Hi. Long term strategy review request

[pfin_focus]

I am 39 Years Old and DW is 35. We have two kids age 11 and 4. I would like to review our existing financial situation and get advice on our future strategy

Our current NW is approx 1.58M. Around 55% of that(880K) is invested in our home country India and 45%(700K) is in US. During the early years of our life we were planning to go back to india so did most of the investment there. Later we decided to stay in US long term for our kids education. We may work here until retirement but has absolutely no plans to retire in US.

Both DH and DW aare planning to work for another 19 years when DH reaches 58 and younger kid has completely graduated out of college. 6 Months of our retirement will be india and remaining 6 months we wish to travel around Europe every year. We have our own houses in india. We expect around $20K for living expenses in India and $40K for 5-6 Month of travel (will plan to stay in a country/place fore couple of months) and expect total yearly expenses to be around $60K at retirement inlcuding medical insurance (which will be taken from India as that will be our resident country). following is our strategy

1. We expect the Indian assets (invested in safe CDs and Real Estate) to grow at a rate of 6% after adjusting for inflation and expect to be ~$2.5M by the time we retire. We are not expecting to add any more contributions to this. At that time we expect this to generate ~$150K a year inflation adjusted. We are expecting to completely live off , of the income from indian assets. We both expect to draw SS at age of 62. DH will have approx 24K yearly 4 years after retirement, and DW will have approx 18K 8 years after retirement.

2. Based on what we have saved so far and future yearly savings, i have run an analysis on personal capital and it shows we will have approx 4.3M in us assets based on an "average" market returns. Note that we are 100% invested in equities at this point including Taxable and Non taxable accounts. We are not planning to touch this ever and planning to leave as legacy for kids.

Is this plan workable? Any advice or feedback on this strategy? Are these numbers/expectations/assumptions reasonable

 

[Blue Collar Guy]

So 6 ,months in India, 6 months in Europe. The kids by this time are raising their own families in the United States one would assume. Nice strategy. I look forward to follow up posts. So using your numbers you will generate 150k a year and spending 60k. Is this a gag post? You think that you will generate 6 % after inflation and you projected this out 18 years. I think its a home run. I think everyone in this forum myself included are too conservative, You nailed it, i think we should all shoot for a 6 % initial withdrawal. Im going to rerun my numbers, and look into mortgaging my home to the hilt and reinvest it into the market. Im going to shoot for an 8 % withdrawal.

 

[tu2008]

As you grow older, you will find the idea of tri-continental living unappealing. You will want a home base near your kids. May be examine what you are missing out now and are trying to capture it back in retirement.

Irrespective of what growth rate assumptions you make, you know you have currently enough money now and will have it so in retirement.

I am Indian and I know many Indian families living in the US doing this intercontinental dance. Worst is one spouse is in India while the other is in US for long stretches taking care of parents etc. This will leave all involved unhappy or dissatisfied or resentful.

Ask yourself why you don't want to retire in the US after living here for a life time. What stopped you from assimilating here? US is the easiest country to assimilate into. So this is worth examining.

 

[Whisper66]

A 6% return after inflation seems high to me given how the future looks today. I've been using a 5% return on total portfolio (equities + bonds + cash) and a inflation rate of 2% (for a real return of 5-2=3%) That may be a little conservative but more in line with what I've seen recommended.

With your expected expenses though, I don't think the above numbers really matter. You will have plenty of income to cover your expenses. For example, with a 3% rate of return, you only need 2,000,000 to live off the income and not spend principal. You are not that far from that point already.

Seems like you are saving at a very good rate. I think you might want to either (a) consider retiring earlier than current plan or (b) spending more now to take some of the trips you'd like while you are quite young. That may give you more time to enjoy your kids and their eventual families in their adult years.

 

[OldShooter]

... 1. We expect the Indian assets (invested in safe CDs and Real Estate) to grow at a rate of 6% after adjusting for inflation ...

I know nothing about India except that the Taj is the most impressive thing I have ever seen. In the US, though, your expectation of 6% real return is wildly off the mark. Probably something like 2% is more realistic based on history.

 

[joylesshusband]

When you say "inflation-adjusted" you better factor in 10-12% average annual inflation/COL, and base both your portfolio growth and retirement spending (in India) on this rate.
Your US investments can not possibly beat that sort of inflation.