Inexpensive Retirement in Southeast Asia

[Pete44]

Inexpensively retiring to Southeast Asia could easily be a book. I’ll try and keep this reasonable. I think there is maybe a few people out there that are in the same position I was in two years ago now. 59 years old, I had just been laid off from a marketing position in the Bay Area and didn’t see many good prospects. I recently ended a long term relationship. My children were grown and were no longer around. After some soul searching I woke up one morning and decided to pull the trigger. Sell the house and everything I own and move to Thailand. It was a tough decision. I’d been there a few times over the last 10 years so knew what to expect.


I lived in a great town and was able to sell the house and contents in a couple of months and walk away with $200k. Along with a $100k IRA I was going to give it a try. Two days after the house closed I got on a flight to Phuket with a large suitcase and a guitar. After a few months of partying I moved to a quiet beach luxury condo that I pay $700 a month for. I bought an health insurance policy for $1500 a year that covers hospital stays. Doctor visits are $30. Prescription drugs are all over the counter at the pharmacy. I bought a motorbike for cheap transportation. I buy food at the local outdoor market and mostly cook at home. Food to go from carts runs under $2 a meal. Cell phone and Internet is $25. My total monthly expenses are about $1800. I also did some traveling last year so let’s call it $2000. You can live cheaper than that. I live in the most expensive part of Thailand. I live with a girlfriend and pay all her expenses. I also like to have a beer ($2 each) at the pub and go out often. A bottle of rum is $6. If you wanted to economize, I would estimate you could live in a studio in Northern Thailand (say Chang Mai) for $1200/month comfortably.



I finance all this by living off of dividends for the most part. Take $300k at 8% you get $24k. We’ll leave tax issues and specifics out of this but I like high yield corporate mutual funds. I don’t like volatility that you get with stocks. I have found funds like JAHYX, MWHYX and STHTX work the best for me. I own lots of others and a couple of stocks and ETFs and monitor everything daily. Last year I earned 14% and on track to do that again. Dividends good, volatility/risk bad. I don’t care about growth. When I start taking Social Security in 10 more months I think I’ll feel wealthy here. I don’t think much will change. I should be able to save more.


This isn’t for everyone. It’s a long way from home and you’ll probably never learn to speak the language. Good wine, beef and cheese are expensive because they’re imported. I just do without. Anything made here is cheap. The average Thai makes under $300 a month. The cops are crooked. Laws are enforced intermittently. The infrastructure is passable, on the high end of third world. There are frustrations but overall the Thais are laid back. I’ve got all the friends and entertainment here I can handle. Life is very good and the women are beautiful. (There is a book in itself.)


Let me just touch on some of the other countries in the area. Vietnam is less expensive than Thailand. I was in Saigon for a few weeks and it was too crazy for me but so was Bangkok. I’ve heard the beaches are nice but the infrastructure is a step down. A big step down is Cambodia but it is cheap and there are some beautiful places. One could easily retire here on $1000/mo. Both Cambodia and Vietnam are relatively safe, Thailand being the safest. I would feel safe walking down a dark street in Bangkok at 3 AM. What American city can you say that about? The Philippines are more questionable for me. Guards and guns are everywhere which for me adds a level of paranoia to life. It is significantly less expensive than Thailand. The beaches are beautiful and you can find a comfortable retirement there. Manila I’ve heard is awful for crime. I was comfortable in Cebu in the south. Malaysia is a beautiful country. It’s little more expensive than Thailand with a better infrastructure. It’s a liberal Muslim country. It is probably the friendliest to expats. There are some nice perks to retirement as opposed to Thailand which makes you jump through hoops.



Obviously, I prefer Thailand. It has the right combination of laid back atmosphere (Buddhism is the key), costs and beauty that is tough to beat. It took some courage to make the move but I’ve never looked back. Just bought a ticket to return for Thanksgiving, the first time back in 2½ years. I’m looking forward to it, but I live here now. It can be done.



Sawadee kap

[ItDontMeanAThing]

Having lived in Thailand for the past year I agree with the OPs list of pros and cons. I have a few more.

My cost of living was $1407 a month for the year ending Feb 2010. Details on my blog. I'm in Hua Hin, a town that's less expensive than Bangkok but more expensive than most. It will be higher this year because of out of pocket medical expenses and purchasing health insurance.

Cons

Politically unstable. There have been 15 coups (last one in 2006), 16 constitutions during the current King's reign. These have mostly been non-violent.

Ethnic separatist insurgency using terrorism in the far south.

Enough foreigner real estate horror stories to make me think that if and when I buy something it will be with money I'm able to walk away from.

All those tourists for 3 months of the year ;-)

The other foreigners. They're the worst part about living in what some call the Tourist Disneylands of this country.

In the north the agricultural burning season makes for about 2 months of horrible air quality at the end of the dry season.


Toss Ups

Foreign goods are available but vary with the local population. Where I live it's mostly British and Scandinavian. NFL or NBA on the telly at the pub? Fuggetaboutit.


But It's So Hot

One gets used to it. Last march an unusual cold front meant I was wearing long underwear, long pants, two shirts, fleece jacket, shoes and socks while indoors and still a bit chilled. The temp had dropped all the way to 22 C (72 F). One adapts so well to consistent 29C to 35C that 22C is a shock to the system.


Unknowns.

The King, Rama IX, is currently the world's oldest monarch. His Majesty has been hospitalized since Sept. 2009.

[zinger1457]

Are you staying there on a retirement visa? My understanding of the requirements for a retirement visa is that you have to show proof of a Thai bank account with 800K baht in it or you need to prove 65K baht (~$2.1K) per month income. Do they accept your estimated income from dividends for the monthly income requirement?

[Gone4Good]

I hope to live overseas, in SE Asia and elsewhere, for periods of time. But I'd have major reservations about any retirement plan that depended on developing nation standards of living to make ends meet. I suspect many of these places are going to experience pretty rapid economic advancement over the coming years. As living standards rise, those $1K-$2k/month budgets will go from 'comfortable' to increasingly less comfortable. Rising Asian currencies relative to the dollar may compound those issues for anyone who's relying on USD assets or pensions.

[Gone4Good]

Quote:

Originally Posted by Pete44 I finance all this by living off of dividends for the most part. Take $300k at 8% you get $24k. We’ll leave tax issues and specifics out of this but I like high yield corporate mutual funds. I don’t like volatility that you get with stocks. I have found funds like JAHYX, MWHYX and STHTX work the best for me.

You might want to read through this old thread . . .

Am I crazy, 100% portfolio in High Yield?

The Cliff Notes version is, yes, it's crazy.

For a somewhat longer explanation, jump to this post in that thread where I model how someone spending 100% of their HY dividend would have fared over the past 30 years (Cliff Notes version is that real purchasing power of the dividends declined from $137,423 in 1981 to $21,602 in 2009, while the real principal balance declined from $1MM to $290K [$671K nominal] . . . ouch)

[ItDontMeanAThing]

Quote:

Originally Posted by zinger1457 Are you staying there on a retirement visa? My understanding of the requirements for a retirement visa is that you have to show proof of a Thai bank account with 800K baht in it or you need to prove 65K baht (~$2.1K) per month income. Do they accept your estimated income from dividends for the monthly income requirement?

Don't know if that question was for the OP, myself or both, but I'm happy to answer.

I'm not on the official retirement visa (Non-Immigrant Type O-A), instead have the one most retired people do (Non-Immigrant Type O). Both are renewed annually. Both require the bank balance, income or some combo of both.

Ah yes, the income requirement. Subject to much discussion on thaivisa.com. The Thai guidelines are vague. Immigration requires one to have a notarized form letter from the one's embassy stating monthly income. The US embassy stamps it if all the blanks are filled in, they don't ask for proof of anything except who you are. Some people lie. Others report their income. Others wonder what is income. More about that in a moment.

Handing this letter to a Thai immigration official results in one of two things. He accepts it or he asks for proof. The latter is rare as long as one has a Thai bank account showing enough money to live off flowing in from the home country and out at a Thai ATM because then he knows you're probably not working in Thailand. The local immigration office decides how to interpret the rules. Interpretation can change overnight. Resistance is futile. Bribes help, the official will usually tell you how much it costs to fix a visa problem

People claim dividends, interest, rent, social security, annuity payments, etc. as monthly income. If the funds are irregular, then it seems most expats report their average monthly income and hope immigration will accept that if asked. I use the monthly average of the past 12 months interest and dividends. That's less than 65k Baht, so I make up the rest with bank account funds.

[kevink]

Thanks for these excellent posts. I find it refreshing to hear from folks who are doing the shoestring ER thing - it's a welcome contrast to many posters here who spend more on health insurance premiums alone than many retirees have to spend for their total expenses. Sadly I think many boomers are going to be looking at overseas retirement for economic reasons only.

Having only visited Thailand for a month but lived in Mexico for a couple of years what strikes me, possibly due to the stronger baht now vs. 5 years ago, is that most of the expenses you guys mention are on par with gringo-infested (I mean that in a good way - mostly) parts of Mexico like Lake Chapala or San Miguel. Better medical car per dollar in Thailand, no question and sounds like internet and phone service are cheaper, but that's about it.

More temperate weather in Mexico, close rather than far from U.S., no visa hassles because unlike xenophobic Thailand they really do want expat residents rather than visitors. Long-term I think the language thing is huge: easy in Mexico, essentially impossible in Thailand even for people who try diligently (one friend who has spent big bucks and years studying now can almost ask for directions at bus stations!).

Great thread!

[W2R]

Quote:

Originally Posted by Pete44 I finance all this by living off of dividends for the most part. Take $300k at 8% you get $24k.

Quote:

Originally Posted by ItDontMeanAThing My cost of living was $1407 a month for the year ending Feb 2010.

Quote:

Originally Posted by kevink Thanks for these excellent posts. I find it refreshing to hear from folks who are doing the shoestring ER thing -

According to their posts, some of our members in the U.S. manage to live pleasantly on far less than either of the above. It doesn't cost much for a single person with a paid off home and retiree medical benefits to live in some parts of the midwest and south. Plus, in these regions English is spoken (well, more or less? )

[kevink]

It's apples-and-oranges W2R because you "snuck in" two major expenses these guys don't have: a paid-for house and megacorp-subsidized medical care.

The OP sold his home and is pays his own way for medical insurance and care. Most retirees I know in Mexico rent rather than own (a great idea in any developing country and mandatory in Thailand where foreigner's can't own property) and either have Mexican government catastrophic coverage (at around $300 a year) or simply pay out of pocket (a viable option in both Thailand and Mexico but of course insanely dangerous in the U.S.). AND the folks I'm talking about often do all this with Social Security income only.

The apples-to-apples comparison is where can a single person live on $1400-1800 per month including rent, medical insurance and medical care, with access to great food, fabulous weather, rich culture, etc. Somehow I don't think the spacious bedroom in a shared single-wide in the Ozarks such money will buy in the U.S. is gonna cut it.

[Gone4Good]

Quote:

Originally Posted by kevink It's apples-and-oranges W2R because you "snuck in" two major expenses these guys don't have: a paid-for house and megacorp-subsidized medical care.

Yup, here in the states $1,400 per month can easily be your health insurance premium. What, you expect to eat too?

[Moemg]

I always enjoy reading these threads about foreign retirement . Are there many single American women living alone in these countries ? Most of the posts that I've seen have been from males . Would it be safe for a woman or would it be considered taboo ?

[kevink]

That's a good question and observation Moemg. Hopefully the Thailand-based gentlemen will answer...my observation was plenty of couples and single men but no single women.

In Mexico for sure a different story. In Lake Chapala area and San Miguel de Allende single women are the biggest group after couples. It's such a common thing there's even a good book about it:

Midlife Mavericks: Women reinventing their lives in Mexico

Lots of 50-60 something divorced/widowed/single women in those places. High level of personal safety in those areas, affordable, close to family and kids in U.S., lots of art and freedom to reinvent oneself.

[Webzter]

Quote:

Originally Posted by Gone4Good The Cliff Notes version is, yes, it's crazy.

But, on the other hand, if one doesn't care about leaving an estate and one is at an age where they can be fairly sure of collecting SS at 66 or 70 (bonus points if they maxed out while working), then HY stocks for a few years won't leave one on the street. And, if their personal rate of inflation in their locale is lower than the official CPI for their SS COLA... well

[nun]

Quote:

Originally Posted by Pete44 I bought an health insurance policy for $1500 a year that covers hospital stays. Doctor visits are $30. Prescription drugs are all over the counter at the pharmacy. Sawadee kap

That makes my retirement health insurance look expensive....it covers me completely and I don't pay any premium, doctors visits are no cost to me and I don't pay for prescription drugs either.

Quote:

We’ll leave tax issues and specifics out of this but I like high yield corporate mutual funds.

Do you have to pay tax in Thailand as well as the USA.....is there a tax treaty? How do you organize your accounts and have you had to file FBAR?

[ItDontMeanAThing]

Quote:

Originally Posted by Gone4Good I'd have major reservations about any retirement plan that depended on developing nation standards of living to make ends meet. ... As living standards rise, those $1K-$2k/month budgets will go from 'comfortable' to increasingly less comfortable. Rising Asian currencies relative to the dollar may compound those issues for anyone who's relying on USD assets or pensions.

I'd also have major reservations. My budget is $3k a month. I'm LBYM in Thailand, other countries on my list to investigate are more expensive. My withdrawal rate and thus budget assumes zero SS even though my SS statement says I'm entitled to $1458 a month.

There are many expats here and in the Philippines that have thin income margins. The pound was 70 to the Baht 5 years ago, now it's 49. I've heard some tales from Brits about how they adapted to survive.

Quote:

Originally Posted by Moemg ... Are there many single American women living alone in these countries ? Most of the posts that I've seen have been from males . Would it be safe for a woman or would it be considered taboo ?

Nope, I've met only two single female expats in 2.5 years, read about more in forums. It's not taboo. A friend and neighbor has lived in Thailand for 32 years. She's 60, divorced and can't find a man who wants to be anything more than friends. I think that sums up why so few single retired women come here.

All I know about crime against foreigners in Thailand is from the paper, forums and word of mouth. Burglary is the most common crime. Violent crime is uncommon. Usual types are robbery of drunks out alone late at night in the bar districts of Tourist Disneylands or sudden group beatdowns of a foreigner who has stepped over the line in a personal confrontation. Most expats know to avoid personal confrontations at almost all costs.

Quote:

Originally Posted by nun Do you have to pay tax in Thailand as well as the USA.....is there a tax treaty? How do you organize your accounts and have you had to file FBAR?

Thailand does not tax expat's retirement income. All my financial accounts are in the US except for a Thai savings account because that's required for my type of visa. It's also a good idea as a cushion against currency fluctuations, to save the nationwide 150 Baht (~ $6) ATM fee, and a bank that one can walk into to solve any problems. Filed FBAR for 2010.

[ItDontMeanAThing]

The Real Post Reports at talesmag.com are a good source for firsthand reports on life in many countries. The site began as a way for US State Dept. employees to exchange info on what life is really like at the various posts, because the official post reports were so far off base. Contributions now include people working for multinational corporations, foundations and charities. Reports are answers to a standard list of 33 questions. Almost all are well written and to the point.

That link may not work unless you're registered. Here is the home page.

[haha]

Quote:

Originally Posted by ItDontMeanAThing The Real Post Reports at talesmag.com are a good source for firsthand reports on life in many countries. That link may not work unless you're registered. Here is the home page.

Excellent site, thanks.

Ha

[Pete44]

Let me address a few points:


I DON’TMEANATHING Cons:

• Yes politically unstable but this isn’t Egypt. This political instability doesn’t really affect much. Meet the new boss same as the old boss and they’re all crooked. We’re not on the verge of revolution here.

• The southern insurgency isn’t a worry because no one is going to retire there. It’s a local problem.

• I would never buy property here. Foreigners can never own land. You take out a 30 year lease. Big over supply of rental units make this a non issue. Don’t buy property and don’t fall in love are the rules I live by.
• Three months of tourists. Well that’s what happens when you live in a beautiful resort area. Right now the same beaches are empty and the weather is beautiful. I was up in Hua Hin last month and it was hot!

• The burning up north doesn’t affect the beaches down south or even Bangkok..

• I subscribe to the NFL ticket online. Otherwise I ignore US sports. Soccer isn’t so bad.
• It is hot in April and May. I’ve even turned the air conditioner on a few times. My utility bill averages $15 a month. I learned to live with just fans (and the occasional cold bevy).
• I agree the death of the King is an unknown. Probably just his son takes over. I wouldn’t be surprised if we found out sooner rather than later. That will be interesting. (Be very careful what you say about the King here.)

ZINGER Retirement Visa
The 800k baht thing is for everyone else besides Americans. If you’re American you can go to the consulate and get a letter stamped by the US that says you bring in X amount of money every month. It has to be over a certain amount, I forget. They will okay anything you put down without checking. Visa is good for a year. You report in every 90 days to get a stamp. You can’t work here.

GONE4GOOD
Yes things could change and affect $1k-$2k budgets. The dollar has recently risen 2% vs. the baht. I’m not going to worry about it. I’ll move to another country if I have to. The Thai Prime Minister recently said he thought in 5 years the baht would be at 23 to the dollar, it’s now at 30. I think he’s full of it. They have enough problems now attracting tourists. I think you more likely to see a devaluation of the baht.

MOEMG Woman retirees
I wouldn’t discourage you. There are many things to get involved with here. I volunteer teaching English. There is every kind of sports available. It is easy to meet and start networking with other people. Absolutely it is safe here. I have a number of single farang woman friends.

Nun
No taxes in Thailand but you’ll always have to pay your US taxes. Not the state taxes, however if you don’t live there anymore. It’s kind of a complicated topic. If I move back to California they could ding me for back taxes. I filed with a Thai address this year. CA ain’t getting any more of my money. Cut my drivers license in half and mailed it to them. Different states have different rules.

I regards to money. Schwab is a great deal for expats. Reimbursements of all ATM fees saves me at least $20/mo. I’ve kept a US address on the account because it allows me to continue to trade mutual funds. Easy transfers of large amounts at the highest rates. Call them on Skype whenever there is an issue.

In regards to the HY stocks. I was able to pull big dividends out and the portfolio rose 14% last year! I own some other things. A completely unexpected inheritance and the rise of the dollar have me smiling lately.

Buddha has been good to me.

[Gone4Good]

Quote:

Originally Posted by ItDontMeanAThing There are many expats here and in the Philippines that have thin income margins. The pound was 70 to the Baht 5 years ago, now it's 49. I've heard some tales from Brits about how they adapted to survive.

I think those kinds of stories would be tremendously helpful on a retirement forum . . . especially an 'early' retirement forum. Typically these threads extol the low-cost nature of retiring to a developing nation and give the impression that folks can do it on a shoe string.

And while it's true that starting budgets are cheap, there is no 'FireCalc' simulation that tests a retirement plan where a dollar-denominated fixed income is used to support a lifestyle paid for in a foreign currency in a country with rapidly rising living standards. That formula has risk of failure written all over it. To compensate I'd want a pretty healthy margin of error (an extremely low WR, or spending far lower than income), which would probably chew up most of the low-cost benefits.

I'd obviously feel differently if I were 70. But early retirees should consider these risks carefully.

Your plan to live within a budget that excludes SS seems prudent.

[Gone4Good]

Quote:

Originally Posted by Moemg I always enjoy reading these threads about foreign retirement . Are there many single American women living alone in these countries ? Most of the posts that I've seen have been from males . Would it be safe for a woman or would it be considered taboo ?

I'm not sure about living full-time, but independent solo female travel is something that is becoming far more commonplace. It's still a 'man's' world out there, but an ever larger group of intrepid female explorers is paving the way.