Early Retirement or work another 5 years?

[sinbinjack 251]

I know guys that have lived in Pattaya for years on pensions of around $1,000USD. Another guy in Chiang Mai living on less than that.

 

Would most us want to live like they do...? Probably not but I suspect many do.

I dont know where some of you guys are from but my guess is that some at least are from Mars the very most I have ever earned was 4 years ago and the year end total was just over £21000(inc overtime) before tax as I am now disabled and cant work i live on £10000 but this includes extras because I am disabled (over£2000 a year)many people live on much less than this and most pensioners get less than £100 a week so get real like it or not not everyone is expecting an easy ride in retirement and an income of £200a week in pattaya might look very interesting to a lot of people

[Soi7 1]

Bottom line: If you're reasonably happy now, you'll probably be happy in Pattaya. And if you're depressed now, Pattaya will have little effect in the long run.

 

This is very true My life or the first 3 months in pattaya mirrors my life in the states If you are unhappy at home in the long run you will most Likely be same same here.

[wagger 0]

ummmmm i like this thread... it ask many questions that i have been struggling with about when to cut and run.

 

I have had the spreadsheets churning and checked out the trinity study but i'm coming up with 2 different results when comparing an asset base converted to annuity's vs a drawdown plan using Trinity at 4% initial with a 3% annual increase. My target income would be £24K and the annuity route plan assumes finishing work at 50 and converting to annuity at 65 needs a pot of £700K where the Trinity calculation suggests i only need £600K.

 

Maybe i have some assumptions not quite right but is there a specific reason why they should be so far out?

[Owen` 2]

I have had the spreadsheets churning and checked out the trinity study but i'm coming up with 2 different results when comparing an asset base converted to annuity's vs a drawdown plan using Trinity at 4% initial with a 3% annual increase. My target income would be £24K and the annuity route plan assumes finishing work at 50 and converting to annuity at 65 needs a pot of £700K where the Trinity calculation suggests i only need £600K.

 

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.

[wagger 0]

ahhhhh yes!

 

I think you could be spot on there, i completley forgot about the charges associated with annuities and i know they are significant.

 

Thanks for that, it helps me understand my model a bit better.

[Bazle 1,480]

ahhhhh yes!

 

I think you could be spot on there, i completley forgot about the charges associated with annuities and i know they are significant.

 

Thanks for that, it helps me understand my model a bit better.

I have yet to read about Trinity but is it a stupid question to ask whether the £24K you quote is spending money (net income) or gross (before tax has been deducted)?

 

Calculations I have done in the past have been hugely influenced by tax. Eneukman will tell you from his recent experience that if you are receiving a UK pension whilst living in LOS, you will still have UK tax deducted from it.

Edited September 18, 2005 by Bazle

[wagger 0]

hmmm you raise a good point, i have not discounted the tax issue but my model is fairly simplistic at the moment.

 

£24K is a net target figure and 60% of my cash has already been taxed (or will be when i take the cash free lump sum) so i will be exposed to tax on the annuity and state pension income at 65.

 

I know i will have to build this factor in but my rationale at the moment is that i will need more cash in the early years rather than later when naturally you begin to slow down.

 

My key driver in this exercise is make sure i use up as much as possible as i don't have any heirs to pass onto and i don't want the tax man to take anything if i can help it. On the other hand i don't want to run out!

 

It doesn't seem to be a very precise science this retirement planning LOL.

[BigDUSA 71]

It doesn't seem to be a very precise science this retirement planning LOL.

Actually it's quite simple. Spend less then what you make.

Edited September 18, 2005 by BigDUSA

[Eneukman 1]

Wagger, the income you're seeking is virtually the same as I expect my income to be (after tax) once I'm able to invest the sale proceeds of my flat next month. I'm relying on my private pension, dividend income and bank interest to provide me with a sufficient income rather than going for annuities etc. I will get a 2nd pension when I'm 60 but as contributions were only made to this one for 3 years it's not going to be worth a lot even in 10 years time.

 

Back in January, I came up with a monthly budget of around 80,000 baht per month. I'm keeping track of what I'm spending this month and so far reckon I'll be inside this.

 

I took the option of a tax free lump sum when I got my pension and bought some Rank Group shares with it. After going down initially, , the shares have performed extremely well and are now 10% higher than the price I bought them at. Let's hope that the shares I buy next month will perform as well.

 

Alan

[Owen` 2]

Quoting from several (Wow, you guys post while the US sleeps! We must be slackers!)

 

Calculations I have done in the past have been hugely influenced by tax. Eneukman will tell you from his recent experience that if you are receiving a UK pension whilst living in LOS, you will still have UK tax deducted from it.

 

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.

 

 

My key driver in this exercise is make sure i use up as much as possible as i don't have any heirs to pass onto and i don't want the tax man to take anything if i can help it. On the other hand i don't want to run out!

 

Dying the minute you spend your last shilling, eh? I like this idea.

 

 

 

Actually it's quite simple. Spend less then what you make.

 

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".

[galt67 2]

Here's an EASY way to formulate how much you need to retire on:

 

Take 25X your ANNUAL Pattaya living expenses--

 

Hypothetically--

 

You need 60,000B per month to live happily (720,000 annually)

 

Take 25X720,000B=18 million Baht is the TOTAL 'nest egg' you'll need

 

Assumes the following:

 

1-A 50/50 mix of bonds, stock market index funds

2-Adjusting annually for inflation (US CPI)

3-Is the NET (after tax) income

 

One way to implement is to have 20% of the TOTAL in 'laddered 1-5 year CDs' with remaining 80% split as stated above.

 

Regarding US taxation, their are several states that don't have a State income tax besides Nevada. Florida, New Hampshire, Texas, Tennessee, and Alaska also do not.

 

Also, if your yearly income is below $30kUSD (see above) you'll probably owe little if any taxes--even filing 'single'.

[4Reel 0]

Any comments with this retirement scenerio would be appreciated.

 

I am single, 63 years old and live in USA and receive $1300 or 52,000 bht per month.

 

I have $75,000(3 million bht) in IRA mutual funds and 50 % of that in a S&P 500 index fund.

 

Before moving to Thailand, after age 65, I would sell my home and have a minimum of $125,000(5 million bht) equity from the sale.

 

This will give me $200,000(8 million bht) most of which will be securely invested and some in stocks for speculation.

 

I am a frugal person and have experience in the monger scene. I really don't like women except for sex and maybe a little companionship. I'm a gfe type but also a lovem and leavem type.

 

The one area that I have to figure out is medical insurance.

 

In the next 2 years and trips to LOS, I will consider getting a TEFL to teach English plus computers/electronics. I'm an electronic engineer with a BS degree.

 

What do you all think? Any suggestions?

 

4Reel (Lovem and Leavem)

[Owen` 2]

I am single, 63 years old and live in USA and receive $1300 or 52,000 bht per month.

 

I have $75,000(3 million bht) in IRA mutual funds and 50 % of that in a S&P 500 index fund.

 

Before moving to Thailand, after age 65, I would sell my home and have a minimum of $125,000(5 million bht) equity from the sale.

 

This will give me $200,000(8 million bht) most of which will be securely invested and some in stocks for speculation.

 

I'll wing a quick financial analysis of the above data. I will let the other guys tackle the medical insurance issue and the English teaching issue since I have no idea how that works. As a EE I would think you could find a company in the states to outsource some emailable work to you, perhaps reviewing competitive proposals the company might be preparing. Or even reviewing designs. Companies like to pay independent people to do such reviews. It costs them no SS, no benefits in general and you're not on the payroll.

 

Okay, from your data above, the first question is where is the $1300 coming from? Is that your age 62 "early" social security payout? If so, it won't get any bigger other than from inflation adjustments.

 

You also talk about things happening at age 65. That means you have 2 more years to do . . . something. Are you working? If so, adding to the 200K nest egg would help.

 

But let's just make assumptions and crunch numbers.

 

Let's assume that is $1300/mo AFTER TAX. That is $15600/yr and if it's from SS it is inflation adjusted per US CPI inflation annual numbers. A poster did mention above in the thread that US inflation is not likely to be equivalent to Thai inflation and Thai inflation will be worse. This should not be a huge issue, but it does exist and it is a risk.

 

The 200K at . . . (AFTER TAX) 4.5% withdrawl adds 9000 to your 15.6K. Don't panic about the after tax thing. If your IRA is a Roth there is no tax. Anyway, that's a total of $24,600/yr of spendable income in LOS. There seems to be some disagreement in general as to whether or not this would be "enough" in Pattaya. If not, the other jobs you might seek will have to get you to the final target number. I sure hope other guys weigh in on this "enough" thing. That's not clear at all.

 

One other thing. At age 65 . . . the Trinity study based 4.5% is probably too conservative for you. Thirty years for you takes you to 95. Possible but not likely. This means you could yank out 5% or maybe even 5.5% and your risks of running out of money are possibly acceptable. 5.5% withdrawl would increase your Pattaya spendable money per year to $26,600. That should translate to fewer English lessons taught, no pun intended.

 

[landy2a 0]

To any Australians contemplating early retirement, please don't!!!!

 

 

 

I need your tax dollars rolling in to support my pension so I can keep enjoying early retirement in Thailand. LOL

 

John

[4Reel 0]

Thanks Owen,

 

I do have a company that I consult for the last 2 years for work in SE Asia countries. This work has brought me to Thailand several times in the last 2 years. I could have an additional $8 - $12, 000 per year income until I am 70. It would be either that or teaching.

 

You were correct in assuming SS income of $1300(52,000 bht) / mo.

 

Based on your analysis I would have a minimum of 86,000 bht per month.

Using the better than typical 1/4 rule for housing, I could afford a 2 bedroom apartment for 21,500 bht per month.

 

The medical insurance is still a problem.

 

I am also looking into retiring in Cost Rica which will solve the insurance issue but will be more expensive to live and monger in. The trips to USA will be 1/5 the cost. I would plan to return to USA on an average of 1.5 times per year to see my family.

 

Any other thoughts, anyone?

 

4Reel

[BigRobo 0]

If you have £15,000 to £20,000 a year available you can live good

 

[BigDUSA 71]

Health insurance is available here. Cost around $3-500USD per annum. Age goes to 70 I think?. I would start getting every major body system checked out. It's a good idea to know what condition your condition is in before you come here. My HMO will pay for health care in LOS. I pay up front get a bill submit it and they will reimburse me.

 

Do a google on BUPA.

Edited September 20, 2005 by BigDUSA

[Owen` 2]

Health insurance is available here. Cost around $3-500USD per annum. Age goes to 70 I think?. I would start getting every major body system checked out. It's a good idea to know what condition your condition is in before you come here. My HMO will pay for health care in LOS. I pay up front get a bill submit it and they will reimburse me.

 

Do a google on BUPA.

 

Thanks for this data, guy. This is really important for the Americans. I imagine the UK guys have their government health care that covers them, but Americans pay this out of pocket.

 

Did you say 300 to 500 dollars PER YEAR? That's not a typo and you meant 3000 to 5000 dollars? What is covered for 3-500 dollars per year.

 

Your HMO (from the US) covers you in Thailand? Isn't this unusual? And do they cover only some certain percentage of something? I will google BUPA, but if you can get coverage in Thailand for 3-500 bux, why have an HMO? Isn't that a lot more expensive?

[Eneukman 1]

If you have £15,000 to £20,000 a year available you can live good

 

£15,000 per annum equals about 90,000 baht per month, which will give you a very good standard of living. You do, however, need to factor in the cost of visits back to farangland etc, though apart from visits to family why would you want to go back?

 

Rent is probably the highest cost most people have (I'm paying 20,000 baht for a double room in View Talay - though I saw a studio flat on the floor above advertised at 25,000 baht per month ) and you pay for what you want. I prefer having a bit extra space and don't mind paying a few thousand baht extra for that priviledge. If you're content to rent a studio condo, that can save you several thousand baht per month. Not for me though.

 

Also, it is my intention to escape the madness that is Songkran each year which will add a bit to my costs. However, that's my choice!

 

Alan

[wacmedia 277]

You do, however, need to factor in the cost of visits back to farangland etc, though apart from visits to family why would you want to go back? 

 

Hi

 

Think I would ask them to drop in on me as there would be no surprises fron their point of view (my reputation preceeds me). . Try to do any business on line. Would be a nicer break for them, than for me in farangland.

[BigDUSA 71]

Owen,

 

As a retired postal employee, I pay $100USD per month for family coverage including prescription drugs. HMO covers 100% of medical costs in LOS. BUPA insurance is cheap and has various levels of coverage. Cost is $3-500USD per annum.

 

Civil servants take care of civil servants.

[Owen` 2]

Owen,

 

As a retired postal employee, I pay $100USD per month for family coverage including prescription drugs. HMO covers 100% of medical costs in LOS. BUPA insurance is cheap and has various levels of coverage. Cost is $3-500USD per annum.

 

I must have done something wrong. The BUPA website provides an online quote that does not force you to wait for anyone to call or anything like that.

 

I picked their lowest level coverage. I'm 50. I specified living in Thailand.

 

With $400 deductible, they quoted $1200 per year. That's not so bad, but it's not 3-500. I must have done something wrong. Maybe a higher deductible gets it down to $500.

[BigDUSA 71]

Owen,

 

I had a quote from them two years ago and I may have remembered the quote wrong. Sorry if I mislead you.

[4Reel 0]

I just called BUPA and for me at age 63, the premium for me living in the US would be $405.15 per month. It would be a little cheaper if I lived in Thailand, maybe by $50(14,200 bht per month).

 

4Reel

[Stretch 0]

I have yet to read about Trinity but is it a stupid question to ask whether the £24K you quote is spending money (net income) or gross (before tax has been deducted)?

 

Calculations I have done in the past have been hugely influenced by tax. Eneukman will tell you from his recent experience that if you are receiving a UK pension whilst living in LOS, you will still have UK tax deducted from it.

The uk tax on a pension payed outside the UK is about 6% will check with my mate who is receiving his in germany. At the age of 40. 5 more years till i can draw my pension :).........

 

This si on a military pension unsure if it differs for other pension types but i shouldnt think so.

 

Cant wait but dont think ill have enough to live in LOS but seriously looking at the options.