Owen`

Quoting from several (Wow, you guys post while the US sleeps! We must be slackers!) Yup. Taxes matter. I don't know how the UK does this, but in the US taxes can come in multiple forms. Federal is unavoidable. All sorts of variables will be on this for different guys. Different income sources are taxed differently and I won't go into detail. Another thing Americans face is state tax. The US is 50 states and in addition to federal tax each state has to fund its operations. about 42 of the 50 do this with an income tax of . . . oh an average of 5%. I think you Brits call "states" "counties". (Americans divide states into subsets we call "counties"). If you Brits have the same sort of thing going on, don't forget this tax source. That's why I was babbling above about moving to Nevada for a year before heading to LOS. It is a zero income tax state. Dying the minute you spend your last shilling, eh? I like this idea. Ha. And that's what everyone has done their whole career in order to accumulate the sort of 600K savings this guy is talking about. But . . . as he just said, the goal is to spend the last penny the minute you die. That don't happen if you spend less than you make for 30 yrs. That's the tricky part. To spend more than you make, but to a carefully calculated extent. FYI, everyone, and I mean everyone, trying to do any kind of retirement planning in the US is extremely reluctant to drawdown their savings. If they start at 1 million dollars then everything they do is designed to die with 1 million dollars. It's a mindset that seems to be impossible to get past. When people spend 30 years building a nest egg they can't bring themselves to "piss it away".

I'll wing a guess at this, but beware I'm an American and Brit annuity arrangements could be a lot different in the UK. You're going for 24K pounds in the first year. That translates to 600K pounds saved for the 4% number (which may be overly conservative, the difference between 4 and 5% is huge in terms of what assets have to be saved up, at 5% you need only 480K pounds). Annuities usually don't kick in with income until a later age. Sounds like 65 in your case. There is probably a tax break on it too, but what you want to know is why does it need 700K vs 600K. Here's my guess, and it's only that. Commissions. Annuity vendors are notorious scam artists, even the reputable ones. They are paying themselves 15 years worth of management fee and it translates to a need for a higher initial amount. This doesn't mean they are paying themselves 100K over 15 yrs (though they might). It just means that given some annual amount they are going to stack onto the 24K, you need an extra 100K to start. Just a guess, but it seems credible. Again, I don't know how y'all play the annuity game in the UK. As this thread has unfolded and really valuable stuff has been said by guys already living in Pattaya, what I'm evolving towards personnally is a frame of mind that doesn't presume permanence. I'm guessing that if you spend 10 yrs in Pattaya starting at 600K pounds and you want to go back to the UK at age 60, that 600K will fund a reasonable life for the needed years when added to whatever you folks call Social Security over there. Sorry if I'm completely wrong on this because of UK differences.

Generic storage facilities anywhere in the US would be less than $100/month. The exact price will depend on the amount of "stuff". Multiple residences . . . well, I've looked into it. One ties up money in real estate equity that won't earn interest or dividends, and given the bubble might itself be at substantial risk. A more subtle obstacle is insurance. Most insurers won't insure a vacant property for more than a few months (while it is being sold). Being gone 6 months runs a big risk of the insurer pointing at that clause in your policy and refusing to pay if the place burns down. One thing I've seen done, common among congressional staff in DC, is take out a long term lease, or even buy, a tiny condo costing maybe $25K in Texas or Florida or Washington or Wyoming or one of the other 0 income tax states. This establishes residency and provides you with a "base" of sorts if you want to store things there (uninsured). These properties exist solely for people on the move who just need a home address but intend to be there only rarely. Certainly not enough for your 6 month purposes, but it's a maneuver worth being aware of.

Good data. Important point. $40K is the extraction for the first year. It gets a 3ish% upward bump each year in the Trinity study presumptions. So it's $41,200 in year 2, etc. That approach gets you a 99% probability of not running your $1 million to zero in 30 years. That 99% number has market crashes built in, cyclical interest rates built in, everything that happens good and bad over 30 yrs. I won't presume to talk for other guys, but I . . . and I suspect others who self make themselves 1 million dollars in net assets . . . don't think I will be happy trolling around daily for women and golf. No question several days a month spent thus will be excellent, but daily for 30 years? Nah. I try to pay attention to the things I read from guys who are already spending their time in Pattaya and they seem to say that it does taper off. It becomes several days a month and not every day a month. I, too, think travel will be an imperative. The good news about this, as I discovered in Pattaya this past spring, is the arrival in SE Asia of Southwest Airlines clones. You can get one-way tix to Singapore for well under $50. Ditto other destinations of the region. I suspect it would take years to explore that particular corner of the world and it looks like that can happen cheaply. Each trip constitutes a visa run, too.

Several comments as the posts just keep on coming: 1) Government pensions are not sure things. Their magnitude can be cut. They won't go to zero, but they can be cut. In fact, this is pretty easy to do -- even politically. You just change the annual inflation adjustment so that it starts falling behind. The checks get bigger, but not by enough to keep up with life. I completely agree that there is no question at all govt pensions are safer than most and a recipient should probably not lose any sleep at night worrying, but I GUARANTEE you if part of the fix of Social Security turns out to be a benefit reduction then Civil Service pensions will be cut by the same amount. Veterans and disability, I'd guess those folks have an extra layer of protection, but 100% safe? No. Nothing is, other than your own money in your hand spent before inflation eats it. 2) The poster who calculated 1.18 million . . . well, that sounds to me personally a tad too demanding, but I like that philosophy of safety and being careful a lot. If you want to take the conservative 4% number, then 40K/yr requires 1 million dollars. Period. That's math. That's not judgement. I am of the opinion $40K/yr buys a very nice life in Pattaya, but I don't live there and I've seen conflicting comments. I don't know. 3) The investment banker from Stickman's website who thought 200K would last a lifetime . . . well, that was before the Trinity study. If he'd had access to it he'd have known better. This I banker very much comes back to yet another post somewhat earlier in the thread that talks of finding an income source through the internet while in Pattaya. This seems very much possible to me. Telecommuting has become a common thing in the American workplace. Even if you had to commute to the states for a quarterly meeting, it would still be worth it in terms of avoiding a gap in the resume, retaining an income flow and . . . having something to do. I'm intrigued at the posts in this thread. It seems like most of the guys considering this are definitely white collar types. With the possible exception of those guys relying on pensions. I guess one should not be surprised. Hundreds of K or a million in net assets are not likely for Joe Car Mechanic.

An unpleasant thought for those relying on pensions rather than personal portfolio . . . have a look at what is happening to US airlines. Those employees, pilots, flight attendants, mechanics, whatever . . . they thought their pensions were sure things. They aren't. And there is no goal line to cross. Even those already retired are not going to get their full pension checks. Pensions are NOT sure things. Thinking in terms of "if I stay 5 more years then my pension is $XXX" should be phrased "if I stay 5 more years and I'm lucky maybe I'll see pension payments of $XXX for a few years until my company folds and stops paying". Don't think it can't happen to your company. Ten years ago United Air Lines seemed no different than General Electric. About the only thing that comes even close to a sure thing is interest from government bonds from some stable country. Inflation will eat into that, but it's the closest entity to a "sure thing" that exists in the world of finance.

Understood. I'm not surprised. Everyone has their own individual situation. In my case I spent a few decades in jobs that did not pay into SS so my total year count was not high to begin with. Add that to early retirement and the monthly pension payout does plummet. Your mileage may, and probably will, vary. I'm trying to think of other things I've considered and researched that may prove important to others and therefore be worth mentioning. Here's one: Mail drops. I mentioned above that state or residency matters for tax purposes of your interest and dividends. If you own some tiny piece of desert land in Nevada in order to claim it as your state, you probably can get into trouble if your mail goes somewhere else. So I'm wondering about maildrops in Nevada or other tax desirable states that forward your mail. How does this work?

This is indeed good stuff. Let me offer some items additional to the stuff above. The Trinity Study was American, but the concept of 4-5% withdrawl rate has to apply to other countries too. The study was statistical. Money is split between stocks and bonds and inflation adjusted. The US Standards and Poors 500 index was used as the definition of "stocks", but I would suspect near identical results would have been obtained if the FTSE in the UK had been used. Some more American points: Having additional years in Social Security counts a lot less than you might think. There is an estimator at www.ssa.gov. If you stop working well before your SS trigger age, the monthly pension plummets. And please keep in mind the trigger age is NOT 65 for most folks who would be of an age to be reading this thread. If you're 50 now the age is 66 for pension payments to start, and that works against you two ways -- 1) you wait longer for money and 2) an extra year is in early retirement not paying into SS so the pension payment, when it starts, is less. As of right now, Medicare triggers at age 65 for everyone. It will NOT send money outside the US for medical treatment. Another important issue. Within the US, what is one's state of residency. This matters for state income tax. If you are a resident of, say, Illinois and you retire to Pattaya, that state's elections is what you vote in, absentee. You also will be hit for state income tax from there. I may not have this right, and I'm definitely curious what others plan to do or have done, but I think if you are going to live in Pattaya, you need to spend a year in Nevada, Texas, Florida or one of the several other states with zero state income tax first to establish residency. Applause for the guy above who says there are ways to work via the 'net. There are. One need not turn one's income down to zero. I plan to do some consulting, which will require some travel (paid for by the hiring company). This should double as a visa run, too.

You are correct, sir. The Trinity study did presume guys were on autopilot and yanked that money out at that rate regardless of what kind of year they were having in the market. And as you say, if that amount is simply the minimum someone can live on, then the numbers do make sense. We're into this really deeply here, and probably for good reason given the interest folks have for retiring to Pattaya. FYI to all, these topics are hit really hard on the discussion forum Investing In Retirement of www.morningstar.com. It's free. I'm not shilling for the website. Also FYI, my understanding of the whole shebang is the issue is largely decided in the first 2 years of retirement. If you get two good years in the market to start out, you are guaranteed a comfortable 30 yrs. If the first 2 yrs are like 2001, 2002, best you find a job.

The matter is very complex. The 4-5% reality does indeed presume 3% inflation, and a poster above quoted 5% for Thailand, which is very good input into the calculation and tightens all projections. The Trinity study looked at all 30 year periods from 1890 to present and found that 85% of such periods saw a retiree not run out of money if he withdrew 5% from his assets the first year and bumped that withdraw up 3% each year (with 50/50 bonds and stocks in his portfolio). It found 99% of such 30 yr periods saw the retiree still have money after 30 years if he withdrew only 4% of assets the first year. Important Note: that is 4% after taxes. A 4% pretax yank does not supply 4% for living expenses. Your living expenses are what is left after taxes. If you have Soc. Security showing up X number of years from now, that does not change the overall equation. It just means the calculation restarts on that date and if you live to 95 (30 yrs forward from 65) you still have to worry about running out of money. If you make it to 65 I think the odds are now over 50% that you will make it to 90. Another major issue is at age 65 Americans get Medicare to cover 80% of health costs. But the current laws are that Medicare will not send any money for health care expenses out of the US. Someone else may know more about that than I. My point in mentioning it is that at age 65 your asset drawdown could reduce in that your health care premiums would reduce since Medicare kicks in. The rental property idea is fine, and it would seem to change things, but I suspect it does not. The stocks/bonds mix mentioned above just combine to create some annual return. It doesn't matter what the vehicle is that generates that return. The point is that the returns vary and some years they are negative. Average them all together, as the study did, and 4-5% is the magic number.

Folks, I've been to Pattaya once and am returning in November. I happen to know something about the retirement money issues. The bottom line on it all is 4-5% as magic numbers. This is from a study at Trinity University in the US. To survive 30 yrs on a lump sum of money with that money allocated 50% equities and 50% bonds, you may not extract more than 4-5% the first year (with an inflationary bump of 3% per year on the extracted amount each year). So if you have 200K, and you want to live on it 30 yrs (you don't, you have other money coming in), you should not try to remove any more than $9,000 the first year (that's 4.5%). If you go for 11K, or 20K or whatever, you will run out of money before you die, and your final years will just suck. Given that you have 400K, the 5% number is actually 20K. I keep saying 4-5% because the study showed at 4% your odds of running out of money are about 1%. If you yank 5% out your odds drop to 85% (still pretty good). For folks trying to retire in farangland, a good number is $45,000/yr. That takes a million dollars if you don't trust Soc. Security to appear. That's ugly, but that's the way it is.