently 8.9% and I immagin it will go higher, we can without to much trouble adjust our life style (if necessary) to continue adding the minimum of 10% to our principal. By owning everything inflation does not impact us as much as it does those who are renting or making payments.

I must say that retiring at 50 is fantastic and have not regretted it for a minute. Hope this approach will help someone who is considering retiring. Perhaps the hardest part is keeping the government from getting the lions share of your money. Good luck.

Always interesting to hear from people with more experience than yourself... Sounds like you have plenty of T-Shirts...

[teej]

AFKAF: The "double and then double" admittedly is on the cautious side. But it can make the difference between retiring and worrying about your finances (or even thinking about them) and retiring and having the time of your life (which is the point, isn't it? ). Worrying about money sucks. It always has. It always will. For most, though, I'd definitely recommend at least double what they think they need.

BEENTHERE: WOW, you really have been there and done that. Good on you for being a healthy 74! My parents are both 70 and have been retired for about 10 years IIRC. Being healthy really matters. I'd like to use the phrase "Having your health is all that matters" but I don't want to discount the real fact that it's better to be healthy and wealthy than to be healthy and broke.

When I talk to my parents the overall concern is to know that they are healthy -- and I believe that they feel the same way about me. As long as we have our health, then everything else doesn't "really" matter -- however in using that oft-used cliche we (my parents and I) both realize that the other party is financially comfortable. When people use the phrase "all that matters is your health" as a rationalization, then the problems begin.

Also BEENTHERE, good sound financial advice you've given -- Especially the TAX part!!!!!

[AFKAFSinLOS]

AFKAF: The "double and then double" admittedly is on the cautious side. But it can make the difference between retiring and worrying about your finances (or even thinking about them) and retiring and having the time of your life (which is the point, isn't it? ). Worrying about money sucks. It always has. It always will. For most, though, I'd definitely recommend at least double what they think they need.

BEENTHERE: WOW, you really have been there and done that. Good on you for being a healthy 74! My parents are both 70 and have been retired for about 10 years IIRC. Being healthy really matters. I'd like to use the phrase "Having your health is all that matters" but I don't want to discount the real fact that it's better to be healthy and wealthy than to be healthy and broke.

When I talk to my parents the overall concern is to know that they are healthy -- and I believe that they feel the same way about me. As long as we have our health, then everything else doesn't "really" matter -- however in using that oft-used cliche we (my parents and I) both realize that the other party is financially comfortable. When people use the phrase "all that matters is your health" as a rationalization, then the problems begin.

Also BEENTHERE, good sound financial advice you've given -- Especially the TAX part!!!!!

Talking of parents, that's one that people often forget to factor in... You might have enough for you and your spouse and family, but your parents are hard to plan for...

They've probably done some planning for their retiremement, but chances are it hasn't covered every eventuality. They'll probably be too old to have insurance. Sure there's the things like government health service. But sometimes paying to go private may be the difference between (good chances) of life and death... Or they might need long term care for one parentbut not the other...

Using up your THB 40mio to extend your parents life after you've retired early?...something to bear in mind...

THB40mio for the mother-in-law though is an easier call... In fact if someone was interested in throwing in the rest of the outlaws in the deal, and making them disappear, I'd consider funding their retirment for them... quality of life and all that...

Edited July 16, 2008 by AFKAFSinLOS

[GuestHouse]

THB40mio for the mother-in-law though is an easier call... In fact if someone was interested in throwing in the rest of the outlaws in the deal, and making them disappear, I'd consider funding their retirment for them... quality of life and all that...

I know a number of Farangs who are still working in their late 50s and 60s while funding the 'rest and ease' of Thai in-laws younger than themselves, and more than just a few Farangs are working to fund the 'rest and ease' of in-laws only marginally older than themselves.

[BEENTHEREDONETHAT]

Must admit I did not have parents or anyone else programed into our retirement funds. And did end up caring for my mother for five years during our retirement. It was not a real financial drain as we had here move in with us and her social security check more than covered the additional expense of looking after her.

While she was really easy to have around and was healthy up to the last couple of days (lived to 96) but as easy as she was to have living with us it still was a definite impact on our life style. Couldn't travel or both be gone for any extended period, like overnight. The reason I mention this is I for one would not want to put our kids through the same thing. So our retirement $$ are sufficient that should one of us pass away and the other become unable to live alone we will have the necessary help or even move into a nursing home. Of course that will impact the kids inheritance but that is the breaks.

Just one more thing to consider, when you retire at 50 the social security check will not be very large.

[Lancelot]

Retirement kitty? Just multiply your annual expenses, including taxes, times 25. That will give you a 4% withdrawl rate and you should not outlive your principle

[GuestHouse]

The reason I mention this is I for one would not want to put our kids through the same thing. So our retirement $$ are sufficient that should one of us pass away and the other become unable to live alone we will have the necessary help or even move into a nursing home.

And the reason I like that is because it is an all too rare example of expats planning for their financial security in old age AND the financial security of their Thai wife.

Given that so many foreigners marry women very much younger than themselves this is a consideration that ought to play a larger part in Expat Retirement Planning.

The evidence of the many threads discussing retirment funding is it does not.

[mikethevigoman]

I dont see how anyone can answer this for you,how will you live ?, where will you live ?, do you drink? smoke ? eat ? .comments and advice you will receive will surely be worthless without an assesment,..do you want to live in a pattaya penhouse or a tin shed in issan,one is definatly cheaper than the other,unless the in laws take it all off you

[AFKAFSinLOS]

THB40mio for the mother-in-law though is an easier call... In fact if someone was interested in throwing in the rest of the outlaws in the deal, and making them disappear, I'd consider funding their retirment for them... quality of life and all that...

I know a number of Farangs who are still working in their late 50s and 60s while funding the 'rest and ease' of Thai in-laws younger than themselves, and more than just a few Farangs are working to fund the 'rest and ease' of in-laws only marginally older than themselves.

My in-laws are self funding... the scenario above I can't imagine getting myself into while I still have my marbles...

My point was more if I had a THB 40mio retirement, I would probably consider giving up a very large chunk if it meant my parents would be around for longer, and they couldn't afford the medical costs themselves....eg large treatment fora critical illlness. It's a reality that could happen...

Whereas for the out-laws I'd be happy to pay a large chunk of the THB 40mio to "make them disappear" ... and no need to wait until retirement... I'll consider funding anyone's retirement who "helps out with the making them disappear"...

[Zodiac]

I do not consider this topic particularly helpful. Even if someone has 5 million or less but can cut his/her cloth so to speak to live on the income generated from the capital sum, then he has enough to retire and live in Thailand. The secret surely is living within ones' means and preserving the capital......

[Dave the Dude]

Just one more thing to consider, when you retire at 50 the social security check will not be very large.

Please correct me if I'm wrong but I thought both U.K. Men and Women have to have completed 30 years of contributions (N.I.) in order to get up to the maximum benefit. Any more years and you are paying for the scroungers and mock-rasberries!

Dave (retired at 49)

Edited July 17, 2008 by Dave the Dude

[binnsy]

100% correct it ised to be 44 years but if you have worked for 30 you are entitled to full pension

[meom]

I do not consider this topic particularly helpful. Even if someone has 5 million or less but can cut his/her cloth so to speak to live on the income generated from the capital sum, then he has enough to retire and live in Thailand. The secret surely is living within ones' means and preserving the capital......

In a way you're right Zodiac and it is not that difficult to retire and live in Thailand on let's say 5mil. Question is for how long?? Which brings us back to the OP with retirement starting at age 50 for lets say 25 years until 75.

Assuming the experts are right the 5 mil will allow you to spent 200thou a year so if you can live on 16,666/month or less than you're ok.

[BEENTHEREDONETHAT]

I do not consider this topic particularly helpful. Even if someone has 5 million or less but can cut his/her cloth so to speak to live on the income generated from the capital sum, then he has enough to retire and live in Thailand. The secret surely is living within ones' means and preserving the capital......

In a way you're right Zodiac and it is not that difficult to retire and live in Thailand on let's say 5mil. Question is for how long?? Which brings us back to the OP with retirement starting at age 50 for lets say 25 years until 75.

Assuming the experts are right the 5 mil will allow you to spent 200thou a year so if you can live on 16,666/month or less than you're ok.

Are you assuming that you can live on 16,666B now and still be able to live on 16,666 in 25 years? Or does the life style drop a bit each year so you can still survive. In 25 years at a inflation rate of 4% $1,000 will be worth $333 or your B16,666 will be worth B5,550 in spending power. If you can live on that go for it.

[meom]

No I can't live on that amount. Wish I could do

You are right about inflation although the example assumes that the return on 5 mil would compensate for inflation allowing 4% drawdown.

Not sure if that would be realistic though considering current inflation.

Personally I think the amounts required by immigration are not far of i.e 400,000 - 800,000 a year so retiring with 10-20mil in the bank at 50 is possible in my opinion.

Edited July 17, 2008 by meom

[GuestHouse]

Retirement kitty? Just multiply your annual expenses, including taxes, times 25. That will give you a 4% withdrawl rate and you should not outlive your principle

The problem is.... turning up in Thailand with very few annual expenses and then discoverring that after not to long you've aquired a whole lot of annual expenses you could never even have imagined.

[Naam]

Retirement kitty? Just multiply your annual expenses, including taxes, times 25. That will give you a 4% withdrawl rate and you should not outlive your principle

that's "milkmaid mathematics" the principal has to grow according to the inflation rate which depends on the individual setup and spending pattern.

[ace]

My vote on the survey is that for a comfortable, modest life level you would need 20 to 25 mill baht if you had no future pension, and 10 to 15 million baht if you expect a future pension. For retirement in the US, double those figures (at least).

I went with 10 to 15m. However, I own a place in Thailand already. Second, when a good contract comes up, for 3 or 6 months I'll take it. And that'll set me up nicely for another 6 month/year + savings top-up. So perhaps not really retiring, but semi-retiring, 50-75% in LoS, 10-15m. And so indeed 20 - 25m to retire.

[bendix]

Not sure if I've replied on this thread or not (too lazy to look through it), but I think 25-30 is right if - as the OP said - you're completely cashed up (ie no house).

More than enough to give you a decent income (especially out of Bangkok), with enough to reinvest from the income stream to keep the principle growing and inflation proof.

[JimsKnight]

16.5 million is key, a nice figure to live off.

Budging within the interest that makes and being semi-retired is also the big key.

you'll likely be well under the monthly outgoings so even more coin into the kitty

Anyone fully retiring at 50 needs to understand how boring it is doing diddly squat and stopping work then.

Hobbies are good but hobbies vary on where you settle down.

Singletons should avoid the countryside and head to the big city, then to the quiet zones in the country. Rotate around and keep your mind sharp and the scenery fresh.

Staying still in Thailand is = to being on the road to stagnation and boredom. Cool if that's what you're into, not cool if you're young at heart or get bored.

Keep your mind active, keep your options open and plenty of irons in the fire ready to move elsewhere if TSHTF

I work offshore and there are plenty of coffin dodgers still doing their thing and they are in their 60s!

Keep active.

Good luck for those hitting the big 5-0

Edited July 19, 2008 by JimsKnight

[Naam]

Anyone fully retiring at 50 needs to understand how boring it is doing diddly squat and stopping work then.

you can only speak for yourself. i retired 19 years ago at age 46 and my only regret is that i did not retire several years earlier

[Daffy D]

OK, I know there are a lot of early retirees and retire in Thailand wannabes on TV.

So, if you totally cashed out and had NO PENSION at age 50 today, how much money do you think you would you need to retire in Thailand and maintain a pleasant life?

Much Much More

[CaptHaddock]

I do not consider this topic particularly helpful. Even if someone has 5 million or less but can cut his/her cloth so to speak to live on the income generated from the capital sum, then he has enough to retire and live in Thailand. The secret surely is living within ones' means and preserving the capital......

In a way you're right Zodiac and it is not that difficult to retire and live in Thailand on let's say 5mil. Question is for how long?? Which brings us back to the OP with retirement starting at age 50 for lets say 25 years until 75.

Assuming the experts are right the 5 mil will allow you to spent 200thou a year so if you can live on 16,666/month or less than you're ok.

Are you assuming that you can live on 16,666B now and still be able to live on 16,666 in 25 years? Or does the life style drop a bit each year so you can still survive. In 25 years at a inflation rate of 4% $1,000 will be worth $333 or your B16,666 will be worth B5,550 in spending power. If you can live on that go for it.

He just divided the 5 million by 300 months. So he assumes that you earn nothing on it. If you assume a 4% return you could take out 26,391 baht per month before you went broke at 75. However, depending on your health you probably have a greater than 50% chance of living past 75, which means you're still alive and broke. Also, you have to take inflation into account, to say nothing of exchange rates. Retiring on 5 million at 50 gives you only a very small chance of a successful life.

[Peregrine]

How long is a piece of string?

I know people retired in Thailand on a fund that I would not be able to sleep nights through worry. They seem to be as happy as Larry.

There are two problems I see with retiring on the minum visa requirement.

1. What happens as inflation eats in to your lifestyle.

2. What happens if you settle with a younger woman and along comes the younger woman's needs.

I take the view, retire in Thailand on what you need to retire back home and live very much better in Thailand, with the option, because you can afford it, of going elsewhere if the need arrises.

Agreed,...you are wise Man.

[monkeytunes]

Hi Mobi

Can you give us any more info on the outfit that gets you 10% on your investments? Are their services available to anyone?

I'll pm you the details.

Also curious, could you PM me the details too, many thanks