How much you really need to retire in Thailand

[impartialobserver]

As a financial professional, the ad and thread about retiring on 2.5m baht in Pattaya bothers me.

Everyone should do their own due diligence and hire a financial advisor they trust and respect at a reputable firm. That said, there are some general concepts that all potential retirees should keep in mind:

1. Currency and Inflation - One of the big issues about living in Thailand is currency exchange and inflation rates. On the one hand, you can avoid currency issues by transferring all of your money into THB and investing in local assets. On the other hand, this exposes you to an unstable economy and the likelihood of currency devaluations and/or rising inflation rates. If you have your net worth in a stable country's economy, you will become victim to the vicissitudes of the FX market. A financial planner with understanding of FX issues is worth consulting for this reason, and also makes retirement planning significantly harder. A way to protect yourself from this risk is to lower your safe withdrawal rate...

2. Safe withdrawal rates - In the late 1990s a comprehensive study of how long a retirement portfolio will last was undertaken, and is the cornerstone of modern financial planning. Since 2008 the findings of this study have been somewhat controversial, but the main takeaway from the Trinity Study is still a good general guide: you can comfortably and reliably withdraw 3%-4% of your portfolio to fund a retirement of 30 years or more. To read more on this: https://en.wikipedia.org/wiki/Trinity_study

3. Cost of living - The final consideration is how much it will cost you to live in Thailand. There's no guideline for this; I live on about 80,000 THB and can't imagine living on less. I've met people who live on 150k and people who live on 30k. It really depends on what lifestyle you want and what you're comfortable with. However, you also need to keep in mind unexpected medical expenses and emergency costs, and plan for this accordingly. With that in mind, someone who needs 60,000 THB a month can feasibly retire on 18m THB.

4. Social Security/government pensions - The amount of money you need to retire in Thailand will be substantially less if you get Social Security or a similar old age pension from your government. I think northern Europeans are most fortunate on this front.

Investing and keeping a nest egg for decades is hard. Anyone who promises you a guaranteed high return or emphases how easy/simple their investment plan is, is probably selling snake oil. Do your due diligence, consult many financial advisors, and be very careful before entrusting your financial future in the hands of a stranger.

Also, I personally would not use any financial advisor in Thailand. I've spoken to executives at some of the biggest investment banks in this country, and they're frankly incompetent by NYC/London/Hong Kong standards (I've worked in all three of those cities so I feel comfortable making that comparison). What does that tell you about the Pattaya-dwelling expats offering financial advice? Think about it.

[Don Mega]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

Edited February 27, 2016 by Don Mega

[chiang mai]

Competent independent investment advice in Thailand is very rare, some UK firms of IFA's send their people here to trawl for new fodder in the knowledge that there is no regulation restrictions that will impact them. Expats Brits who genuinely live in Thailand will not be accepted for new business by onshore IFA's hence their remaining choices are slim - I'm currently in discussion with the UK FCA on this point and a directer has promised me a ruling on the use of onshore IFA's by Thailand based expats and I'll post it here when I receive it. So what does that leave, restricted market advice based in Thailand or IFA's based in Hong Kong or Singapore where regulation is strong.

[huawei]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

You'll adjust if and when you have to.

I realised I just wasted a lot of money..

Easy if you own your own property.

[Don Mega]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

You'll adjust if and when you have to.

I realised I just wasted a lot of money..

Easy if you own your own property.

Cannot own property. so waste money renting.

[Johnniey]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

My father in law is a retired teacher at a government college. He was the head of the English department. He has a new car worth 1 million, eats out most evenings. Has holidays to the beach every year. He gets 300,000 a year. You claim 3 million isn't enough for you - how very sad or a troll.

[GuestHouse]

Good post "Impartialobserver" and your upfront declaration that you are "Financial Professional" is welcome, we get a fair few people trawling for business on this forum, so being open is a good thing.

You'll find I and a few others here frequently post warnings and cautions about using Thai based 'IFAs', the forum rules do not allow names to be named, but that is a sensible precaution to comply with Thai law.

One of my standard cautions is to remind people that their pension savings are like no other savings we have - they are designed to take care of us when we are old and can no longer work, they are irreplaceable. More over they may, in the case of company pension schemes and a handful of private pension schemes come with gold plated benefits that are just not available in the market these days. A pension for a wife and dependent children under 18 or still in full time education when we die are examples.

I have friends who have cashed in gold plated company pension schemes because the believed they could get a better deal, or might avoid tax ten or more years from now when they retire - They invested via 'IFAs' in Thailand and can be assured that they will pay zero tax on the pitiful residue (if there is a residue) of their pension savings.

Cunningly many of the IFAs play on the position some expats find themselves in, resident in Thailand living on meagre income but with a pension pot they cannot yet get their hands on - Its an easy sell to tell a guy desperate for money that he can get his hands on his pension pot and live well for the rest of his life in Thailand.

I like to sum that up with 'Don't turn a midlife crisis into a late life disaster' - Your pension was never designed to give you a retirement from the age of 40, 50, 55, or perhaps even 60. If any of us are going to take our pensions early we need very solid, and perhaps hard nosed, advice.

The points you have raised are a good start, but of course need tailoring for every single individuals own circumstances.

Edited February 27, 2016 by GuestHouse

[huawei]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

My father in law is a retired teacher at a government college. He was the head of the English department. He has a new car worth 1 million, eats out most evenings. Has holidays to the beach every year. He gets 300,000 a year. You claim 3 million isn't enough for you - how very sad or a troll.

Sad is when you want things you can't have and pretending you don't want them. Sad is when you can't give your child a good education which can cost 300-600k per year. I could go on. 3 million especially in Bangkok is a very good standard of living..nothing special.

[alfieconn]

likelihood of currency devaluations

a. Why is it likely that the currency will devalue ?

b. If you have retired in Thailand and all your assets and cash are here then then it doesn't matter if the currency devalues.

rising inflation rates

Why rising inflation rates ? inflation rates can go down !

[Naam]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

My father in law is a retired teacher at a government college. He was the head of the English department. He has a new car worth 1 million, eats out most evenings. Has holidays to the beach every year. He gets 300,000 a year. You claim 3 million isn't enough for you - how very sad or a troll.

are you aware that 100 grams (a healthy breakfast portion) of top quality Beluga caviar sells for 25,000 Baht (cost of import not included)? is it not possible that TV-member Don Mega is a caviar aficionado?

[Don Mega]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

My father in law is a retired teacher at a government college. He was the head of the English department. He has a new car worth 1 million, eats out most evenings. Has holidays to the beach every year. He gets 300,000 a year. You claim 3 million isn't enough for you - how very sad or a troll.

Your father in law needs a better paying job. 300k per year is chump change.

[Gsxrnz]

The simple answer to the question - to retire in Thailand or anywhere else in the world, you need minimum USD5M generating 7% p.a.

That protects you from all eventualities. Assuming you don't buy a stable of Lambos and only waste semi-lavish amounts on women and wine.

[Naam]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

My father in law is a retired teacher at a government college. He was the head of the English department. He has a new car worth 1 million, eats out most evenings. Has holidays to the beach every year. He gets 300,000 a year. You claim 3 million isn't enough for you - how very sad or a troll.

Sad is when you want things you can't have and pretending you don't want them. Sad is when you can't give your child a good education which can cost 300-600k per year. I could go on. 3 million especially in Bangkok is a very good standard of living..nothing special.

the same applies to a very comfortable standard of living in the outskirts of Pattaya with a wife, no children, but two dogs.

summary: using the pension of a retired teacher in Thailand as a benchmark or comparison does not apply.

[Naam]

The simple answer to the question - to retire in Thailand or anywhere else in the world, you need minimum USD5M generating 7% p.a.

That protects you from all eventualities. Assuming you don't buy a stable of Lambos and only waste semi-lavish amounts on women and wine.

that's a wee bit exaggerated and "anywhere else" does not apply because not many countries offer the income tax advantages for offshore income that Thailand does.

[smutcakes]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

You'll adjust if and when you have to.

I realised I just wasted a lot of money..

Easy if you own your own property.

Cannot own property. so waste money renting.

You can own condominiums. Hope your job does not involve real estate.

[Don Mega]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

You'll adjust if and when you have to.

I realised I just wasted a lot of money..

Easy if you own your own property.

Cannot own property. so waste money renting.

You can own condominiums. Hope your job does not involve real estate.

I dont consider buying a flat to be property ownership, well not one I would aspire to anyways.

[huawei]

I currently churn through about 3 million per year but that is with me occupied working 60+ hours per week.

If retired I obviously have more time on my hands so north of 3 million per year would be needed.

You'll adjust if and when you have to.

I realised I just wasted a lot of money..

Easy if you own your own property.

Cannot own property. so waste money renting.

You can own condominiums. Hope your job does not involve real estate.

I dont consider buying a flat to be property ownership, well not one I would aspire to anyways.

Why not. Security of ownership, security for yourself...it's like anything..due diligence a bit of luck and it can be a very comfortable living and good value.

But condos aren't for everyone..

[Don Mega]

He I'd love a condo in my name... find me one that will let me keep my pets (4 dogs and 30 koi fish) and I'll jump right onto it !!

[KittenKong]

The simple answer to the question - to retire in Thailand or anywhere else in the world, you need minimum USD5M generating 7% p.a.

That protects you from all eventualities. Assuming you don't buy a stable of Lambos and only waste semi-lavish amounts on women and wine.

that's a wee bit exaggerated and "anywhere else" does not apply because not many countries offer the income tax advantages for offshore income that Thailand does.

There's the important point. It's not how much I spend here that matters (many totally banal everyday things here cost me 3 or 4 or 5 times what I would pay for them in the UK). It's how much I save on tax that matters, to me anyway. Personally I save a lot and it more than balances out the cost of those banal things I mentioned.

If Thailand changed its attitude to overseas earnings I would be gone like the proverbial sh*t off a shovel, Spain and Portugal being much more attractive in many ways and much cheaper for many things too.

[Naam]

The simple answer to the question - to retire in Thailand or anywhere else in the world, you need minimum USD5M generating 7% p.a.

That protects you from all eventualities. Assuming you don't buy a stable of Lambos and only waste semi-lavish amounts on women and wine.

that's a wee bit exaggerated and "anywhere else" does not apply because not many countries offer the income tax advantages for offshore income that Thailand does.

There's the important point. It's not how much I spend here that matters (many totally banal everyday things here cost me 3 or 4 or 5 times what I would pay for them in the UK). It's how much I save on tax that matters, to me anyway. Personally I save a lot and it more than balances out the cost of those banal things I mentioned.

If Thailand changed its attitude to overseas earnings I would be gone like the proverbial sh*t off a shovel, Spain and Portugal being much more attractive in many ways and much cheaper for many things too.

i'm sure you would reconsider after updating your knowledge about the latest developments. in continental Europe (except the Balkans and some eastern countries) you'd be a transparent man sitting in a glasshouse with the taxman's claws in your pocket or worse around your balls. in other words. a situation Thailand is technically far from even if offshore income will be made taxable.

[Pib]

A key factor regarding your monthly spending needs is whether you rent or own a residence...and if renting the amount of monthly rent. Housing cost can be very significant portion of a person's monthly income needs unless renting really cheap.

[gamini]

This is a pretty stupid post in the first place. Everyone's needs are different, because it depends who you are. It depends how much money you have too. Most of my friends send their children to public schools in England and hence spend a lot more money. Some people manage without servants,, some live like a Thai. You would need anywhere between 150,000 to 3 million , depending on your lifestyle. We spend 1 1/2 million per annum but own our own property. it also depends on whether you play golf or not. I used to be a polo player and employed four people full-time, just to look after my polo ponies.

[maewang99]

the 5 million US is crazy. if you've got any kids to care for, yeah you need it. but that ain't what most folks consider retirement. unless your goal is to leave behind a large estate, you don't need even a million US unless you or your wife are still in your forties.

Edited February 27, 2016 by maewang99

[Naam]

the 5 million US is crazy. if you've got any kids to care for, yeah you need it. but that ain't what most folks consider retirement. unless your goal is to leave behind a large estate, you don't need even a million US unless you or your wife are still in your forties.

mileages vary

[ronz28]

There are cheaper places to live but benefits vary: http://time.com/money/4229754/cheapest-countries-to-live/?xid=frommoney_soc_socialflow_facebook_money

[sunnyjim5]

An interesting thread/Topic.

I would just like to say that many people enjoy living a modest life, they do not need to flaunt displays of wealth or brag about their assets.

For those who do feel the need to brag, live in a house bigger than is needed or drive the latest Merc I have one question -------------Why ?

We shall, in all probability, leave some assets when we depart this world but we have already determined how those assets will be distributed and the stray/feral cat home will receive a big chunk !

[Naam]

A key factor regarding your monthly spending needs is whether you rent or own a residence...and if renting the amount of monthly rent. Housing cost can be very significant portion of a person's monthly income needs unless renting really cheap.

i agree that this applies to "nominal" rent. but at the bottom line it tallies when (in case of property purchase) you consider the blocked capital with zero yield on investment plus the cost for the upkeep of the property.

[KittenKong]

....... not many countries offer the income tax advantages for offshore income that Thailand does.

There's the important point. It's not how much I spend here that matters (many totally banal everyday things here cost me 3 or 4 or 5 times what I would pay for them in the UK). It's how much I save on tax that matters, to me anyway. Personally I save a lot and it more than balances out the cost of those banal things I mentioned.

If Thailand changed its attitude to overseas earnings I would be gone like the proverbial sh*t off a shovel, Spain and Portugal being much more attractive in many ways and much cheaper for many things too.

i'm sure you would reconsider after updating your knowledge about the latest developments. in continental Europe (except the Balkans and some eastern countries) you'd be a transparent man sitting in a glasshouse with the taxman's claws in your pocket or worse around your balls. in other words. a situation Thailand is technically far from even if offshore income will be made taxable.

I calculated how much tax I would pay here if overseas income became taxable and it was slightly more than I would have to pay if I lived in Spain. And of course living in Spain would give me access to subsidised health care, a state pension that increases every year (if I ever reach the age when I can claim it), a wide choice of household items at reasonable price that simply doesnt exist here and much cheaper day-to-day grocery bills for many items. Quite a lot of property is similarly priced too, though locations would be very different. And I would save about GBP1500 on my yearly shopping trip back to the UK. Obviously it's all swings and roundabouts, but even so the difference was smaller than I was expecting once the tax slice is removed from the equation.

[Suradit69]

Competent independent investment advice in Thailand is very rare, some UK firms of IFA's send their people here to trawl for new fodder in the knowledge that there is no regulation restrictions that will impact them. Expats Brits who genuinely live in Thailand will not be accepted for new business by onshore IFA's hence their remaining choices are slim - I'm currently in discussion with the UK FCA on this point and a directer has promised me a ruling on the use of onshore IFA's by Thailand based expats and I'll post it here when I receive it. So what does that leave, restricted market advice based in Thailand or IFA's based in Hong Kong or Singapore where regulation is strong.

Competent independent investment advice (in Thailand) is very rare.

[JMWPACIFIC]

Very, very sage advice!