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Late 40s overseas looking to retire very soon - appreciate any input
Old 04-15-2017, 08:25 PM   #1
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Late 40s overseas looking to retire very soon - appreciate any input

Hey everybody

First time posting - been reading for a long time and learning a ton. Really happy to see this group!

47 years old US citizen living and working in Hong Kong. I would like your input about whether we can retire in the next couple of months.

Nest egg of US$3.5 million (excludes the value of primary residence that is fully paid for). No debt. No pensions or Social Security or 401K. Living with partner who is not working. No kids and none planned. 1 dog!

Estimated expenses per year in retirement: US$90K per year

Nest egg of US$3.5 million divided up in:
- 76% in equities in taxable accounts (90% of which in Vanguard Total Stock / Total International/ Emerging Market index funds, 10% in individual US equities)
- 15% in bonds in taxable account (all in Vanguard Limited-Term Tax-Exempt Fund, small amount in iBonds)
- 9% cash (60% in USD online bank CDs, rest in HK dollar cash)

My questions:
1. I think I have enough to retire but … am I right to think so? I want to resign ASAP after 20 years in the same stressful job, and itching to do something more in line with my interests, but might not earn much (if any) money. Ran Firecalc scenarios for 50 years which show 100% success of cycles

2. The US$90K per year is a conservative estimate. This US$90K includes a US$10K per year I added as buffer for healthcare and other unexpected expenses - but I am not sure how to estimate long-term healthcare costs, future US taxes from equity investments, as well as home maintenance costs. How do you all estimate these and should I add more? (P.S. in Hong Kong there’s a basic healthcare net that can take care of basic needs for very little cost, although it is not the highest quality or most immediate care)

3. Any the risks to my situation if I retire very soon?

Thanks for listening and considering.

LR
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Old 04-15-2017, 10:39 PM   #2
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Looks good to me. I retired on 3M with wife and three kids at 52 just in Dec last year. My only suggestion that cut your equity allocation little bit. May be 60% and then Cash/Bond to 40%. Your WR is pretty good even for a very conservative AA
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Old 04-16-2017, 05:13 AM   #3
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Probably OK. If you are buying individual health coverage it may run $20K/yr, but your WR would still be 2.85%. At your age though, I would be more comfortable with a WR below 2.5%.
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Old 04-16-2017, 05:27 AM   #4
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Quote:
Originally Posted by Lion Rock View Post
2. The US$90K per year is a conservative estimate. This US$90K includes a US$10K per year I added as buffer for healthcare and other unexpected expenses - but I am not sure how to estimate long-term healthcare costs, future US taxes from equity investments, as well as home maintenance costs. How do you all estimate these and should I add more? (P.S. in Hong Kong there’s a basic healthcare net that can take care of basic needs for very little cost, although it is not the highest quality or most immediate care)
Welcome aboard, Líon Rock

If you are sure of that spending level, your nest egg looks big enough to support ER. If you are planning to return to the US, though, I would advise caution. You currently are not eligible for Social Security, which means you will not be eligible for Medicare, and you will find health care costs to be far more than the $10k you have budgeted. Private health care insurance options for seniors are limited because everyone uses Medicare.

Health care costs in the US are quite high, so if you intend to include comprehensive coverage and health care for the next 40 or 50 years in the US (the rest of your life) without Medicare, you may need to reconsider.
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Old 04-16-2017, 11:17 AM   #5
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You need to have paid Medicare taxes for ten years to, not necessarily consecutively, to qualify for Medicare at 65. If you have ten years paid already or you plan on working at any wage and paying Medicare taxes for any additional time needed, then you should be okay there.

http://www.aarp.org/health/medicare-...edicare_9.html
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Old 04-16-2017, 11:55 AM   #6
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You need to have paid Medicare taxes for ten years to, not necessarily consecutively, to qualify for Medicare at 65. If you have ten years paid already or you plan on working at any wage and paying Medicare taxes for any additional time needed, then you should be okay there.

Medicare Options for People With Less Work Experience - AARP
Lack of access to Medicare or other insurance is probably the major reason that people don't retire to the US. A common situation is for someone in the US to want to sponsor their parents for US residence, but if they are older ie. over 66 the cost of health insurance basically makes it impossible.

If the OP has enough FICA payments to qualify for Medicare then their options are open....however, without those there is an enormous practical hurdle against them ever residing in the US again.
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Old 04-16-2017, 02:48 PM   #7
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No, if you look at the AARP explanation at the link, you can actually buy into Medicare if you are over 65, with some restrictions. The premiums are very reasonable compared to private insurance.
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Old 04-16-2017, 03:24 PM   #8
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OP -- when I worked overseas I still filed US taxes and paid employment taxes (SS & medicare). There were credits for foreign taxes paid. I would assume you would have done something similar. Just because you earn $ in another country does not get you out of filing US taxes.

AllDone is correct

check out a calculator here
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Old 04-16-2017, 11:22 PM   #9
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Thanks everybody for your insightful feedback

retire2020: Yes I realize now that I'm probably close to the trigger date I need to lower the equity part a bit, although it's hard since this AA has served me well ...

DrRoy: One of my biggest worries is expenses and $90K is with a lot of cushion. I take your point and want to get to a level like US$75K a year. Hong Kong is an expensive city!

MichaelB: The US health insurance situation is something I need to study - sounds like a total nightmare. Time to hang out in the Health and Early Retirement forum! Am counting on the affordable and simple Hong Kong system for the next 15-20 years (don't plan to be back in the US for that time at least) but my main worry is anything that I want to get treated in the US for or LTC insurance.
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Old 04-16-2017, 11:33 PM   #10
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All Done and Nun: I worked for a short time in the US (mainly summer jobs and part time while in school for 3 years) but not enough to have paid enough Medicare taxes.
Thanks All Done for the link! I was wondering if I would actually need to additionally work to pay the Medicare taxes needed but I am going to look into this.

bingybear: While overseas I do file tax returns with the IRS and pay US income tax, have done so for almost 20 years. But the company/ies I work for are/were not affiliates of US companies or part of the US government. And Hong Kong is not part of a Totalization Agreement. So I did not pay SS or Medicare tax.

https://www.irs.gov/individuals/inte...working-abroad
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Old 04-17-2017, 04:16 AM   #11
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What is the primary residence worth ? A small honkers apartment can be worth $$$ millions.

Retiring somewhere other than expensive honkers is an easy option that many choose.

Tell us more.
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Old 04-17-2017, 04:26 AM   #12
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Quote:
Originally Posted by Lion Rock View Post
Thanks everybody for your insightful feedback
DrRoy: One of my biggest worries is expenses and $90K is with a lot of cushion. I take your point and want to get to a level like US$75K a year. Hong Kong is an expensive city!
At $75K/yr, if medical was fully covered including out of pocket, then you would be WR ~2.5%.
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Old 04-17-2017, 05:16 AM   #13
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Originally Posted by career2.0 View Post
What is the primary residence worth ? A small honkers apartment can be worth $$$ millions.

Retiring somewhere other than expensive honkers is an easy option that many choose.

Tell us more.
career2.0: You're right. Never put my place on the market, but similar apartments are ~$1.2 million equivalent. Would sell it only to downsize (but it's pretty small already) or move somewhere cheaper like Thailand, Taiwan or mainland China (have friends who have done this). This is the backup plan.
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