the joys of retiring abroad

[Khufu]

I R'ed only somewhat E this year. We then moved to Bangkok, a change for which we have been planning several years. It's early days yet, but we are delighted with our choice so far. We moved from New York City which inevitably forms the basis for our comparisons.

Advantages: Cheaper cost of living. We rent an apartment in a full-service building in an excellent neighborhood that provides twice the living space for 2/3's the cost of our place in Manhattan. Near to excellent, low-cost public transportation. A tax ride across town cost me $3 the other day. Electricity is 30% of NYC costs.

Stimulation of being in a new culture. I started teaching myself Thai a year before we moved and could read and write it in a limited way before we came. I am studying now in a one year intensive program now that will bring me up to functional level. But I am determined to become fluent which will take some years longer. For me this study is very enjoyable. My wife is already fluent in Thai and English.

Health care. We do not worry about either the cost or the quality of health care, even if we pay out of pocket. You go to the dentist and ask to see the price list and he shows you the price list. By contrast, a 48 year old family member with a wife and three kids in CT just got denied health coverage because he takes Lipitor. He's out of a job and now in a crisis. I can't tell you what a joy it is to be free of the execrable US health care system and to be beyond the risk of bankruptcy due to medical costs.

Taxes. We won't have to pay state (or local) income tax again. I'll complete our Roth conversions before age 70 in the 15% bracket. In NYC, because we were still earning, we were in the 37% total bracket.

Personal safety is not an issue here as it is in Latin America.

But there are disadvantages, of course:

Miss the friends and family. Skype is a big plus.

Not all aspects of Thai culture are so charming.

Although tasty, Thai food is not very healthy, but then US restaurant food isn't either, with some exceptions. Thais fry everything and then douse it with MSG. But if you cook at home the ingredients are better than the US. Limes are exceptional, for instance. Chicken is better. Beef is worse, but we don't eat it.

the weather. Very nice right now, but not so nice for much of the year.

Bangkok floods. Our neighborhood didn't, but family members were affected.

Political tensions simmer below the surface and could become violent again. Although i was surprised to find that the Gini coefficient for the US is actually higher than Thailand.

Poor road safety. Accident rate per capita of twice the US. But we don't drive and travel in cars outside the city very rarely. If I had to drive here, I wouldn't have come.

The dollar will probably resume its decline after the current flight to safety runs its course. This is a huge risk since our assets will always be in dollars while our liabilities are in Thai baht. I have made an attempt to cope with this risk, but it remains to be seen how successful it will be.

So, I know that we could probably have realized similar savings in the cost of living if we had moved to Atlanta or Boise. But Bangkok is more interesting than Atlanta or Boise.

I had estimated a 25% lower cost of living here in Bangkok than in NYC during retirement. That was probably a conservative estimate. But a savings like that in the after-tax bottom line is huge. Much better than a similar investment gain. For this reason I think some folks whose finances are borderline should consider expatriating and should do so early in retirement so that the savings have the biggest impact. It's also easier to cope with relocation the younger you are. It goes without saying that expatting is not for everyone. If you think you wouldn't like it, you wouldn't.

But the biggest improvement for me was not moving to Bangkok, it was retirement itself. Having my day to myself again is just incomparable.

 

[nun]

I've seen a few posts from expats in Thailand and the tax and residency situation intrigues me. If you spend longer than 180 days in Thailand you become resident for tax purposes, but if you put $25k in a local bank account and get a non-immigrant "retirement visa" you avoid tax on money remitted to Thailand, but obviously have to file FBAR with your Federal taxes.

To avoid NY taxes you have to become domiciled in Thailand and you are doing all the right things for that, but make sure you've cut all ties with NY like houses, bank accounts voter registration etc. so that NY doesn't come after you.

The IRA to ROTH rollover is an interesting situation. If you are NY non-resident, NY won't tax income from your IRA even if it was funded with NY source income, and Thailand won't tax it either as you have a retirement visa. So you just have to deal with Federal.

 

[Khufu]

I've seen a few posts from expats in Thailand and the tax and residency situation intrigues me. If you spend longer than 180 days in Thailand you become resident for tax purposes, but if you put $25k in a local bank account and get a non-immigrant "retirement visa" you avoid tax on money remitted to Thailand, but obviously have to file FBAR with your Federal taxes.

To avoid NY taxes you have to become domiciled in Thailand and you are doing all the right things for that, but make sure you've cut all ties with NY like houses, bank accounts voter registration etc. so that NY doesn't come after you

Almost right. To qualify for a retirement visa you have to have 800,000 baht (about 25k USD) in a local bank account at the time that you apply for or renew you annual visa. But you can spend it down until the next year when you have to replenish it before you can renew. I am not on a retirement visa myself, since my wife is Thai. So, the deposit requirement at my visa renewal time will only be 400,000 baht. And there are some other benefits to my visa.

I will always be liable to Thai income tax on income earned in Thailand, but I won't have any. I will not be liable to Thailand for income earned outside the country.

I reviewed the NY State tax domicile rules and believe that I have no exposure there. However, it is not necessary to close bank or brokerages accounts. We do not own property or businesses in NYS and I surrendered my driver's license before leaving. As far as I know there is no procedure to remove yourself from the voting registration lists. NYS is not one of the most aggressive states in asserting its tax domicile rules, unlike CA or VA, for instance.

 

[DangerMouse]

Do you have any pictures you could share of your apt in Bangkok? Do you rent furnished or did you move your "stuff". Leases in Thailand - are they typically month to month or do you have to make a longer commitment?

Sounds like you researched your move thoroughly before going and that all is working out well for you.

 

[Ozziedreamer]

Great post, thanks, and glad it is working out for you

As someone contemplating moving to Thailand to retire early in the future, would you be willing to provide a breakdown of your budget, and how much you believe is required to provide a reasonable standard of living.

Are there particular parts of Bangkok that are nicer to live, or put another way, are there any parts one should avoid? Where do you recommend?

What is the smog / pollution factor like?

Can you expand on the not so charming Thai cultural aspects?

Any courses or books you can recommend on learning Thai?

By the way, as an Australian, the tax system also favours retiring early to a country like Thailand. Interest from bank deposits in an Oz bank is only taxed at 10% once you are a non-resident for tax purposes, and fully franked dividends are tax free. No tax would be paid in Thailand as you say as the income is not earned in Thailand.

Health system in Australia is different however, with most people able to get by on the Govt medicare system.

 

[Khufu]

Do you have any pictures you could share of your apt in Bangkok? Do you rent furnished or did you move your "stuff". Leases in Thailand - are they typically month to month or do you have to make a longer commitment?

Sounds like you researched your move thoroughly before going and that all is working out well for you.

Bangkok, and Thailand generally, is a renter's paradise. Most apartments come furnished. Occasionally, we saw one that was unfurnished. Since we knew this in advance we took only a few pieces of furniture with us. We looked at more than 30 apartments before we chose one. There is a huge supply, very much unlike NYC. However, very few of them seemed fit for us. We only found two units that were acceptable and negotiated on both.

Landlords always want a one-year lease, but nearly everything is negotiable in Thailand. I understand that after the initial term of the lease landlords are often willing to go month-to-month.

There is no credit system and so, no credit check. The landlord's protection is a two-month security deposit. We tried to negotiate this down, but they wouldn't budge. Some expats report getting it back after vacating while others report problems. However, the normal practice seems to be not to raise rents for existing tenants. We know people who have stayed for from three years in one case to ten years in another without a rent increase. Makes the inflation rate less relevant.

Kitchens are usually not as nice in Thai apartments. Ovens were quite rare. We bought a countertop combination convection/microwave unit.

 

[Khufu]

Great post, thanks, and glad it is working out for you

As someone contemplating moving to Thailand to retire early in the future, would you be willing to provide a breakdown of your budget, and how much you believe is required to provide a reasonable standard of living.

Are there particular parts of Bangkok that are nicer to live, or put another way, are there any parts one should avoid? Where do you recommend?

What is the smog / pollution factor like?

Can you expand on the not so charming Thai cultural aspects?

Any courses or books you can recommend on learning Thai?

By the way, as an Australian, the tax system also favours retiring early to a country like Thailand. Interest from bank deposits in an Oz bank is only taxed at 10% once you are a non-resident for tax purposes, and fully franked dividends are tax free. No tax would be paid in Thailand as you say as the income is not earned in Thailand.

Health system in Australia is different however, with most people able to get by on the Govt medicare system.

In terms of budget one size does not fit all. What is reasonable for me may not be reasonable at all for you. But since you want to hear numbers I can tell you that our budget for the coming year is about 160,000 baht per month. That include 62,000 baht for rent and 20,000 baht per month for the intensive Thai course for the next year. We buy a lot of imported food items because we can afford them. (You will pay through the nose for your vegemite.) We plan on 8,000 baht per month for groceries.

Now, if I posted that budget over on thaivisa.com, there would be howls of indignation at the wastefulness, reminders that Thais get by on 20,000 baht per month and ESL teachers are happy on 30,000 baht per month, etc. We moved from a very nice neighborhood in Manhattan, which is one of the most expensive places to live in the US, to a very nice neighborhood in Bangkok. You will have to chose the standard of living appropriate for yourself.

I am sure that there are areas to avoid in Bangkok, but I don't know which they are. The main question will be whether you are willing to live in an all-Thai neighborhood or will pay the premium to live among the expats. The language barrier is one aspect, but the availability of imported food and foreign restaurants is another. I think most new arrivals should start off in an expat neighborhood. There will be plenty of culture shock as it is.

Air pollution on our street is not a problem at all. Less than it was in Manhattan as it happens. But in general there is a lot of air pollution here. I walk a lot and the big intersections are likely to have blue air. However, it has improved in recent years because there are fewer two-stroke vehicles than formerly. The buildout of the light rail system continues apace.

Thai culture is a long discussion. They are indeed fun-loving and tolerant. On the other hand, they seldom show initiative and avoid taking responsibility at all costs. Probably for good reason, but it can be disappointing. If you ask a clerk in the department store about the specs of some product and he doesn't know the answer, he will just make something up with a smile. To admit that he doesn't know would involve loss of face.

Are you asking for a reference for learning Thai at home in Oz by yourself? I used the Marvin Brown books and tapes constituting the AUA Thai course. Available here:
Language Resource Center - Thai

These are expensive however. They are solid and well-regarded, but I wouldn't choose them if I were starting over now on my own because they don't teach grammar. They have everything else like tone recognition exercises and consonant differentiation, which is initially difficult for English-speakers, reading and writing, etc. If you do start on your own, learn the writing system as early as possible. Doing so makes learning Thai easier, oddly enough.

As far as studying Thai in Thailand, the only way to go is a course at a university, if possible an intensive one, provided you can afford the time and money commitment. There are only a handful of these. There are a huge number of amateur schools teaching Thai using their homemade methodology. Cheap, but not recommended.

I envy the Aussie and European expats who can escape income tax completely. Is your superannuation payout taxed? We Americans can only dream.

Australia has an excellent health care system because it is a civilized country that puts the well-being of its citizenry above that of the corporations. Unlike the US. However, don't you lose access to the Aussie system if you expatriate?

If you haven't investigated thaivisa.com yet, there is a world of info there.

 

[pb4uski]

....However, it is not necessary to close bank or brokerages accounts. We do not own property or businesses in NYS and I surrendered my driver's license before leaving. ....

If you haven't closed your bank or brokerage accounts wouldn't you have property in NYS? (assuming they have positive balances in them). Or by property were you referring to real property?

 

[Khufu]

If you haven't closed your bank or brokerage accounts wouldn't you have property in NYS? (assuming they have positive balances in them). Or by property were you referring to real property?

I meant real property. It has been established, at least in NY state, that maintaining bank and brokerage accounts does not in itself establish tax domicile. Nor does real property for that matter. The typical situation is that an older couple who have lived and worked in NY state retire and buy a condo in Florida, which has no income tax, to spend the winter months there and then take FL as their legal residence. As long as they do not spend more than 180 days per year in NY state, their claim to tax domicile in FL is valid and they do not owe NY taxes.

However, these tax domicile rules vary from state to state. While none of those factors taken in isolation may suffice to establish domicile, a number of them taken together might.

In any case, our registered address for each bank account is out of NY state. We don't expect any difficulty.

 

[Tif7]

Welcome. Nice post. Thanks for all the detail.

T

 

[nun]

Almost right. To qualify for a retirement visa you have to have 800,000 baht (about 25k USD) in a local bank account at the time that you apply for or renew you annual visa. But you can spend it down until the next year when you have to replenish it before you can renew. I am not on a retirement visa myself, since my wife is Thai. So, the deposit requirement at my visa renewal time will only be 400,000 baht. And there are some other benefits to my visa.

I will always be liable to Thai income tax on income earned in Thailand, but I won't have any. I will not be liable to Thailand for income earned outside the country.

I reviewed the NY State tax domicile rules and believe that I have no exposure there. However, it is not necessary to close bank or brokerages accounts. We do not own property or businesses in NYS and I surrendered my driver's license before leaving. As far as I know there is no procedure to remove yourself from the voting registration lists. NYS is not one of the most aggressive states in asserting its tax domicile rules, unlike CA or VA, for instance.

So what visa are you on? If not the non-immigrant retirement visa are you resident meaning that Thai tax would be due on any money remitted to Thailand?

Sounds like FBAR is still required as 400000bht is over $10k

 

[nun]

I meant real property. It has been established, at least in NY state, that maintaining bank and brokerage accounts does not in itself establish tax domicile. Nor does real property for that matter. The typical situation is that an older couple who have lived and worked in NY state retire and buy a condo in Florida, which has no income tax, to spend the winter months there and then take FL as their legal residence. As long as they do not spend more than 180 days per year in NY state, their claim to tax domicile in FL is valid and they do not owe NY taxes.

However, these tax domicile rules vary from state to state. While none of those factors taken in isolation may suffice to establish domicile, a number of them taken together might.

In any case, our registered address for each bank account is out of NY state. We don't expect any difficulty.

So is that address in another US state or Thailand?

 

[Khufu]

So what visa are you on? If not the non-immigrant retirement visa are you resident meaning that Thai tax would be due on any money remitted to Thailand?

Sounds like FBAR is still required as 400000bht is over $10k

Non-immigrant "O." Tax is due on any money earned in Thailand. Money transferred into Thailand is not taxable in Thailand. I am simplifying a little bit, but that's the gist.

FBAR will definitely be required, but I would file one even if it were not required. It's not like it is difficult to file.

 

[Khufu]

So is that address in another US state or Thailand?

I maintain a mailing address in a US state with no income tax.

 

[timeasterday]

Thanks for posting that. Thailand is our #2 retirement spot. It's our backup plan in case there are major changes in Taiwan before we retire.

 

[nun]

Non-immigrant "O." Tax is due on any money earned in Thailand. Money transferred into Thailand is not taxable in Thailand. I am simplifying a little bit, but that's the gist.

FBAR will definitely be required, but I would file one even if it were not required. It's not like it is difficult to file.

I thought that if you were in Thailand for longer than 180 days in a year your are liable to pay Thai income tax on money you bring into Thailand.....however it is very poorly enforced and most people slip under the radar.

 

[Khufu]

I thought that if you were in Thailand for longer than 180 days in a year your are liable to pay Thai income tax on money you bring into Thailand.....however it is very poorly enforced and most people slip under the radar.

Ok, if you want the complete details: I would be liable for tax on money earned in Thailand, of which I expect to have none, and also on money earned outside Thailand, but only if it is transferred into Thailand in the same year in which it was earned. It's easy enough to avoid doing so without relying on poor enforcement. You bring in savings from abroard, but not money earned that year.

 

[Khufu]

Thanks for posting that. Thailand is our #2 retirement spot. It's our backup plan in case there are major changes in Taiwan before we retire.

That's interesting. I don't know anyone who is retiring to Taiwan. Do you speak Mandarin? What are the advantages to Taiwan? I understand they have a very smart and affordable health care system. Can you get a long-term visa?

What major changes are you thinking of, incorporation into the PRC?

 

[kcowan]

Thanks for the informative thread Khufu. I know that comparing costs with Manhatten is not typical for members of this forum but it is good when comparing to life in an upscale Bangkok neighborhood.

What it indicates is that any relocation can be managed if you have the will to make it happen.

Do you get your mail forwarded?

 

[nun]

Ok, if you want the complete details: I would be liable for tax on money earned in Thailand, of which I expect to have none, and also on money earned outside Thailand, but only if it is transferred into Thailand in the same year in which it was earned. It's easy enough to avoid doing so without relying on poor enforcement. You bring in savings from abroard, but not money earned that year.

Well that's a novel way to do things. Reading a PWC pamphlet on Thai tax I found the bit about waiting a year to remit the money.

I agree with you about wanting to get away from the US healthcare system! It's one of the main reasons I'lll be retiring outside the US. I live in MA and part of my planning has been to make sure I don't have to file any MA tax forms once I leave the US.

 

[Khufu]

Thanks for the informative thread Khufu. I know that comparing costs with Manhatten is not typical for members of this forum but it is good when comparing to life in an upscale Bangkok neighborhood.

What it indicates is that any relocation can be managed if you have the will to make it happen.

Do you get your mail forwarded?

Yes. We use St. Brendan's Isle mail forwarding service. Very happy with them. We seldom actually have mail forwarded though. Most of it gets scanned and then I download the pdf file. Very efficient.

 

[Ozziedreamer]

I envy the Aussie and European expats who can escape income tax completely. Is your superannuation payout taxed? We Americans can only dream.

Australia has an excellent health care system because it is a civilized country that puts the well-being of its citizenry above that of the corporations. Unlike the US. However, don't you lose access to the Aussie system if you expatriate?

Thank you for the detailed response, including your budget. I have spent some time on Thai visa and am familiar with the varying budgets people consider to be reasonable. I for one would not want a significantly lower standard of living than what I have now, so agree that getting by on an ESL teachers wage and counting every penny is not my idea of fun and relaxation in retirement. As a single person, I am looking at ensuring I have at least 100k baht per month.

Whilst working, contributions going in to your superannuation account by you (optional) or your employer (compulsory) are taxed at 15%, and any earnings whilst in super are also taxed at 15%. This is still less than the tax rate of 38.5% for income earned over $80,000 and the tax rate of 46.5% for income earned over $180,000. Once you reach the age of 60, the super payout (entire balance) becomes tax free. If you wish to withdraw before 60, there is some tax that you will need to pay.

As far as Medicare is concerned, it is correct that you lose access once you become a non resident. However you gain access as soon as you return to Australia and show evidence that you are returning as a resident (eg new lease agreement in Australia, new gas/electricity account in Australia). In effect, it means that if you come back to Australia on holiday you are not entitled, but if you come back with the intention of staying, then you resume access. You need to be able to demonstrate your intention of staying.

 

[Khufu]

Thank you for the detailed response, including your budget. I have spent some time on Thai visa and am familiar with the varying budgets people consider to be reasonable. I for one would not want a significantly lower standard of living than what I have now, so agree that getting by on an ESL teachers wage and counting every penny is not my idea of fun and relaxation in retirement. As a single person, I am looking at ensuring I have at least 100k baht per month.

Whilst working, contributions going in to your superannuation account by you (optional) or your employer (compulsory) are taxed at 15%, and any earnings whilst in super are also taxed at 15%. This is still less than the tax rate of 38.5% for income earned over $80,000 and the tax rate of 46.5% for income earned over $180,000. Once you reach the age of 60, the super payout (entire balance) becomes tax free. If you wish to withdraw before 60, there is some tax that you will need to pay.

As far as Medicare is concerned, it is correct that you lose access once you become a non resident. However you gain access as soon as you return to Australia and show evidence that you are returning as a resident (eg new lease agreement in Australia, new gas/electricity account in Australia). In effect, it means that if you come back to Australia on holiday you are not entitled, but if you come back with the intention of staying, then you resume access. You need to be able to demonstrate your intention of staying.

One thing I have learned here that is not apparent on thaivisa is that there is a substantial and active expat community. They are readily available and welcoming. There are all kinds of clubs focused on sports or other kinds of activities. There's a book exchanging club, for example, and golf and bridge, etc. Most of the expats I have met so far have been working, rather than retirees, as it happens. So, it's easier to make social connections than you might suppose. You might get the impression from thaivisa that the expats are all sourpusses, but it's not so.

When you are here pick up a copy of the book, "The Bangkok Guide", put out by one of the expat groups. Lots of useful tips and groups.

For looking for an apartment this is a site that you might find interesting:
Kobayashi-ApartmentService

If you nose around you will find the maps. These show actual apartment buildings, distance to public transportation, parks, etc. The write-up on each building gives apartment sizes and rents, and sometimes a recommendation. We found it to be pretty accurate. The big expat area is Sukhumvit from the low numbered soys out to soy 55 or more. The higher numbered soys will be cheaper.

And this site is also quite helpful:
Thailand Real Estate & Property Forum (

These are ads for rentals organized by building. The apartments in the expat areas will be in English, while those in the Thai areas will be in Thai. So, it's easy to get a feel for which are the expat zones.

Nun, you'll find pictures of apartments on the kobayashi site.

 

[Khufu]

Well that's a novel way to do things. Reading a PWC pamphlet on Thai tax I found the bit about waiting a year to remit the money.

I agree with you about wanting to get away from the US healthcare system! It's one of the main reasons I'lll be retiring outside the US. I live in MA and part of my planning has been to make sure I don't have to file any MA tax forms once I leave the US.

I understood that MA had a good health care system. Not your experience?

Are you considering Thailand as your destination or somewhere else?

As far as avoiding MA tax, you have to research the tax domicile rules for MA. One point that is important for some states is that there be nothing that can be construed as an "intent to return." It also means that we cannot vote although there is a way around that apparently. Let me know if you want the details.

My wife felt ill a few weeks ago so I took her to the doctor. In Thailand that means a trip to the hospital. Not plush, but a well-respected government hospital here in the BKK. Waited half an hour. Got to see a doctor, who happened to be bilingual. Spent 10 min. or so with him. Filled the four prescriptions right at the hospital pharmacy. Total bill including meds: USD 18. In Manhattan, without insurance, that would have been hundreds of dollars.

 

[DangerMouse]

As a point of reference for all Australians, we have never had the 10% withholding tax applied to our Australian investments. We have always used an overseas address and had no issues. We have always declared and paid tax on Australian interest/dividends in our country of residence, at this time the US.

With regards to Australian medicare, none of the providers ever ask if you are resident in Australia. Both DH and I have valid Medicare cards even though we have been overseas for a long time. Also look at the reciprocal medicare agreements and if you have dual citizenship you can probably get around any issues of not being entitled. Personally I have never even heard of a tourist being refused treatment.