BelgianBoy Posted October 24, 2003 Report Share Posted October 24, 2003 Guys, I refer to the ongoing threads in GD on retiring to LOS, how much $$$ are needed etc....... Not being a banker or an accountant, BUT going to retire in a few years, how does one calculate what is needed ?? A capitalfund, monthly spending, yields, inflation, etc.... how does one convert all this in an excell sheet ? What other variables have to be taken into account here ? Cheers ! Link to comment Share on other sites More sharing options...
Dexi Posted October 24, 2003 Report Share Posted October 24, 2003 Standard proceedure when doing any estimate....use the best figures available to calculate the amount needed,then add 50 %....many unknown elements here such as ...inflation,currency flutuations,changes to the laws relating to Farangs in LOS...also,something no one has mentioned yet...who is going to look after us in our 70`s,80`s and possibly 90`s...if not a Thai relative,and how much will this cost ? Says BelgianBoy: Guys,I refer to the ongoing threads in GD on retiring to LOS, how much $$$ are needed etc.......Not being a banker or an accountant, BUT going to retire in a few years, how does one calculate what is needed ??A capitalfund, monthly spending, yields, inflation, etc.... how does one convert all this in an excell sheet ?What other variables have to be taken into account here ?Cheers ! Link to comment Share on other sites More sharing options...
elef Posted October 25, 2003 Report Share Posted October 25, 2003 Hi BB, I think you should start with asking your insurance broker/company to make an analysis on your incomes after retirement. After that you must add the uncertainties as inflation, changes in taxation and so on. Living in an other country than your money brings the risk of exchange rates fluctuations. And finally make a budget of your cost of living. Making a excel sheet adding up all parts is not that hard! elef Link to comment Share on other sites More sharing options...
Guest Posted October 25, 2003 Report Share Posted October 25, 2003 BB, You use a calculation called Time Value of Money which is available on financiall calculators and software and on the Internet at many financial sites. (Search for "retirement planning.") You then make assumptions about these variables: 1. inflation 2. currency rates assuming you keep your assets in your home currency 3. life expectancy 4. return on investment of assets 5. monthly cost of living The best situation is to be able to live off interest (taking into account the assumptions you have made) without spending principal. That way if you live longer than expected you don't go broke. Also, your heirs would have some inheritance. If that scenario is too expensive then you expect to spend most of your assets before dying. So, let's make these assumptions: 1. inflation - long term average of 2.5% 2. currency rates - I would expect the Thai baht to weaken as competition from China erodes their export businesses, but let's assume no change for simplicity's sake. 3. life expectancy - retirng young? then let's assume a generous 40 more years. 4. return on investment - 4.2%, but we have to subtract inflation for a real rate of return of 1.2%. This is the current, low return. In the US now the US 10 year bond rate is currently 4.2% while the Consumer Price Index is lately estimated at 3.1% per year. 5. cost of living - the perennial question. I read that you can live for US$ 1000 per month in BKK, but let's be more conservative and assume US$ 2000. Even this could require adjustment due to higher medical costs in the future, for instance. We will also assume that you spend it all before you die, disappointing your heirs hugely. We input these values to the Time Value of Money formula: Future value: 0 (when the grim reaper calls) Payment: US$ 2000 (received by you each month) Annual Interest rate: 1.2% (real rate of return, after inflation) periods per year: 12 (months) number of months: 480 The formula returns the Present Value of: US$ -762,136.36 The number is negative because you have to "pay out" this amount by putting it into investments from which you then receive positive monthly payments. To put this into practice you would try to keep two years of living expense in cash so that it is not subject to market swings which affect even US Treasury Bonds (to date, the safest investment vehicle.) If you can't afford this then you have to try to get a higher rate of return which means taking more risk, for example, in the stock market. If you have other assets, like national health insurance or a pension, then you adjust the cost of living accordingly. Hope this helps. Khun Pad Thai Link to comment Share on other sites More sharing options...
Guest Posted October 26, 2003 Report Share Posted October 26, 2003 You might want to try out some dedicated pages, e.g. - http://www.retireearlyhomepage.com/ However, professional service for doing/ reviewing the calculation is highly advised though. When dealing with probabilities, simulation models can give further insight. Link to comment Share on other sites More sharing options...
New Petchburi Pete Posted October 29, 2003 Report Share Posted October 29, 2003 Have you seen my post (not written by me) on the 'retirement plan?' .... just kidding! I've obtained the one year retirement visa; so, I will be gaining first hand experience. My doctor's urging me to move out of Bangkok, which we intend to do ... most likely area to relocate to is Hua Hin ... we plan to check it out when the weather is cooperating; and, hopefully, I'll have a Thai driver's license (Fon recently got her's) ... we'll buy a two wheel drive truck to save money ... this will put me in a better seating position (better for back). Johnny Was has informed me that the cost of renting a house in Hua Hin is around 8-10 thousand/Bhat/mo. ... so we'd save there ... although we would like to purchase a home when ready. I'll keep in touch & pass along any info regarding retirement as I acquire first-hand experience. There is a good chance that I will be offered a decent, more or less, part time position in SE Asia, which would allow me to reside in LOS. I'm praying on that one! Link to comment Share on other sites More sharing options...
dean Posted October 29, 2003 Report Share Posted October 29, 2003 I'm assuming that the calulation assumes that there will be only one person and not a wife or any children. Link to comment Share on other sites More sharing options...
BelgianBoy Posted November 7, 2003 Author Report Share Posted November 7, 2003 All, Thanks guys for all the responses, some of them rather complicated All in all, a simple question : is there somewhere a kind of excell sheet where one can put in and play with the different variables ? Anyone ? TIA ! Cheers ! Link to comment Share on other sites More sharing options...
soongmak Posted November 7, 2003 Report Share Posted November 7, 2003 All in all, a simple question : is there somewhere a kind of excell sheet where one can put in and play with the different variables ? Loook in your mail box. Cheers! Link to comment Share on other sites More sharing options...
BelgianBoy Posted November 8, 2003 Author Report Share Posted November 8, 2003 SOONGMAK, I loooked and many thanks, this is exactly what I was looking for !!!! Cheers ! Link to comment Share on other sites More sharing options...
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