Updated cost of living in Pattaya ????

[Owen` 2]

100K baht is $2900/month or $35,000 per year. Your statement

 

"70,000 baht a month, which is about what I get (not including money from stock investments and the like)"

 

means your investments need to fund 30,000 baht per month.

 

If "what I get" is inflation adjusted pension, then what you need is enough investments to fund about $900 USD/month. That is $10,600 per year. If your investments are divided approx. evenly between stock market mutual funds and bonds/Certificates of Deposit/Money Market accounts then you need about $260,000 total to cover yourself for the next 30 years.

 

If you drink heavily and smoke, you won't last 30 years so you could get by with less, maybe as little as $240,000.

 

Of you have far less than 250K, you're in trouble and have to cut spending or find a part time job. And do it now, before the recession hits.

[js007 795]

100K baht is $2900/month or $35,000 per year. Your statement

 

"70,000 baht a month, which is about what I get (not including money from stock investments and the like)"

 

means your investments need to fund 30,000 baht per month.

 

If "what I get" is inflation adjusted pension, then what you need is enough investments to fund about $900 USD/month. That is $10,600 per year. If your investments are divided approx. evenly between stock market mutual funds and bonds/Certificates of Deposit/Money Market accounts then you need about $260,000 total to cover yourself for the next 30 years.

 

If you drink heavily and smoke, you won't last 30 years so you could get by with less, maybe as little as $240,000.

 

Of you have far less than 250K, you're in trouble and have to cut spending or find a part time job. And do it now, before the recession hits.

 

Owen,

 

No problem. Do your figures include just the interest and dividends on the capital, or are you factoring in the fact that someone might simply plan to spend down to the last dime and then drop dead? At this point, I have no kids that I know about, and no wife. Suppose I have $500,000 worth of investments yielding, say 4%. That's 20,000 a year, before taxes. That works for now so long as the world economy stays relatively stable and the dollar doesn't tank. At some point, though, I just might decide that I should start spending some of the principal each year. I might as well have fun while I still can, no? I'm 55, but I seriously doubt I'll still be around at age 85.

 

J

[Owen` 2]

Owen,

 

No problem. Do your figures include just the interest and dividends on the capital, or are you factoring in the fact that someone might simply plan to spend down to the last dime and then drop dead? At this point, I have no kids that I know about, and no wife. Suppose I have $500,000 worth of investments yielding, say 4%. That's 20,000 a year, before taxes. That works for now so long as the world economy stays relatively stable and the dollar doesn't tank. At some point, though, I just might decide that I should start spending some of the principal each year. I might as well have fun while I still can, no? I'm 55, but I seriously doubt I'll still be around at age 85.

 

I have babbled about this extensively in the archives.

 

First, and foremost, you must not put all your money in CDs or Money Markets yielding 4%. If you do that, you will run out of money.

 

You cannot understand this unless you first embed deep in your gut an acceptance of one critical concept:

 

My Costs Today Must Not Be The Only Basis Of Calculations. Inflation Decides Everything.

 

The magic number is 4-5%, depending on whether or not you will get another pension input at age 65(6) (social security in the US, the UK calls it state pension, I think). If you will, you can move that magic number up between 4.5 and 5%.

 

That number means this: A profile of both stock and interest rate histories from the year 1880 to present shows that if you divide your investments roughly 50% stocks and 50% "bonds" (CDs) then you can take 4.5ish% from that nest egg in year one, increase the amount withdrawn each year by inflation, and not run out of money over a period of 30 years (95% confidence -- meaning 95% of all 30 yr segments since 1880 did not run out of money using that procedure -- and 5% did).

 

If you take more, you will run out in maybe 50% of 30 year segments. If you have 100% CDs and no stocks, you will run out in 50% of segments. If you have 100% stocks and no CDs, you run out in 40% of 30-year segments. Stocks protect you from inflation. You have to endure the risk they represent to buy that protection.

 

All this depends on history repeating itself. It is a WORST CASE analysis. You are extracting an amount that would leave you with money on day of death in 95% of historical cases. If you live longer than 30 years, 4.5% will be too high. If inflation proves higher over the next 30 years than the historical norm then 4.5% will prove too high. If you die in 20 years, or if inflation is low over the next 30 years, you are going to die rich. You cannot know what will happen, but this procedure is a very structured and well reasoned approach that is frankly the ONLY method available to nest egg retirees that has a rationale behind it not designed to make money for some annuity salesman.

 

So you see your question about drawing down to die at zero (everyone's goal) is addressed by this procedure. It's all a matter of probabilities and not certainties. You cannot compute it precisely because you don't know what inflation will be in the future and therefore don't know your costs. And you don't know your date of death.

Edited July 11, 2007 by Owen`

[Munchin glad rags 0]

.

 

So you see your question about drawing down to die at zero (everyone's goal) is addressed by this procedure. It's all a matter of probabilities and not certainties. You cannot compute it precisely because you don't know what inflation will be in the future and therefore don't know your costs. And you don't know your date of death.

 

 

Great post Owen, however flawed he can do his money as he is maybe pull some capital out, if he runs out in 20 he does the dive, no money date of death when money runs out.

 

Succesfull strategy and a winner -

[soi6 0]

Owen' is right.. I've also been researching this.. As have thousands of others 4%...30 years....

 

Here is a site with more detailed info etc...

 

http://www.retireearlyhomepage.com/novtips.html

 

http://www.retireearlyhomepage.com/safesum.html

[Owen` 2]

The early retirement forums have become too conservative. Do not embrace them too firmly. There are no shortcuts on this. You have to understand what is going on.

 

The 4% number ONLY applies if there is no pension at all in the future (social security or state pension). If there is to be such a thing, the number can elevate. This is not quibbling. 4% of 500K is 20K/yr in year 1. 4.5% of 500K adds $2500/yr to what you can safely spend. If the lump sum is higher, the fractional % is even more powerful.

 

There is also a study addendum by Guyton that shows an asset behavior profile that can add a full additional 1%. The folks on the early retirement sites lose their objectivity on that. Somehow, 4% seems correct to them and 5% does not, for whatever reason.

 

At 5ish%, life can be pretty damn good for 30 years.

[m_right 0]

Have to take into account currency devaluations like the USD and inflation.

[Eneukman 1]

Have to take into account currency devaluations like the USD and inflation.

 

Very true as well as bearing in mind that inflation in Thailand may be higher than that in your home country. I'm only 52 so just don't feel comfortable drawing on capital just yet. Maybe when I get to 70, I'll think about it as the chances of living to 100 are remote.

 

Alan

[Owen` 2]

Guys,

 

Currency fluctuation is presumably cyclical. If you want to undermine its effects, you could entrust some portion of the 50% bond asset allocation niche to CD or Money Market equivalents at Thai banks. But in general, currency fluctuation being cyclical makes it negligible over 30 years. If it's not, it's not. That is just one more unknown. It does not undercut the structured nature of the analysis. Most of the calculators using the historical numbers give you a choice of using historical inflation, or specify your own. You can nudge the inflation number to reflect your projection of the upcoming 30 years of currency fluctuation.

 

And in the category of "Really Weird", here's some help predicting your date of death:

 

http://www.telegraph.co.uk/news/main.jhtml...1/nmoles111.xml

Edited July 12, 2007 by Owen`

[touristman 1]

Guys,

 

Currency fluctuation is presumably cyclical.

 

Not this time Mr Owen.It's a brave new world out there.

 

I do, however, applaud all your other comments and am aware that my above line is only an opinion.......but even so........DOWN, DOWN, DOWN, Dollars going down (long term!)

[Rumbler 0]

I never intend to reveal my real name on this board so I can be really real here.

 

I am 48 divorced no kids I hate my life here and if I cash EVERYTHING up I come to UK£720,000. Most of this is the totally ridiculous price some damn fool will apparently pay for the hovel in Fulham I live in.

 

At 6% thats 217,000 a month for which I assume I could live like a king.

 

BUT its that old fear in the back of your mind, giving up the well paid job I hate but fought so hard to get, how long will I live, I sure don't want to be old and poor, maybe just a few more years in the saddle.

 

I think I have way enough money for life until death in Thailand but its just taking that plunge...

[Owen` 2]

Rumbler, there are words in the US that address this issue:

 

Semi-retirement

Consultant

Director (as in sit on the board)

 

The point being, SELL YOUR HOUSE. Get that money in your pocket in case some collapse occurs. Then rent someplace posh while you work out a part time arrangement at your job, or consult via email from afar. If you have a board seat, plan to commute quarterly from Thailand for meetings (and have them pay the airfare and you collect the frequent flyer miles).

 

In other words, maintain a connection to the job so it doesn't feel like you are chopped off, and then ease your way to comfort with the idea of chopping that umbilical.

 

Don't plan on 6%. That's a tad high and inflation will eat it up eventually. Do what you need to do to participate in stock shares in the UK and divide up your 700+K pounds among stocks (provide inflation protection), bank accounts, whatever.

 

At 700+K pounds, assuming you have no alimony (ex spouse support) and your kids don't have college tuition demands on you, you can plan on spending 31.5K pounds per year and not run out for 30 years. Assuming you have a state pension coming.

Edited July 16, 2007 by Owen`

[touristman 1]

I never intend to reveal my real name on this board so I can be really real here.

 

I am 48 divorced no kids I hate my life here and if I cash EVERYTHING up I come to UK£720,000. Most of this is the totally ridiculous price some damn fool will apparently pay for the hovel in Fulham I live in.

 

At 6% thats 217,000 a month for which I assume I could live like a king.

 

BUT its that old fear in the back of your mind, giving up the well paid job I hate but fought so hard to get, how long will I live, I sure don't want to be old and poor, maybe just a few more years in the saddle.

 

I think I have way enough money for life until death in Thailand but its just taking that plunge...

 

Owen answered very well IMO, but he should have added ''YOU JAMMY BASTARD!!!!!!'' (except for the 'hating your life' there bit).

 

I know what you mean though..........i 'took the plunge' after travelling the world for a year.Good job, house, car etc............but after a year out i just didn't want to go back to it.I was 30 then though and well aware that it was dodgy long-term.That was 5 years ago........and so far, no regrets (fingers- crossed though).

[jacko 8,827]

I never intend to reveal my real name on this board so I can be really real here.

 

I am 48 divorced no kids I hate my life here and if I cash EVERYTHING up I come to UK£720,000. Most of this is the totally ridiculous price some damn fool will apparently pay for the hovel in Fulham I live in.

 

At 6% thats 217,000 a month for which I assume I could live like a king.

 

BUT its that old fear in the back of your mind, giving up the well paid job I hate but fought so hard to get, how long will I live, I sure don't want to be old and poor, maybe just a few more years in the saddle.

 

I think I have way enough money for life until death in Thailand but its just taking that plunge...

Listen pal, being miserable is no way to live. Your numbers and age uncannily match me nearly 3 years ago... I live in Thailand. Whilst 6% is optimistic at the moment, certainly for a cash deposit, I see 217,000 baht/ month easy for you. I still have my original capital after nearly 3 years.

 

Whilst living off the interest is probably more secure, do you realise you could live here for nearly 20 years without any?

 

At 65 a pension should kick in too. If you have a good enough head on your shoulders, you would be fine.

Edited July 20, 2007 by jacko

[lostinpattaya 0]

So really the magic number is about 100,000 baht a month which is about 2500.00 a month US $$

 

Thats quite bit a money.Hell many folks live fairly well on that in the usa ESP if you have No mortage.

I spend 6 months each year in Pattaya and 6 months in Australia.In Australia my expenditures are far less than when I am in Pattaya. In Pattaya I like to golf most days and drink in gogos everynight .I try to budget at 120000B per month in Pattaya.But I am always overbudget.

[Munchin glad rags 0]

Listen pal, being miserable is no way to live. Your numbers and age uncannily match me nearly 3 years ago... I live in Thailand. Whilst 6% is optimistic at the moment, certainly for a cash deposit, I see 217,000 baht/ month easy for you. I still have my original capital after nearly 3 years.

 

Whilst living off the interest is probably more secure, do you realise you could live here for nearly 20 years without any?

 

At 65 a pension should kick in too. If you have a good enough head on your shoulders, you would be fine.

 

 

I have heard a lot of people like the Op, some guys work hard to get in well paid positions walking away from a fat pay check is hard.

 

Even if he has 217,000 baht in his job and house equity etc he id probably making double more likley 3 times that in UK- Who wants to take a 65% income cut-

 

I would say sort your life out in UK, but if you hate your job go for it

[jacko 8,827]

Who wants to take a 65% income cut-

Yeah, wait until you are 65 and take a bigger cut! When you work, you are selling your time..... as you get older it should be worth more to you than to some employer.

[rambo 0]

'Rumbler'....

 

I say bollocks!! You have to live for today. You dont know whats around the corner so playing safe is NOT an option.

 

They say that 'its when you feel at your most safest, that you actually are at your most dangerous/vunerable'

 

Think on young man!! 750k will see you a very very long time in LOS!

 

Its a no brainer.....what you gonna do.....stay in Fulham and in your job for the next 10 years of your life and be miserable. You will NOT get those years back!

 

Try not listen to the 'Yanks' on this board. They are the masters of investing/stock market/interest paying scheme's and you gotta hand it to them. But your dogone British my son, and that makes you a free-spirit so fly......!!

 

R.....

Edited July 20, 2007 by rambo

[Emil 0]

Question for Rumbler,

 

Would the UK taxman want any of your interest earned, I know Uncle Sam would want his share.

 

I agree that you must live for today and not be too conservative. I had a very good friend who I went to school with and was just a few months younger than me. His plan was to for him and his wife to retire in 2006 at he age of 60, sell their home and then buy a motorhome and travel across America. He was diagnoised with liver cancer in January 2006 and died in April 2006. Nothing is guaranteed.

[jacko 8,827]

Question for Rumbler,

 

Would the UK taxman want any of your interest earned, I know Uncle Sam would want his share.

 

I agree that you must live for today and not be too conservative. I had a very good friend who I went to school with and was just a few months younger than me. His plan was to for him and his wife to retire in 2006 at he age of 60, sell their home and then buy a motorhome and travel across America. He was diagnoised with liver cancer in January 2006 and died in April 2006. Nothing is guaranteed.

He might want some but he doesn't get any of mine! Actually the rules differ UK and USA. Once non-resident status is achieved and declared you can get your interest tax free. I have been out of the UK ages, but am unsure how long it might now take to achieve this status, as the rules have changed.

[rambo 0]

Question for Rumbler,

 

Would the UK taxman want any of your interest earned, I know Uncle Sam would want his share.

 

I agree that you must live for today and not be too conservative. I had a very good friend who I went to school with and was just a few months younger than me. His plan was to for him and his wife to retire in 2006 at he age of 60, sell their home and then buy a motorhome and travel across America. He was diagnoised with liver cancer in January 2006 and died in April 2006. Nothing is guaranteed.

 

 

You ALL gotta listen to Emil! I am not saying to be reckless.....rather to not be wrapped up in your 'safety net'. You do know about 'nets'?......They will always break eventually!!

 

'Balance' is whats required. I took what Emil stated about his friend(and stories like it) with a big jolt!!! I tell you, if I had 750k....in fact.....if I had 50k.....I know where I would be spending it!!

 

I think I might start a thread on this to maybe kick-start myself and others into thinking......HOW LUCKY WE REALLY ARE COMPARED TO SOME FOLK LESS FORTUNATE!!

 

 

R........

[Owen` 2]

Another 2 cents.

 

First off, the 720K+ UK pounds guy is not thinking numerically. There is no risk of running out of money. The problem he has is when someone asks him "what do you do for a living", his reply is "I am a . . . "

 

 

He is a . . . . That's what he is. Vice president of finance for whoever. VP of something for whoever. General counsel for whoever. Comptroller of whatever. He IS that. And when he quits he is . . . he thinks . . . nothing.

 

This is not a Pattaya matter. This is an early retirement matter. A lot of guys have to deal with it. Maybe the ultimate such situation is Neil Armstrong. The day he got back from the moon he was not an astronaut anymore. In fact, I don't think any of the three on that crew flew again. They were retired and they were not even 50.

 

It happens for athletes, too. They get "retired". Then what are they?

 

I suppose they all can spend the rest of their lives as "the former" this or "the former" that. Some move on and become something else. Some hit the speakers' touring circuit and actually turn "the former" this or that into a career in and of itself.

 

And so might we. We might find ourselves doing something else and "becoming" something else.

 

So of all the reasons there might be not to pull the retirement trigger this is probably the weakest.

Edited July 21, 2007 by Owen`

[Tengotodo 52]

I like this topic very much and have found the information very useful as I have of late played with the idea of cashing it all in when I'm 55 and moving to Thailand. I suspect before I actually do it though, I will rent a condo in Thailand for 1 year and play it all out. sometimes the grass only appears greener on the other side of the fence. I have seen people "retire' to Pattaya and age 10 years in as little as 2. More things to consider than JUST money?

[dacah 0]

Yes i would like to agree with Owen on his perspective on ...retirement.

 

I am a "former" antiques dealer....

 

I sold up shop and am still selling the remaining contents.....

 

I still get called to do valuations...write a few pieces for the local papers ....bits and pieces..not enough to keep me going full time.

 

I thought that in Thailand I might find "real" antiques ....

 

maybe find the things I used to specialize in...Chinese and Japanese works of art....

 

Not to be....

 

Trawling through the amount of "Reproductions" and "Fakes" in LOS has yeilded ...nothing ...nada....

 

I have enough income from investments to retire in LOS....I am 56....

 

But ...I am afraid to make the move ....

 

I cannot imagine my self not having an occupation...one that I enjoyed

 

So of all the reasons not to move...that IS my major one,

 

As for the money side of retirement in LOS...the Thai Goverment says you need a minimum of 65000 baht a month for a single man....

 

40000 baht if you are married to a Thai !!!!!

 

Personally I would double that figure on both counts...and live reasonable well.

Edited July 21, 2007 by dacah

[jacko 8,827]

(dacah)...Trawling through the amount of "Reproductions" and "Fakes" in LOS has yeilded ...nothing ...nada....

Might try my TGF's mother's house. Looks like a scruffy antique shop... Edited July 22, 2007 by jacko