Owen`

Gary, I too never understood this tendency of guys to move somewhere and take their money with them until a few years ago when it all became clear. It's about lawyers. Guys get sued. They have to get their money out of the country or it will be confiscated. If it's something relatively minor, the creditor will not bother with trying to freeze passport renewal. So someone with a few hundred thousand dollars in US banks may need to get out and get out fast -- and once out the money needs to get out too before the lawyers arrive. If you can get out of the country without being sued, then you're not there anymore to be the target of some manufactured slight. You can leave your money home in that case. But the guys who DO move money out sometimes, maybe often, have good reason.

Interesting maneuver, and it's not altogether UK centric. I think what is being suggested here is the 800K is moved to Thailand to satisfy retirement visa requirements. Its Thai bank account interest is taxable, but if I read Thai law correctly, the amount of that interest will be under the threshold for paying taxes. The issue is then bringing more money into Thailand to live on -- without touching the 800K. The use of CCs or Debit cards to do this is the suggested mechanism and this would appear to be invisible to the Thai tax authorities. Well, I don't know, but it looks dangerous to me. Surely the Thai tax authorities could -- as the very first thing they would look at -- notice there have been no significant withdrawls from the 800K account. Obviously they then must ask . . . what are you living on, and that's when they trigger the investigation because they will think you are working illegally. The real answer to that question would be . . . savings from the account the CC and Debit are tied to -- which is non interest bearing. But . . . I don't like it. They can demand records from that account and the influx from the underlying interest paying account would be revealed. I think maybe it is better camouflaged by drawing down the 800K and NOT avoiding it as much as you can before topping it off next year. This would look all right and proper and not trigger an investigation. You can always claim the top off is from savings elsewhere and not interest on savings. Hmmm, meaning, and I think this does work . . . the money you are bringing in is principal out of other accounts, not interest. I suspect that can hold up to scrutiny for 10+ years.

I like to have these comments have some value to the UK cousins too. This tidbit from Bob . . . I guess I was vaguely aware the Brits have a mechanism available to them to collect "bank interest" from some source that is not taxable and Bob is making it more clear. Good! That's about 1/3 of the problem and for the US it is the hardest 1/3. It looks easy for the Brits. The other 2/3 is your equity or shares position. The US has some maneuvers for minimizing taxes from that segment of nestegg. The UK guys may want to step up with something on this. It's a solid and important issue. Your dollar (or pounds) cost of living in Pattaya will experience change from 3 sources: 1) Your own discretion. 2) Currency conversion changes 3) Thai inflation The third item kicks in seriously when it varies a great deal from your home country inflation. Pension guys get their annual "payraises" based on what their pension indexes to at home. It if is higher than Thai inflation in some year, they are going to be doing A LOT of soi 6 STs in comparison to the previous year. If their home inflation rate is lower than Thai inflation, then they are taking a pay cut and will have less fun that year. For nestegg guys, the 4% rule (for the US) presumes you give yourself approximately a 3% "payraise" each year. If item 2 is constant and Thai inflation is 3%/yr, then you are spot on target and need do nothing. Do the drinking and BFing you budgeted for. You are entitled to it and can afford it. If Thai inflation goes crazy and explodes well above 3%, don't panic. Take a look at what that means to you. If the source of the inflation is that they are boosting taxes on car ownership and you don't own a car, then you are immune. If it's in healthcare insurance then you are not immune and you'll have to either throttle down other spending or endure a higher risk of running out of money. One last tidbit of value. There are studies out saying that people in their 70's spend less than in previous years and therefore the equations and models that mandate a 3% payraise per year are way too demanding and you can really extract more money each year from nestegg than those models say (which is babble for "you can take out more than 4% safely"). Well, no. I claim those studies do not apply to the typical BM. Those 70+ yr old folks who spent less when they got older spent less not because of health or being old and frail. I claim that they spent less because they didn't manage their money well and didn't have it to spend. Simply that. They were running out of money and stretched it. That's not preferable to planning well and addressing the situation sooner with part time work. Don't wind up 70+ yrs old in a trailer park with no money to even go to a movie.

Ordering thoughts. A good thing. 1) How much is enough? Historically, 25X expected spending (inverted 4%) would be enough for 30 yrs if you expect zero pension at age 62 or 65 or whatever. If you DO expect a pension that is inflation adjusted, the historical number becomes about 4.5% or savings of 22X your expected spending is required. If you want to spend 80,000 baht a month averaged over a year -- that rule would say you need to have $570ishK if you expect Social Security. This rule would achieve 95% confidence historically -- meaning 95% of 30 yr periods did not see that money run out. If you are comfortable at 85%, then you need less than $570K. 2) Uncertainty about the future of US tax law. It ain't just the US. But as for there being a skew of what happens if Democrats vs GOP are in power, I don't think it affects mathematics. Social Security being poorly funded has to be dealt with. The workers who will be funding pensions of the future are going to be minorities. The retirees will be white. I do not envision this being tolerated easily when increases in payroll taxes are requested to fund SS. I anticipate pension cuts -- but I think there is good news to be found in this. Folks like us that would like to retire early . . . will not have made that last 10 yrs of contributions to SS. That means our pension payout won't be large. And I think the cuts that will be made will be at the top end. So if you retire early, I suspect you won't be hit very hard at all. The average SS recipient gets 12K/yr. The top end is 20+K. It is they who will be cut. Not early retirees getting 10K. 3) Means testing. It's almost always done via income. Not assets. As shown above the configuration can be one of not having much reportable income at all. There is an advantage in this. In fact, this is the key contrast of retiring on a nestegg vs pure pension income. The pension has the potential advantage of being inflation adjusted. But it is also almost entirely taxable income. The nestegg endures risk from the stock market and varying interest rates, but it can be orchestrated to generate very small amounts of taxable, reportable income. 4) The absolutely inevitable truth is retirees in the US are not going to grow in number at the same rate as the number of people at retirement age. A lot of folks in their 60's are not going to have pensions beyond SS and simply won't be able to stop working. At least for Americans wanting Pattaya, they will soon become more nestegg retirees than pension retirees -- because pensions are going away and getting cut.

I know nothing of this. This will need some study, but in the link you provided I see the following: 1) 30,000 baht personal exemption for a single person (that's $810) 2) Section 3.1 says zero taxes from 0-100,000 baht income. (that's up to $2702) 3) " Interest income may, at the taxpayer's selection, be excluded from the computation of PIT provided that a tax of 15 per cent is withheld at source." The retirement visa I think requires $25ishK on site. At 4% (don't know what local yields are) that would be $1,000/yr interest. This looks to be erased by items 1 and 2. I am certainly not expert at this but it looks to me like you should not be opting for the 15% withholding. You should opt instead to file a tax form that asserts the exemption and notes that your Thai interest income is under $2702 in that account. I think that will mean your tax is zero. haha . . . it may prove that it costs more to pay someone to do your Thai tax return than to just eat the 15% withholding. Section 2.1 doesn't mention pension income or income from holdings outside Thailand. This document appears to say you should have zero Thai tax, but I have no idea, really. Maybe the Expats club gets into this.

US holiday today and I'm doing chores and numbers. I'll try to be a bit generic here so the UK folks can get some benefit from this, but they will have to do some translating. We all probably know at this point that the non pension approach to retirement is accumulating a nest egg and not withdrawing more than 4% in year 1 from it. For a 50/50 stocks and fixed income mix, with an inflation boost each year, this will probably (95% historically) survive 30 yrs. A question often arises as to whether or not taxes must be part of the 4%. The answer is yes, but the news is good and many are getting this wrong. If you have a nest egg of $575K USD and you want to live a lifestyle in Pattaya equal to $23,000 USD (about 71,000 baht/mo), that is 4% and you might think all is well with the world. Well, you forgot taxes. That's the bad news. The good news is that it's not as bad as you think. Most who are doing this calculation are saying . . . suppose I made 5% on my nest egg last year. That is $28,750. Taxes on that will be about $6500 (differs for everyone, just pulling that number out of the air as reasonable) so you might think you're really extracting $23,000 + $6500 in year 1 and that's $29500 -- and that's 5.1% of the nestegg and you could be in trouble. No. It's not that bad. The reason is this. That 575K nestegg is likely a mixture of different things. Some part of it will be IRA/401K (I think this is ISA for Brits? Something tax protected?). Some part of it will be stocks that you do not sell (selling is the taxable event) and some of the income will be dividends (which are taxed for long term holdings at no higher than 15%). Only the portion positioned in some investment vehicle whose proceeds are unadjusted for taxes will be hit at maximum tax liability and because you have a brain, you will optimize that. Here's an example. Let's say $100K of the $575K is in an IRA. Now, you can't spend that, but it does grow and you won't withdraw it til you're . . . at least 60 yrs old. But it still grows at the 5% number we're using. This leaves 475K in the rest of the nestegg. Let's say that in the 50/50 mix we wisely put all of the IRA into fixed income bonds (which would be maximally taxed if not in the IRA) and so then we only need to have $187.5K in (heavily taxed) bonds outside the IRA to achieve 50/50. $187.5K at 5% is 9.3K in taxable income -- and your standard deduction and 1 personal exemption should erase that. (sorry, UK guys, that is US centric, you probably have a low end equivalent for the first 10K of income). So understand what just happened. Fully 1/2 of your nest egg's income is configured to be tax free or deferred. The 50/50 mix will put $287.5K in stocks, and let's say you have it all in an S&P500 index fund. These are yielding 1.5% dividends right now with the rest of the return in capital gains. Well, as you may know right now long term capital gains under certain income thresholds have a tax of zero. Above that threshold it's only 5%, then 10% and then 15%. Chances are you'll be under the 0% threshold for just that portion of your nestegg. So the point here is -- you don't get taxed on everything the nest egg generates if you position it properly. You are only taxed on what you withdraw. Also, if you have a big booming year in the stock market -- you don't sell (this is not about market timing). If you don't sell, you have no tax liability other than that 1.5% dividend yield (and you may know that long term holdings have a maximum dividend tax of 15%). You only sell what you need to sell to pay for living expenses and that's independent of how big a rise the market did. On the downside, you behave differently. If the market drops You Do Sell. I know, this looks like selling at the bottom, but it's not. You sell, and you immediately buy a different index. Maybe from S&P500 to Wilshire 5000. Both will reflect the market, but they are not the same thing. You sell at the bottom but that same day you buy at the bottom. You sell to establish the tax loss for the future. That tax loss can erase tax liability for withdraws you make in the future for living expenses. After a few years of this configuration, chances are you will pay few or no taxes . . . pretty much forever (or until tax law changes attack you). Hope this makes sense. In general I think a typical guy configured optimally is looking at maybe $500 of taxes for $23K of withdrawl. This is scarcely a blip on the 4% rule.

Amps do have a time component but only in the context of being a rate of change of charge. 1 Amp = 1 coulomb / sec. That is irrelevant to the point because electricity is priced in money per Kw-hrs. Half a kilowatt consumed for 2 hrs is 1 kilowatt-hour. And yup, that's the same as consuming 1 Kilowatt for one hour, i.e., 1 Kw-hr. Look at this way. If you consider your microwave oven, it will maybe say on it that it consumes 900 watts when it's on. If there were no time aspect to the billing, then how could you price it per month? If it was ever on during the month . . . for maybe 1 minute, that can't be the same price as having it on 24/7 during the month. So the unit for billing has to be watt-hours in order to reflect how long it was on. So the bill is baht, or pennies or pence per Kw-hr. In the US a price of 10ish pennies per kw-hr is typical. Here's a website with better text on electric bills: http://www.callawayelectric.com/Safety%20T...20Breakdown.htm

The AC vs Pattaya electric data is good. Slight modification. That's per kilowatt-hour, not per kilowatt. Sorry for the nit pick. It can matter because guys can actually calculate how much consumption by adding up not just how many kilowatts a device consumes, but also how many hours per month it is on. 6.13 vs 3.6 is good, hard data. Thanx.

Jesus, this is scary stuff. I don't want to screw anyone up in either direction. I don't want guys to move to Pattaya and take a walk off a condo balcony 8 years later because they woke up that day out of money. I also don't want to persuade guys to stay locked in the cubicle with nose to grindstone longer than they need to because this is a formula for driving up their blood pressure and that will take years off their lives every bit as effectively as walking off the balcony. Even if the BP doesn't rise, those are years of life not . . . lived. So I don't tell nobody what to do. I just do numbers. You got 60K in rental income. Good for you and well done, sir. Let's have a look at that money. I hope it is net of all maintenance and vacancies, with both those items sampled over several years. (I think the brits call them voids). 1) If it's not in a zero income tax state like Florida or Texas, you will get about 5% chopped off it. 2) The feds will take their 20% too. So you get to keep 0.75 X $60K = $45000. Unless you already had taxes embedded in the numbers. That $45K is $3750 per month. 3) The number that seems to float around to describe a nicely comfortable life in Pattaya is 80,000 baht a month. That's $2162. You're well covered. You should be able to pop back home to watch over your stuff once in a while with no strain on the budget. 4) I preach at the pulpit here about the dangers of inflation. Well, hopefully you can make your rental income track that. 5) Guy, if you're 50, you have a 30 yr sequence to manage. You have a revenue stream. Presumably you expect Social Security in 12 yrs too at some magnitude. I'll take a guess and say . . . $7000 of 2006 vintage (meaning it will be more dollars in 2018, but they will be equal to 7000 of today's dollars) based on you quitting in your 50's and maybe some future benefit reductions from the gov't. Solve the health care insurance equation and unless there are things not in your post that are relevant, you could be looking at the girls soon. I see you have a job too, and quitting that is bigtime scary, I know. Don't know what kind it is. I will say that I think a lot of jobs, maybe more than even you know, offer some part time possibilities via email. Even if your job is supervising a bunch of people who do inventory at a warehouse, I'll bet 2-3 times per year some task comes in where you have to review written procedures or safety regulations or something and recommend changes to what is written down. No reason you can't do that via laptop and collect a few bux. Another plus to something like that is . . . your resume doesn't die. You have something to put on it for the years when you were a "consultant". If some disaster hit, you could go home and not be out of date and get work. Anyway, I sympathize. I have been on the verge of resigning and becoming a "consultant" for months. It's very hard to shut down a nice salary.

Not new at all, Bob. Actually, it caught attention because the program shut down in 2001 after being in place for 30+ years. Military years of service after 2001 don't get this treatment. This is going to translate into a few hundred dollars per year, inflation adjusted. Not thousands. No one will get rich on this, but it will be a nice addendum for guys that want to splurge once in a while on something extra.

What about health insurance?

Pretty sure I got this right. Housing and subsistence allowance were not taxed. Still aren't. The theory is you may sometimes be forced to live on base and eat on base, if that base is a battlefield. The rule just tosses some SS benefit to folks for being willing to endure that. This is from about.com: "Below are the rates of tax-free housing allowance (Basic Allowance for Housing, or BAH) that are provided to commissioned officers (without dependents) who are authorized to reside off base at government expense." It's not huge, but it's a nice cushion for some bad thing that might befall you, or maybe even a minor luxury to which you might want to treat yourself someday. Anyway, a good thing.

SS has a reduction in benefits, as I recall, if the recipient is getting any other form of federal pension. Or it could be that other pension that is reduced. But in the text that outlines this little bump in SS benefit for military service, there is no mention of anything else. The general answer to your specific question would seem to be no. There are other effects on military pension, but this isn't one of them. The idea is that while military some of your pay was housing allowance and food allowance and no SS tax was extracted from that. At the time you were happy about that, but retirees now wish otherwise. At some point some Congress critter friendly to the military slipped this into a bill and tossed a few dollars per month to veterans.

Write your Congressman and ask. Or watch TV. Both are a waste of time.

There is considerable debate about the accuracy of the inflation index. It is not intentionally inaccurate. The problem is that a few items are holding the overall index down, and mostly they have to do with technology. The price of X amount of computing power costs a fraction of what it did 10 years ago and the CPI properly tries to measure this. The same thing happens in car features. Can you imagine what you would have paid for a GPS in your car 10 years ago? The price of a DVD player or a plasma TV screen has just collapsed in 10 years, and this has to factor into the CPI as a proportion of total US spending. Technology has a huge effect on this. So, the result is we get quoted 2% and 3% inflation numbers while medical care is booming upwards at 7% per year. Or gasoline is booming upwards. But right now we have housing heading down, technology heading down, and some foods are heading down. Average them all together and you get 2-3%. We all got our own inflation rate, but the corrections being applied to the SS number are not outright bad. They are trying to measure things properly. If you don't buy a GPS in your car, you don't see it. If you still are using VHS tapes, you don't see it.

The Florida Guy is right. Soc. Sec. is inflation adjusted. That's $96 2006-dollars. Whatever a 2006 dollar is worth in 23 yrs, multiply it by 96 and that's what they will send you additional each month. Meaning . . . a 1983 dollar is probably worth something like $2 in today's money, so maybe your $96 number will become something like $192 in 23 yrs. That's about 7 barfines. If it's there. 23 is a lot of years for it to stay safe, but that particular pension will be the last one touched because there will be so many voters affected. Your odds are good you'll see some portion of it, if not all.

Yes. Yes.

US military vets. Heads up, in case you didn't know. When you reach Soc. Sec retirement age (or if you already have), if you notify Soc. Sec. that you have military years of service it will increase your pension payout. The form they send you each year showing you how much money you contributed to the system does NOT reflect this additional total. The ssa.gov website describes the formula, but in general it is $1200 more per year of military service. For a nominal 5 yrs of military, this adds maybe $60/month to your eventual pension. It's a nice, unexpected, chunk.

Thanks for the numbers. It's good that the Navy is taking good care of you.

Good numbers, sir. Are you including healthcare in your various miscellaneous categories? And is the 75K pension inflation adjusted. At your age that sounds a lot like Social Security is the pension you're describing -- so thumbs up to you. You're collecting back from all that money you paid in over the years.

Two sides to every story.

early-retirement.org Use their search feature for discussions of various countries. or www.internationalliving.com Others have done this before us -- but my read is that none have done it in our particular socio-economic envirionment. Which is BS phrasing for . . . pensions are going away and people have to figure out how to retire without them and how to get health care.

Not while these boards are around. I pound the keyboard on these threads to inform guys way ahead of time what is coming. There will be no shock effect for guys who read these boards. They can see problems coming and address them long before they see zeros on their ATM receipt and decide it's time to step off a roof. A comment on your phrasing "worrying to think how many farangs sell everything leaving no return route home." I have never understood guys saying "you may want to hold onto that house or condo back home so you 'have a place to come back to'". Of course there are return routes home. As long as airplanes fly and ships sail there is a return route home and it has nothing whatsoever to do with having a house. If you want to go home and you need a place to live, you put your stuff in storage for a few weeks, check into an extended stay hotel for a few weeks and go buy a house. Why is this scary? You don't want to buy a house? Fine. Rent a UK flat. Presto, you have a place to come home to. Guys, you don't have to tie up your money in a house that generates maintenance expense and tenants who take a hammer to your walls and don't pay their rent on time. Sell it. Pocket the money in a bank interest bearing account. Go spend time in LOS. Decide you have to go home. Go home. Take the money and get yourself a place to live. This Is No Big Thing. Maybe the house increases in price faster than bank interest. Maybe not. Even if it does, it may not do so to the extent of covering damages and maintenance and insurance and all the other costs. Anyway -- this idea that if you sell your house you can't return home is kind of insane. Passports work and airplanes fly. Of course you can go home. Home is your country and city. Not a piece of dirt with a structure on it. Thumbs up on your entire thorough approach, guy. You're being careful. Don't do anything rash. If you want to spend a year in LOS, have at it. Just don't expect that year to go on and on without more income.

Usual caveats here. You don't know me. I should not be listened to unverfied. Do your own research. I got no reason to lie to you. I'll do the best I can providing info. blah blah. Search for Eneukman and Soi7 posts on what they spend to live in Pattaya. They are on the ground there. I'm not. I would not presume to quote costs based on my relatively brief visits vs those guys who live there and have learned what constitutes life there. They both took the time and made the effort to provide the data to guys like you and me who are interested. And it's excellent data. Search will help you. Beyond that, as to how to fund whatever numbers you decide are going to be your costs I can offer information. Philosophically, it's important to understand that it need not be Pattaya specific. The picture is much bigger than that. What you're talking about is Early Retirement. 1) You're 40. Instead of 30 yrs for something to go wrong in your plan, you have 40 yrs for something to go wrong. 2) You have apparently a net worth of about 225K pounds? You intend to spend 120K baht per month or 1.44 million baht a year. That's what, about 20,000 pounds? This gives you an annual withdrawl rate from your net worth of about 10%. You have 10X your annual expenditures. Not 25X. Formula for disaster. 3) You are not the first to be shocked that such hefty net worths will not support "retirement". Inflation is devastating. It's also inexorable. 4) Guys on inflation adjusted pensions are the most common mechanism you'll see for retirement. They are at a big advantage and a big disadvantage. Their advantage is their income level now, defining a lifestyle, will be maintained as long as their inflation adjustment maintains. Their disadvantage is that if that's all they are relying on and their pension agency either freezes inflation or shuts off altogether, they have NO HOPE. They must return to work. Guys retiring on assets will always have the hope of big returns to save them if they are in trouble. 5) Opinions are cheap and easy. I got one just like everyone else. You most likely do not have enough money to retire and move to Pattaya. Period. If you try it, you'll greatly hurt your life 15ish yrs from now. You're about half-way there. See if you can manage the other half in the next 10 yrs. 50 is still pretty young.

Guys, focus here. The gentleman makes a good comment. Flexibility of spending can accommodate rental vacancies (I guess you Brits call them voids). This is a much broader concept than simply vacancies. This is about 30 years, people. 30 years for something to go wrong. Suppose a tenant burns a property down. You are on an airplane the next day to get it "sorted out". What's that going to take? Well, you'll be insured, of course, and the coverage will take care of rebuilding. But it won't cover (presumably) loss of rent during the build process. It won't cover the fact that you're going to be paying BOTH rent in LOS if in the middle of a lease there and lodging in the UK during the construction process. You probably can't just up and leave and not pay the LOS rent because you have to keep money in an LOS bank accout for your retirement visa. The landlord will tap it. Should you plan for something as bizarre as a burned down house? No. But in 30 years some kind of disaster is going to happen and you have to have cushion for it. Flexibility is a great thing, but expenses are in two categories -- necessities and discretionary. By definition, you can't reduce necessities. All you can do is drink less and bar fine less and eat cheaper. Don't put yourself in a position where that's necessary. That will be irritation lasting 30 yrs. Now, I will say that there are good studies out suggesting that people spend less, not more, as they age -- despite inflation. Up to you what you think you'll do. The 25X rule of thumb is designed around no flexibility in spending. It is based on spending autopilot of 3% inflationary increase per year. If you're flexible in your needs/wants, that 25 number can reduce. Just not by much.