Retire in Thailand in your 30s or 40s. Move here and enjoy the sun, sea and ….
Financial Independence and Retire Early (FIRE) is a premise I have become aware of in the last year or so. The idea is that you save 25 times your annual expenses and then invest wisely and this should provide you with enough income to retire. For example if your annual expenses are $25,000 you will need a pot of $625,000 to retire. By cutting back on expenses and saving / investing early the idea is that you can reach this goal way before usual retirement time of 65/70 in most countries.
I’ve nothing against the idea and the math kinda works out. The problem is some people are using this idea and saying that if you live in Thailand you don’t actually need so much money to retire early. Some people are advocating that $200,000 is the magic number where you can stop working in your 30s and retire here. I think this is a con and is giving people false hope.
I saw the Tweet below the other day and it really struck me that there are some bloggers who promote the idea that Thailand is the place to come and they will share how to live for 40+ years here without working. I think its dangerous information to share for a number of reasons.
Can anyone retire in their 30s? Meet the people who say yes.
— Phil / Ajarn.com (@Ajarncom) November 20, 2018
A Guardian article on how you can retire very young if you have a very well-paid job and you're a tightarse.https://t.co/7DpZ25E05c pic.twitter.com/mKaFmi41JC
$200,000 to Last a Lifetime.....
Imagine retiring at age 35 and having $200,000. If you weren’t investing your money it would mean a budget of $5,000 a year based on living another 40 years. Investing would give you more each month via dividends and interest payments but there are a number of issues which make this a pretty crappy choice. Exchange rate fluctuations, financial crashes and unexpected costs can leave you in the lurch at any time.
I won’t go into all the financial details as this excellent article on FIREinThailand.com goes through it perfectly. All in all most people should see that $200,000 isn’t enough for the average person to come and retire in Thailand at such a young age.
Let’s look at the fact that to get a retirement visa you need to have 800,000 baht in a bank which is around $24,000. This means that over 10% of your pot is locked in an account. Also remember you can’t even get that visa until you’re 50. That means visa runs, getting a study visa or marrying a Thai citizen are you only option to be here legally anyway if you’re in your 30s or 40s. Next you’ll have to withdraw money from your pot to live from. Bank fees are not cheap. Sending from an overseas bank account to Thailand might cost 1,000 baht a time. ATM withdrawals with an overseas card are at least 150 baht a time.
Even worse in my opinion is that many people stating low figures needed to be here advocate that you shouldn’t get health insurance. Health insurance is always going to be a must for me whilst living here. I spent a few days in hospital this year and the bill came to well over 100,000 baht. If you were unlucky to get a serious disease then you will have to fork out a good percentage of your pot to cover it. If you had 25 times your annual expenses saved you could afford health insurance, on $200,000 you probably can’t. That’s a game changer for me.
Selling the Dream
As I said before the premise of saving 25 times your annual expenses and retiring early does make sense to me. I can see that it works. There are a couple of problems with this however.
Firstly what do you base your annual expenses on? If you are going all in for FIRE then you are probably trying to live as cheaply as possible. Will your retirement be spent in the same way – flat sharing, not going on vacations, only using public transport? Perhaps you’ll want to live a better life. When you retire will you suddenly lose benefits from work such as health insurance, a company car, a housing allowance? If so your annual expenses during retirement will be higher. If you are moving from another country to Thailand then you probably don’t know exactly what you will spend. This is where you take a look online and get some advice.
People recommending that $200,000 is enough to allow you to move and live in Thailand are selling a dream. In many cases, at that budget it will likely become a nightmare. Perhaps a lot of people who run websites stating you can live here for peanuts started out living here on their $200,000 pot but then you see they all have training courses or books on the subject which probably make them more money than their investments…
In my experience I would say I live a pretty normal expat life here in Thailand. A decent condo, a couple of nights eating out a week, a game of golf every two weeks and a couple of vacations a year cost on average 68,000 baht a month last year. That’s around $2,000 a month or $24,000 a year. Sure I could certainly cut back and I did previously live on 34,000 baht when I first arrived. The problem is I wouldn’t want to live like that especially if I was faced with 40 years as a retiree. Also what about inflation? I’ve noticed prices creep up in the six years I’ve lived here. I Imagine in 30 years basic necessities will cost much more than now. Can your investments keep up with this?
A lot of the time people advocating living here as cheaply as possible don’t budget for flights back to their home country. It can sure be expensive flying to the US or Europe from Thailand. Some of these people say they have no desire of ever going back home, a big claim for someone who is only in their mid 30s. For most people in that age they will have family back home. Are you happy that you could never afford to go home to visit them or even attend funerals or say goodbye to dying relatives?
I guess that’s the difference between me and someone who is all in with FIRE. If you are prepared to live in a basic place, avoid overseas vacations, eat at home or buy street food every day and skip health insurance then that $200,000 pot might be enough in a perfect world with a stable financial system. In all likelihood I feel that for most people who try this lifestyle it will have significant drawbacks.
Life Ends at 30
These days people are getting married and having children later in life. Imagine saving up to retire at 35 and then seeing that you don’t have enough money to support a child. Perhaps you’ll be in a situation where you’ll have to go back to work or stick to your guns and say you never want kids.
For some people work is actually an enjoyable activity. There are lots of people with goals which are work related. If you’re one of these people then chances are you cant achieve everything you want at work by your mid 30s.
If you’ve moved to Thailand but then decide it isn’t for you then the cost of relocation is likely to be a few thousand dollars when you consider flight tickets, lost deposits and wasted visa fees. This could lead to some people having to stick things out in Thailand as they simply can’t afford to leave.
How Boring Would Life Be if You Retire at 35?
My plan is to work full time until I’m around 50 and then look at moving to a part time role where I can spend a couple of days working a week.
My current job gives me around 11 weeks holiday a year. I have a long break which is around five or six weeks. Honestly I’m bored by the end of it and look forward to going back to work. The idea of doing nothing might sound great but I know I’d get bored really quickly and I’m sure there are others in the same boat.
If you manage to save enough money to go on trips every week, play golf every day or do something you dream of then fair play maybe it’ll work. However, especially using the FIRE premises, most people aim to make the minimum possible to live without doing anything fancy. You’ll have 45 hours a week to fill which were previously office based without upping your expenses. There’s only so much you can do for free in that time.
Retiring Early in Thailand
There’s nothing wrong with retiring early in Thailand. If you’ve saved up, know the risks and have a plan then go for it. If you follow these online “financial gurus” telling you to buy their book or course and retire here with $200,000 then cross your fingers, buy as many lucky charms as you can as, in my opinion, you’ll need all the luck you can get.
The premise of FIRE whereby you have 25 times your annual expenses is sound, stick to that if you want to retire early in comfort.
