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50 and ready to go soon. Or am I?
Old 06-08-2014, 07:50 PM   #1
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50 and ready to go soon. Or am I?

Dear all,

Here is my strategic info for starters:

We are:
- Me 50 years old still working
- DW 30 SAHM
- One child 1 yo (yeah, I am a late bloomer)

Current portfolio:
- 401(k) and IRAs: $500k
- After tax investments: $900k
- Employer stock options ready to exercise now: $200k (estimated aftertax)

Our plan is to retire by end of 2015 and relocate our family to DW's birth country of the Philippines. Our current annual expenses are well below $40k, and we have estimated our post retirement expenses drop down to $28k per year when excluding our child's education expenses. This level should be enough to keep our material standard of living at the current level, but with the obvious massive increase in my quality of life as I will be retired.

The rough finanical plan is following:

The after-tax assets and options will go to:
- emergency fund $50k
- income producing fund Wellesley $1M
- the rest roughly $100k to 150k to be held in something stable with the emergency fund and to be used for a house purchase couple of years down the road once we are 100% sure we will stay in the Philippines for the foreseeable future

The pre-tax portfolio of $500k will remain in growth funds until eventually needed
- for our child's education
- for the plan B if things in the Philippines go sour and we choose to move back to the USA or to some other country with higher cost of living.

Additional points to answer some of the most obvious questions:
- Health care after retirement: Fairly low cost decent quality care is available in the Philippines. We will either take a local health insurance or pay as we go or the combination of the two.
- While living in the Philippines is certainly not for everyone, we know quite well what we will be getting into when moving there. DW lived there her first 24 years and I have spent extensive time there for work and vacations over the past 10 years.
- Theoretically, I will be getting $1300 per month from social security and $1000 per month pension starting age 62, but since it is still 12 years I am not really counting on either
- The cost of education is mostly for giving our child an option to enroll in a western university after graduating high school in the Philippines. The quality of schools in the Philippines is a concern, but we are planning to fill the gap by homeschooling a couple of hours per day.

This kind of plan is not something I can easily test with Firecalc or other financial calculators, but based on my best efforts the numbers seem to work. Regardless, I am here to get some constructive criticism and recommendations on the aspects of our financial plan.

Happy to be here!
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Old 06-08-2014, 08:32 PM   #2
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Having spent about half my working life as an expat, my advice is that you never know what is like to live in a place until you've actually done it - visits and vacations just aren't the same thing. I think before setting off on this adventure you need to test it - I.e. Don't burn any bridges until you've found a way to try out living there for at least six months. Maybe ask for a leave of absence based on some made up family need of your wife's?
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Old 06-08-2014, 10:51 PM   #3
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Originally Posted by Dd852 View Post
Having spent about half my working life as an expat, my advice is that you never know what is like to live in a place until you've actually done it - visits and vacations just aren't the same thing. I think before setting off on this adventure you need to test it - I.e. Don't burn any bridges until you've found a way to try out living there for at least six months. Maybe ask for a leave of absence based on some made up family need of your wife's?
Well, the only bridge I will be burning is with my current employer. They would never approve a year long leave of absence for any reason, and anything shorter would be pointless as I have spent months in the Philippines in the past with my previous job. As my technical speciality is in very high demand right now, I should be easily employable within my industry for at least 2-3 years after departing from my current job, so I am not too worried about that part of the Plan B.

I did my previous relocation from Europe to the USA 25 years ago just after one short prior visit here, and certainly did not have option for "test-living" in the USA before taking the plunge. At this point I feel I'm much better prepared for our move to the Philippines, yet if things don't work out to our satisfaction there we have lots of countries left to try after that.
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Old 06-08-2014, 11:05 PM   #4
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You can do it.
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Old 06-08-2014, 11:19 PM   #5
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I agree with Dd852 - having spent the past 27 years working in developing countries (including in South East Asia), I would give it a try for 12 months first.

Rent a house in the area you plan to settle in before you actually move there. Not sure of you are planning on moving to the area your wife is from but if so, that could be very different from the area where you stayed when you were working in the Philippines previously. Also, having the wife's extended family around on a regular day to day basis can make a difference (good and bad).

Not clear if you have a house in the US but I would hold off selling that until the satisfactory end of your 12 month due diligence period.
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Old 06-09-2014, 12:21 AM   #6
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Originally Posted by Aus_E_Expat View Post
I agree with Dd852 - having spent the past 27 years working in developing countries (including in South East Asia), I would give it a try for 12 months first.

Rent a house in the area you plan to settle in before you actually move there. Not sure of you are planning on moving to the area your wife is from but if so, that could be very different from the area where you stayed when you were working in the Philippines previously. Also, having the wife's extended family around on a regular day to day basis can make a difference (good and bad).

Not clear if you have a house in the US but I would hold off selling that until the satisfactory end of your 12 month due diligence period.
No house. We are currently renting. And as I indicated in my first post we have no plans on buying a house in the Philippines for a couple of years yet. The way we are living our life there is really no difference in between moving there for 12 months vs 12 years. Outside our financial life we really don't have much else tying us to the USA after we move, which will give us a full freedom to choose our next country if our life in the Philippines is not fun enough. Actually it is my Filipina DW who has some family and relatives in the USA and obvioiusly much more in the Philippines. I have zero in either country.

Oh, and I am very well aware of the impact of the extended family in the Philippines. Thus we are going to be living in Negros Oriental province while DW's family is in Leyte and Manila.
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Old 06-09-2014, 04:39 AM   #7
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Ok, you seem to have it planned out and smart move to keep some space between you and the wife's extended family.

Is there much of an expat community in Negros Oriental province (so not familiar with it)?
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Old 06-09-2014, 01:37 PM   #8
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Is there much of an expat community in Negros Oriental province (so not familiar with it)?
Dumaguete has a relatively large expat (retiree) community primarily Europeans. Our plan is to find a place in the outskirts of the city, but frankly I have never been into socializing with other expats that much. I have been an immigrant in the USA for close to 25 years now, and never tried to form contacts with other immigrants from my country of birth, or from any other country for that matter. But who knows this time it might be different since I will be retired, so I might learn to like listening other foreign retirees complain how things were better in the "old country". Or not!!
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Old 06-09-2014, 02:15 PM   #9
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I am always amazed at people who can live on less than $2,500/month including healthcare, housing and the occasional unexpected expense (transmission goes, you need some sort of surgery, you have an accident and have to pay a deductible, etc.). I'm not saying that it is inaccurate, I just cannot imagine what it would take to get *my* expenses to that level... property taxes, healthcare, insurance (car, home) add up to about $2K/month, and that is before I have eaten one meal. My only caution is to make sure you are properly accounting for all possible expenses. Sounds from your post that you have, however. I say go for it.
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Old 06-09-2014, 03:04 PM   #10
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silly question regarding expenses--will you be supporting your DW's family in any way once you relocate? I've been to PI and Thailand and have seen the strong family "pull" in regards to finances. I found my expenses on both countries to be about 1/3 of the U.S. so you'll be golden there. Cheers.
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Old 06-09-2014, 06:20 PM   #11
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EasyAsianFrog,

Seems you got more than enough to retire. The challenge is, perhaps, holding on to your asset in a foreign country where you are at a disadvantage against local con men crowd. Good luck & best wishes.
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Old 06-09-2014, 06:24 PM   #12
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Run Firecalc with US market returns (since your assets will be here) and inflation numbers you're likely to encounter in the Philippines.

Another aspect to consider - the standard of living in the Philippines will improve in time & probably at a rate much faster than the US. Maintaining your current standard of living will have you lagging behind everyone else.

My personal experience has been with India & I am amazed at how fast the standard of living for the middle-class is improving & with it, the cost of maintaining an "average" middle class lifestyle.
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Old 06-09-2014, 07:06 PM   #13
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Originally Posted by supernova72 View Post
silly question regarding expenses--will you be supporting your DW's family in any way once you relocate? I've been to PI and Thailand and have seen the strong family "pull" in regards to finances. I found my expenses on both countries to be about 1/3 of the U.S. so you'll be golden there. Cheers.
DW's core family is unusually small in the Philippines scale, just the parents and two kids. They are running a small business in their province and are self sufficient while not wealthy. They have never asked for anything apart from some minor items that they have difficulty in obtaining in their location. I expect that there may be some need in the future for modest financial assistance from the kids when the parents age and will no longer be able to work.
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Old 06-10-2014, 10:50 AM   #14
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Run Firecalc with US market returns (since your assets will be here) and inflation numbers you're likely to encounter in the Philippines.
I did this, sort of, and the result shows that $1M in 35% SP500 and 65% in corporate bonds will withstand an inflation rate of up to 5.5% at the $28k WR for 30 years. 5.5% may not be high enough for the Philippines, but my hope is that USD will remain relatively stable currency and give me additional buffer.

My question to everyone here is that if my goal is to pull a inflation corrected $28k per year from the initially $1M stash for the next 30 to 50 years, is it a good idea to keep the entire amount in Wellesley? If not, what else should I consider? Inflation protected immediate annuity?

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