Guest Post: Thoughts on Retiring Early to Asia

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This is the first guest post on this site and it’s entirely fitting that it’s written by Tony, a regular reader and commentator who is on a very similar path to our own.

Tony plans to move abroad in 2012, and like us he’s not doing it with millions in the bank. Reading his post highlights just what you can achieve if you put your mind to it.

In this guest article I’m going to talk about my plans to retire early to Asia. I first developed the plan a few years ago, after having travelled in Thailand, Malaysia, and Japan. In particular, after one trip to Thailand, I decided to look into the feasibility of early retirement to Thailand. Having researched visas, land ownership regulations and cost of living, I decided it was an idea that was certainly within the realms of possibility. Some of my research was actually done “on the ground” in Thailand – I rented an apartment in Bangkok for a few months, and remote worked. I estimated that I would need around 55,000 Baht per month to live comfortably in Bangkok – at today’s exchange rates that is around £1000 per month. A retirement visa can easily be obtained from age 50 in Thailand, as long as sufficient proof of funds is available. A retirement visa has the advantage of you not having to exit and re-enter the country every 90 days, something that is required with other types of visa. 

Having established the feasibility, and cost, the question arose – how was this income going to be generated? I decided that keeping a house in the UK,  and renting it out, would be the way to go. This not only gave me an income, but an appreciating asset. Property prices in Asia can be unpredictable at best, and tend not to follow the trends we have become used to in the UK. There are also no end of illegal properties, scams, and regulatory issues. It is not legal for foreigners to own land in Thailand for example, although there are several dodgy ways around this, it’s not worth it in my opinion, especially as excellent quality rented accommodation can be had at low cost. My penthouse apartment in Bangkok cost around £300 per month, negotiated down from £500 per month. It had fantastic views over Bangkok, 24-security, two very large swimming pools, balcony, two restaurants, maid service, bar, a mini-mart, a huge gym with saunas, plunge pools, massage, the latest exercise equipment, broadband, and a jazz quartet playing once a week in the lounge bar area! Try getting that for 300 quid a month in the UK!!

It was apparent that in order to maximize my rental income, I would need to pay down as much as possible on my mortgage (the practicalities of that would take another article!). Even so the rental income was projected to be around £700 per month, and more like £400 net, leaving a shortfall. I decided that this shortfall could be made up through an online business, and/or part-time remote working/consulting. Part-time English teaching would also be an option, but it’s poorly paid. OK, so now we were talking semi-retirement, rather than full retirement, but it was better than the alternative of working until I drop dead in the UK! If my online business and remote consulting work could bring in £600 per month I would be comfortable. Anything more would be a bonus. Having already had experience of remote working from Bangkok, I felt this would be the best option, and I would only need to work a couple of days a week to have more than enough income.

So the next question I faced was when to “retire”. I would be 50 in 2012, so that seemed a good target date, as I would qualify for the Thailand retirement visa at that time. In 2012 my outstanding mortgage balance is projected to be £9,000, and savings projected to be £32,000. The capital requirements for a retirement visa are currently around 800,000 Baht, about £14,500. Alternatively, you can demonstrate income of 65,000 Baht. If I was prepared to exit the country and re-enter every 90 days, I could forgo the capital/income requirement. As my fixed interest rate mortgage ends around 2012 I would also have the option of paying off the mortgage completely, giving me a slightly greater monthly rental income. If I delayed by one year I would have a mortgage balance of 0, and projected savings of around £41,000. In subsequent years I’ve calculated I would be able to save at a rate of £18,000 per year (with no mortgage). This would obviously build my capital rapidly. This leads to an interesting dilemma – keep working to build capital, or take time out to enjoy the delights of Thailand – especially the scuba diving? Tricky one. This did beg the question, how long would I need to continue working for, before I was financially independent via rental income and savings interest? I have not yet done that calculation in detail, as current interest rates on savings are far too depressing. However, £100,000 at 4% would be £4,000 per year, or £330 per month. Combined with the rental income that would just about be a live-able income, especially out on one of the islands. It would, however, take me until 2016 to save £100,000. Would the extra 4 years be worth it to become fully-retired, rather than semi-retired?

What I’ve found though are there are almost an infinite number of permutations in the retirement/relocation game. For example, staying in the UK and contract working, and then living (but not working) in Asia for six months of the year is also an option. I’ve already tested this out and it worked well. Also, relocating within Europe and continuing to work would be another option with its own pros and cons. At times it can be confusing, so I think this is where having a concrete idea of when and where you want to go to can really help narrow down the options. Sometimes though it’s like there are too many choices! That is actually a good thing though!

At the moment I’m still sticking with my 2012 retirement date. Back in 2004 I was left with a large debt and no assets due to divorce, so I think going from broke to semi-retired in just 8 years, or to fully-retired in 12 years, is not bad going at all. It’s also worth pointing out I earn a modest salary – I am no high-flier. When I first started really analyzing my finances I was about £100 in the red each month. I have turned that around to the point where I am saving £500 per month and overpaying on the mortgage by £500 per month – on more or less the same salary. I think that shows how much money I was wasting through a combination of a consumer mindset and bad management! If you had told me back in 2004 I could potentially be retired within a decade I would have thought you were mad. It still amazes me how financial situations can be rapidly turned around.

I think having objectives for retirement is important. I have a great interest in diving, so I know that will be part of my retirement. I would also like to get involved in travel writing, photography, and I have a couple of ideas for online businesses that I would like to launch. I’m also a keen swimmer and runner, so keeping fit would also keep me occupied for a good chunk of the day. Having these goals in mind leads to a more rewarding retirement.

Good Luck with your own retirement plans!

Thank you Tony!

{photo credit: IMP1}