Retirement in Thailand (at age 42?)
I started reading StickmanBangkok.com three years ago, at which time I was considering going for vacation to Thailand, where I had never been before (next month I will be going for the third time). Although at first I mostly read Stickman’s weekly column, for some time now I have also been following the reader’s submissions. Reading these submissions is a great way to keep up to date on developments in Thailand and to hear about people’s diverse experiences. A reader mentioned that it would be interesting to find out ‘whatever became of’ certain contributors and their lives and he referenced the submission ‘My Thailand’ by Trent Dumois. I certainly remember reading that story for the first time a year ago. It was, as Stickman put it, ‘heartbreaking’ and it made a big impression on me.
Recently, there have been a few submissions on the standard of living and quality of life in Thailand, as compared to the West, and financial requirements for retirement in Thailand. Farewell Canuck concluded in ‘Thailand Sucks…for us’ that his standard of living and quality of life are higher in Canada. It surprised me that, for this contributor, living is actually more expensive in Thailand than it is in Canada. For a few years I have been thinking about how to achieve early (semi)retirement in Thailand or in another Asian country. This would not at all be achievable if life in Asia would be more expensive than in Europe, where I live now. Luckily, I am used to living a modest lifestyle already, which may make the task at hand much easier.
How could one realistically realise early (semi)retirement in Thailand, assuming one is not wealthy and does not have specific skills to earn a significant side income in the Thai labour market. Let’s use a good friend of mine as an example.
After finishing high school, my good friend worked for three years in administrative jobs. As he was trying to find his place in life he joined the army, for which he continued to work for two and a half years. Then he went to law school, which he finished at age 29. Since then he has been working in the legal industry. However, he has never been very career minded and has not capitalised much on his education. Also, he has come to realise that he will never be happy living his working life in Europe. He is now 37 years old and he can very much relate to MaiTaiTime’s thoughts in his submission ‘Heaven on Earth’, especially the idea that we have to earn a living, but that it shouldn’t get in the way of actually living.
Let me break my friend’s ideas for possible (semi)retirement down. He makes $65,000 per year before taxes, which is $42,000 after taxes. Due to the fact that he lives alone, doesn’t have children, doesn’t drive a car, rents his apartment very inexpensively and, as I, generally leads a modest lifestyle, he is able to save half of his net income. He is thus effectively living on $21,000 per year, which is indeed modest, although my friend feels that it is quite enough. He is as of last year out of debt and currently has $16,000 in his savings account. In five years time (at age 42), assuming no changes in lifestyle, he plans to have saved $120,000 (not counting interest). A reasonable return on investment of 5% would then lead to a $6,000 yearly income, my friend says. The question is, what will this buy?
On the surface one may think that $6,000 buying power in Thailand compares favourably to $21,000 buying power in Europe. However, $6,000 is only 192,000 baht and it would seem that 192,000 baht per year is just too little to live on. So let’s add two more years of work (age 44). Yearly income would be $8,150 or 260.800 baht. Still not great, but already a lot better. Let’s add another seven years of work (age 51). Yearly return on investment would be some 500,000 baht per year. A very nice amount in my opinion. But maybe a tad bit late for someone who wants to start living a better life while he is still fairly young? (So 14 years from now, assuming the dollar holds up at the same rate against the baht which I think is VERY unlikely, he would be 40K baht a month to live on. Ha, it won't be anywhere near enough – Stick>
The way my good friend feels about it now, he needs to finish his working life in Europe within the next five years. He wants to go there, to Asia, but it may very well be that Thailand will financially not be achievable. Of course there are Laos and Cambodia, where a $6,000 per year income may go a long way. Still, it seems that alternative strategies need to be deployed, such as generating and saving more income now and/or finding ways to be able to generate an income in Asia later. For instance, if one could earn 15,000 baht per month in Thailand outside of the ‘regular’ labour market with its strict rules regarding work permits for foreigners, maybe through a small internet business, this income, added to a 192,000 baht yearly return from a $120,000 investment account, might be enough to be able to lead a modest, but reasonable, life in Thailand.
It would be interesting to hear from experienced readers of this website what the leaks are in my friend’s reasoning. Is it at all realistic to leave a $65,000 a year job in Europe at age 42, having only $120,000 in savings and maybe a small side income, and expect to do well in Thailand?
It would also be nice to hear from MaiTaiTime about his progression toward his goal of working six months, then living abroad six months.
I think your friend simply does not have enough money to be able to retire in Thailand at this point. He needs to earn more, much more.
Being really frank, your friend is one of an ever increasing group of people who I believe may not be able to retire in Thailand. I pick that the country will continue to get more expensive – as prices go up in baht terms, that the Thai baht will get a good deal stronger and that a low cost of living lifestyle will be less attractive and perhaps even less available in Thailand. I also expect to see further tightening of the visa laws and the criteria for retirement visas to become more challenging. I truly believe that many who dream of retiring in Thailand simply won't realise that dream.