It's been a looooooooooong time since I posted an update, so reviving my old thread. Well, I relocated to India and have been living here over the last 8 months. Settling down took more than 6 months even though I was born and raised in this country! The US had spoiled me so much.
What a roller coaster the last 15 months have been!
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Originally Posted by Cool_Sparrow
Thank you all for your comments. I especially appreciate the detailed analysis posted by r2i on his blog. That analysis and others prompted me to re-think my plans a little and also, post an update for your comments.
1. Our retirement assets would probably be close to $650K when we actually begin retirement due to some vesting contributions expected when I leave my job. This may not change our calculations sizeably but the asset size increase is significant for us. |
At one point the retirement asset base went down to $450K during the worst part of the bear market (early March 2009?), and I remember thinking boy did I screw up
. Now it is about $620K and what a recovery! Adjusting for the vested pension cash balance, I am down about 10% from the peak in late Oct. 2007. Don't know if I should feel proud for not bailing out at several depressing points over the last 15 months
(or) kick myself for not moving all to cash at least in May 2008 after seeing 6 months of gyrating market.
The capital markets made me sufficiently nervous to take up a job in India soon after my return. This pays me well, though it is very stressful. Still, I am telling myself that if I could hang on for 3 years, my position would be much better.
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2. Using FIRECalc under its various settings and assumptions have given me a cause for concern that I should consider no more than about $1500/month of expenses to be fairly sure (>92%) of our assets lasting a 50+ year retirement. While this reduction is significant, I feel a modest but reasonable lifestyle can still be afforded by this income in a Tier 1 metro in India but for a really comfortable lifestyle, we should consider retiring to a Tier 2 or Tier 3 town. This will have an impact in terms of quality of health care and other lifestyle issues but if this town is located near a Tier 1 metro that has high quality care available for major illnesses, the impact should be marginal. Also, this reduced income has an impact on the type of schools that we hope to send our child to, so that is another factor that's worrying me. My wife points out that we both studied in rather modest schools and did pretty well in life, so the school itself is not a major predictor of a child's future success.
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Actually, this worked out better than I hoped. We moved to a Tier 2 town, and our monthly expenses are around Rs. 60-70,000 ($1200-1400), based on my past 6 months of tracking. I feel our quality of life has actually improved in some metrics over our past U.S. life. This figure even includes charities and some luxuries such as having a chaffeur and renting a much larger-than-average home in India.
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3. Anyway, to revert back to my $2K/month spending goal, one option is for me to not withdraw from my assets till I reach 40. The additional 3 years, supported by modest employment in India, would offer a better chance to start our retirement with $2K/month. Delaying till 45 will put us in a much better position according to FIRECalc, but the prospect of toiling for 8 years in a high pressure & relatively low wage country like India is a major concern to me. We are not counting on any savings from working in our retirment destination, but rather hope to earn enough to cover our living costs to let our retirment assets grow. With the faltering capital markets this year, the prospect of withdrawing from it from the end of this year is scary 
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I don't think $2K per month is now needed based on my track record to date. However, inflation rates are much higher in India vs. U.S. so it worries me about reaching this expense figure sooner than I want to. Delaying withdrawals till 45 is still a great help, but I am not sure I want to handle a stressful job for that long.
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4. Much was mentioned about health care costs. I found couple of decent India-based health insurance plans with annual premium of about $400-500 for a family of four (~$40 a month), which we can cover within our monthly budget. This insurance covers outpatient surgery, inpatient surgery and hospitalization, major dental work including in-home post-op nursing care (upto 30 days) with coverage limits around INR 0.3-0.4 million ($7,000-$10,000). Given current health care costs in India, this coverage is adequate in my opinion. What it does not cover are routine doctor's visits (which are inexpensive in India, as most fees are under $10/visit and rarely cost $20/visit). This insurance combined with the $10K we have earmarked for long-term health care related "investment" is what we are counting on. I am upset with the rising healthcare costs in India as well, it throws a curveball into anyone's long term plans. 
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No change in the above since my return. I have chosen to self-insure myself and family for now. Medical care is still (relatively) affordable in the Tier 2 city I am in.
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5. Regarding our child's education fund, thanks to Mr. Market, the $100K fund has now dwindled to about $93K.  Using this as the base reduces the median long term projection by about 7% - does this mean we now don't have enough for a decent education? Maybe Harvard and Stanford are out? What about less expensive but good schools, does junior have to get a loan? I know many in this forum don't see any issue with that but since my wife and I both enjoyed the benefits of graduating debt-free, we wanted to offer this advantage to our child as well. Can college experts in this forum comment on the adequacy of our current college savings ($93K)?
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This is a major area of disappointment. Since Junior's college fund was all in equities (he was just 2 years old when we returned), it lost heavily in the brutal bear market and despite the recovery, we are up to only around $75K in this fund. To make up for the shortfall, I have now decided to downsize the home purchase from the real estate sale proceeds and make up this figure to $100K for college allocation. Hey, life is full of compromises, so braced myself for this one.