I am often asked questions like this by readers, clients and followers:
- Is $1m enough to retire in the UK, the US, Canada and most developed countries these days?
- How about if you have $5m or $10m invested or saved up – is it enough for a luxury retirement?
- Is $300,000 enough to retire in a place like Thailand, Cambodia and other countries in South East Asia?
- How much do you need to retire early and is it a good idea to begin with?
Of course, it is impossible to know about your lifestyle, future inflation rates and unexpected events.
Despite that, there are some common sense rules, and formulas, that can help you.
In this article, I will list some of my most popular Quora answers down the years, alongside some YouTube videos.
If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me or use the WhatsApp function below.
Where can you retire with less than $1million and live like a king?
How can you retire rich or early as an expat?
What is the 4% rule of retirement?
What is the best place to live in after retirement?
Here are some options:
Thailand:
Thailand now has a huge retirement population. Hot weather, good food and great beaches make life here easy for many., Bangkok, Hua Hin, Chiang Mai, Chang Rai and Phuket are all popular expat destinations.
Medical facilities in Thailand are world-class, so much that Thailand is now a health tourism location. With world-class facilities offering heart bypass’ from $10,000, you can see why.
Expats coming from the UK and Europe are better off still getting expat insurance though, and for the over 65s, this will cost at least $200-$300 a month, so is a substantial extra cost compared to being in the UK or Spain. If you have pre-existing conditions, moreover, you may not get insured.
To get a retirement visa, there are some financial requirements. You need to have a bank account with THB 800,000 (about $25,000) and double that (close to $50,000) for a couple, or a monthly income of THB 65,000 (around $2,000 a month), or a combination of a bank account and income that exceeds THB 800,000.
After meeting this requirement, you must then obtain a one-year retirement visa. To get this you must be 50, have a Thai bank book and a letter from your bank in Thailand. In addition, you will need to provide pictures, a passport and departure cards.
You will also need to get an `extension of stay’ notice and a re-entry permit. This will allow you to re-enter the country if you leave it. Finally, you must report to immigration every 90 days to check in and verify the address you are living in. If you have ever been deported from Thailand or had any sort of criminal history you may not get the visa.
For people under 50 who are financial independent and retired, you will need to find another solution. One is to enroll on a Thai language course or another education course. Spend a limited amount of money, and get a student visa. In 2017, a `digital nomad visa` was introduced. Called a Smart Visa, it is designed for business people.
They have currently limited the applicants to startup business owners, investors, high-level executives, or other highly-skilled professionals. Visa rules are always changing, but if you have a decent budget and you are under 50, you should be able to get a visa. Spending 2-3 months a year in Thailand on a tourist visa if you live elsewhere in SE Asia, is very easy.
One of the biggest mistakes I have seen in Thailand is underestimating costs. Many Thais live off $1,000 a month or less, and you can too. But this doesn’t include luxuries. To travel a bit domestically and internationally, sometimes eat out, get insured and so on will cost you between $1,500-$2,500 depending on your tastes and expectations. A luxury retirement with maids and big house, may cost at least $4,000-$5,000 a month.
Indonesia
I lived in Jakarta in 2013-2014. Indonesia does attract expats as it is the biggest economy in South East Asia. Jakarta is an expat destination but not a retirement destination. It has some of the worst traffic I have seen, prices are expensive (especially for alcohol) and it is a business city.
Bali and some other beach resorts, in comparison, are laid back and cheaper. You can live in Bali in a villa and enjoy a luxury lifestyle of spas and massages, all for $2000. A more modest lifestyle can be had for $1,000-$1,500.
What did surprise me about Indonesia was how strict immigration can be. I found Indonesians some of the friendliest people I have met, but immigration at the airport were an exception. It was curious for me, as for most foreigners from high-income countries, why would they go to Indonesia on a tourist visa to take money from the non-existence Indonesian welfare system?
Based on that experience, it shouldn’t come as a surprise that there are numerous requirements to retire in Indonesia. In Indonesia, the age in which you can get a retirement visa is 55, 5 years older than Thailand. The other requirements include:
• Possess a passport or travel documents with more than 18 months remaining validity
• Copy of all passport pages
• A copy of your resume
• A copy of your marriage certificate, if you are married
• Proof of $18,000 per year of income. This will come from statements from your bank or investment funds. Married retired couples must both prove an individual income of $1500/month and apply separately.
• Proof of medical/health Insurance, life insurance, and third-party personal liability insurance in country of origin or Indonesia
• Statement of living accommodation in Indonesia. Minimum cost of US$35,000 if purchased house/apartment or, a minimum rental cost of US$500/month in Jakarta, Bandung, and Bali; US$300/month for other cities in Java Island, Batam, and Medan, and other cities a minimum US$ 200/month.
• Statement to declare intent to employ an Indonesian maid and/or driver whilst living in Indonesia
• Payment of Immigration Fee based on effective regulations
• You must sign a lease for housing with a minimum one year period. Alternately you can supply proof that you own a house under an Indonesian spouse’s name.
Cambodia
Cambodia is an off-the-beaten-track location, but is up and coming. People are friendly, it is cheap, growing fast and has an easy visa system. Retirees can come to the airport and get a business visa on arrival, and then renew for up to 2 years a time. Kep and Kampot, moreover, are more relaxed than Phnom Penh or Siem Reap.
Having lived in 5 countries, visited 35 and visited more than 200 cities, I haven’t seen a place as good value as Phnom Penh for some things. Not cheap, but good value. Basic goods like water are more expensive than China or Thailand, but you can go to an excellent French or other international restaurant for lunch for $10. And that is for three courses! A traditional Khmer massage can cost you $6-$7 including a tip.
Sihanoukville has a sleazy reputation, but like Pattaya, has been trying to change its image. Some of the beaches are beautiful. It doesn’t have the same amenities as Phnom Penh or Siem Reap, but it does offer a more relaxed lifestyle.
Malaysia
One of the big positives about Malaysia is that they do have a specific retiree scheme. Started in 1997, it has become popular in particular amongst British retirees, which is unsurprising, given that Malaysia is a former UK colony. That fact means that over 90% of Malaysians speak fluent English. Coupled with the golf courses, natural scenery and excellent climate, this puts Malaysia high on an expat retirees list.
Under the My Malaysia Second Home Program, expats pay a one off fee of $3,000. The program then helps expats get a 10 year visa, and also helps with housing. Like Indonesia, the capital city is more expensive, but the traffic situation is much better. Outside the capital, expat retirees can buy a house for $75,000-$150,000.
Penang is a good destination for retirement. Cheaper and more laid back than Kuala Lumpur, with a good climate and the same excellent food, it offers retirees a great standard of living.
Vietnam
Vietnam doesn’t have as easy visa situation as Cambodia or Malaysia for retirees. But Vietnam is currently in the `sweet spot` of development in HCMC, the most developed city in Vietnam. It is still cheap, but it is developed enough to offer extra conveniences compared to Cambodia, such as readily available taxis and cheaper consumer goods due to economies of scale and other issues.
Even though Vietnam doesn’t currently offer retirement visas, it is relatively easy to stay on tourist and business visas long term. Another negative about Vietnam, is like Cambodia, excellent healthcare can only be found in bigger cities such as Ho Chi Minh. Thailand offers world-class healthcare these days, and health tourism has been their reward. If you get sick or need certain medicines, Vietnam isn’t the best option, even if you get expat medical insurance.
According to International Living (https://internationalliving.com/…), Vietnam comes way down the list when considering a good place to retire. Having said that, I would say most expats (both retirees and working age individuals) seem happy in Cambodia and Vietnam, if they can get used to the way of living.
Spain, Portugal and Greece
Spain is arguably the `original` retiree destination for British, Dutch, Germany and Scandinavian expats. With cheap or subsidized healthcare if you are from the EU (at least for British people until March 2019!), Spain can actually compete on cost with Thailand and Cambodia once you factor in this benefit.
With relatively good costs in some parts of the country, excellent climate and proximity to other European countries, Spain, Greece and Portugal will continue to be popular expat destinations.
In Portugal, retirees outside the EU usually hold Type I visas. That visa requires people to show proof of private health insurance valid in Europe, as well as proof of sufficient funds to support living and a criminal background check. After five years’ residence in Portugal, retirees can apply for a permanent residence visa, with associated healthcare benefits.
Portugal has a great reputation of having friendly locals, an easy-going lifestyle and ease of opening bank accounts. Against that, driving is supposed to be dangerous and Portuguese is a more difficult language to learn for many expats compared to Spanish and French, but that will depend on your native language.
Bulgaria
Also in the EU, but certainly not a traditional retirement destination, Bulgaria is an up-and-coming retirement destination. With houses from $55,000, cheap costs and an ever increasing expat community, Bulgaria’s expat community is likely to continue to grow. Similar to Cambodia within Europe, in some ways.
One of the advantages of Bulgaria is it is in the EU, so expats from other EU countries don’t require visas. Non-EU citizens who are retired in their home country can apply for a Bulgarian Pensioner D visa and temporary residence permit. Documents submitted to the embassy will include:
- Documents showing you are entitled to a retirement income, legalized with a notary public.
- Document from a bank in Bulgaria ascertaining that the application has a valid bank account in Bulgaria, where regular transfers can be made
- Evidence of address in Bulgaria
- Medical insurance
Mexico/Dominican Republic/Panama/Costa Rica :
For Americans and Canadians, Mexico and the Dominican Republic are good destinations. The visa situation is very favorable in Dominican Republic, with even overstayers fined a relatively small amount of money.
Mexico has an easy-going lifestyle, but many people are worried about safety. Most of the crimes are committed by people who know each other, such as gang members, so retirees aren’t usually targeted.
For Americans all over the world, getting expat insurance will be cheaper than back home. From experience, most Americans are happier with the overseas insurance situation compared to Europeans. For British people who have grown up in a system where healthcare is free at the point of use, people can feel it is an extra cost.
One of the advantages of retiring in Panama is that you only need to prove funds of $600 a month. That doesn’t mean that it is recommended that you can only live on $600 a month in Panama, but it does show the rules are less strict than elsewhere.
In terms of safety and proximity, Costa Rica ticks many boxes. It has been a retirement destination for Canadians and Americans for 30+ years now for this reason, and many other factors.
Is a million dollars enough for one to retire?
In most countries, it is, because $1M is $40,000 of income per year, inflation adjusted.
The per person income is less than $40,000 in most countries. In countries or cities with high per capita income, $1million might not be enough, especially if you have rental costs.
Here is a simple formula:
- Take your last pay cheque after tax
- Take 70% of that amount
- Then work out based on the 4% rule
Simple example. Your last pay cheque was $40,000 after tax. 70% of $40,000 is $28,000. So you need a 700k pot as 4% of 700k = 28k per year.
Example two. You have $60,000 after tax. So you need $42,000 after tax in retirement. So you need need about $1million .
Of course, there are other things to consider, including:
- Where you live
- If you want more than 70% of your pre-retirement income in retirement
- Social security.
Yes it is unless you have awful spending habits, as 10M is $400,000 worth of inflated-adjusted income for life. The 4% rule is tried and tested, even during 1929 and the crisis.
However, you need to:
- Read the evidence on finance for yourself
- And/or delegate it to somebody who has
- Watch your spending habits closely
- Watch fees closely in the investment account
- Especially watch asset allocation closely
Here are some model portfolios, the evidence suggests you should keep at least 25% in bonds in retirement:
Model portfolios for American citizens and expats under 40 –
60% US Stock Markets,
20% International stock markets,
10% Emerging stock markets
10% US short-term government bonds
Model portfolios for American citizens and expats over 40 –
50% US Stock Markets,
20% International stock markets,
5% Emerging stock markets
25% US government bonds
Model portfolios for American citizens and expats over 55 or close to retirement –
50% US Stock Markets,
20% International stock markets,
30% US government bonds
Model portfolios for British citizens and expats under 40 –
40% UK FTSE All Shares
40% International stock markets,
10% Emerging stock markets
10% Global government bonds index
Model portfolios for British citizens and expats over 40 –
35% UK FTSE All Shares
35% International stock markets,
5% Emerging stock markets
25% Global government bonds index
Model portfolios for British citizens and expats over 55 or close to retirement –
35% UK FTSE All Shares
35% International stock markets,
30% Global government bonds index
Model portfolios for European citizens and expats under 40 –
40% Euro Shares
40% International stock markets,
10% Emerging stock markets
10% Global government bonds index
Model portfolios for European citizens and expats over 40 –
35% European All Shares
35% International stock markets,
5% Emerging stock markets
25% Global government bonds index
Model portfolios for European citizens and expats over 55 or close to retirement –
35% European All Shares
35% International stock markets,
30% Global government bonds index
From the above figures, one can work out what kind of portfolio you should be aiming at, depending on your nationality. If you are from a country which hasn’t got a history of
For investors who want a diversified portfolio which includes REITs and international stocks, I would suggest the following portfolio:
10%- Global REIT ETF. Either iShares or Vanguard
55% – Vanguard Total World Stock Market ETF
35% – Vanguard short-term inflation protection securities ETF
Would you retire early if you have $5 million saved in your bank accounts?
No for two reasons. Firstly, I wouldn’t put the $5M in the bank account.
I would invest it using proper asset allocation. Once you include living costs, inflation could eventually eat into that money.
Even when inflation is low, like it is now (at around 2%-3% in most countries) , if you spend $50,000 a year, you will eat through it quicker than you think.
If inflation raises to 20%+ like it did in the 1970s and 1980s for ten years, you could be in trouble with the money in the bank.
According to the evidence, you can withdraw 4% out of a diversified portfolio – How much can you safely withdraw from a portfolio in retirement?
However, as per the article, you need to watch your asset allocation. If you do that, you don’t need to fear investing in markets.
I wouldn’t retire for a second reason: I am healthy and feel I have something to give.
BUT I would travel even more than I do now, and make different choices.
Right now I have a reasonable amount of passive income, but with an extra $5M I would have another $200,000 per year to add to the pot.
So I would make different choices. I think anybody wants the choicewhether to retire or not, especially as nobody knows when their health will go.
How much did you retire on for an early retirement?
Less than you might think. It depends on:
- Where you want to retire
- How many sacrifices you are willing to make
- Your age
- How early you start
- How much you consider wealthy
- What you are invested in. Ideally you will be invested in low-cost index funds
Age is quite key. If you start out young, you can get wealthy easily. If you invest $500 a month for 40 years, and get the market (historic) average of 6.5% after inflation, you will have $1M+ in inflation adjusted terms in retirement.
If you add in a lump sum from inheritance, you could easily have $2m-3m. If you can save and invest $30,000 a year for 40 years, you could easily be worth $10m in today’s money terms, just based on getting normal returns.
30k a year isn’t a small amount of money, but many doctors, dentists, head teachers and others could manage it. Very few people get to $2m let alone 10m because they aren’t following the evidence/reading.
Focus on, a) starting asap and as young as possible, b) your spending habits and c) low cost funds.
Starting early is incredible important as I mentioned. I saw this today:
What are the biggest detriments to early retirement?
The man above is Jack Bogle, the founder of Vanguard. He commented before his death that, even for middle-income people, they might need to consult a cardiologist, if they invest productively from a young age.
The reason? They would be so shocked at how much their account is worth, if they didn’t check the valuations in the meantime – not a bad idea by the way.
So why do many people not get there? The major reasons are:
- Not investing from a young enough age. If you invest early it is a free lunch. Due to compounding you can get more, by investing less. In other words, the person that invests from age 18 until 35, can often just let the money compound without adding fresh money, and still have more money at age 65, than somebody who invests hard from 45 until 65.
- Overspending – and hence not having enough money to invest to begin with
- Putting money in the bank. You can’t save your way to retirement realistically, especially with 0% interest rates.
- Not taking risks – indirectly leads to risks coming to you. So many people are petrified by any type of volatility. Look at stocks. 100% of people should have money in stock indexes, from those that can afford it. But only about 50%-60% have that, even in developed markets.
- Confusing volatility vs stability. The biggest reason for point 4? I think people are scared by volatility. US Stock Markets have consistently produced 10%, and 6.5% after inflation, over any long period of time. In other words 1960–1990 = 10.2%. 1990-today = about 10%. Yet markets fall hard sometimes and people are scared due to the media
- Giving up too soon – so markets in the US produce about 10% historically and yet let’s look at the figures more carefully. 1960–1990 = 10.2% per year. However, 65–82 = 0%. 1990-today – about 10%, yet 2000–2010 = about 0%. Many people give up too soon if markets have a bad 5 or 10 years
- Being emotional and not rational – let’s look at the above figures rationally, and not emotionally. If you are a new investor, which period should you hope for? 65–90 or 2000–2011 or bullish periods like 85–90 (16% returns) or 2009-now? Rationally, you should want worse returns early on, and better returns later on, due to compounding. Let’s look at two people that invest 1k a month for 30 years. Person A gets 15% for 15 years and then 2% from years 16–30, and person B gets 0% from years 1 until 15, and then 11% from years 16 until 30. Who has more? Person B because he or she is getting better returns when their account is worth more. Remember 20% on $2,000 = only $400 gain. 10% gain on $1m = $100,000. So you should want returns later on. If markets fall, or stay stagnant, you are merely.
- Market timing – nobody can time markets consistently for years. Not me, you, or anybody else. If you get one prediction right, you will probably get the next one wrong. This is linked to point 7 and being emotional. Many people get out of markets after getting fearful due to the media
- Listening to the media – they exist to entertain and sensationalize. They are not academics in portfolio management or a Bogle or Buffett for that matter.
- Not focusing on all aspects of financial planning – your net wealth = your net income – expenditure x compounded returns. So focus on all aspects not just your returns or income.
What are 3 reasons to retire as early as you can?
You can pursue your hobbies and be financially free
- It is better to enjoy yourself when you are young, and have the money, and come back to work if needed when you are older
- You can have less stress and hassles
However, I am a great believer that early retirement isn’t for everybody, but having the ability to retire early is for everybody.
As nobody can know when they will get fired, or get sick, or if a huge economic shock will occur, it is always better to be in the position to retire early.
I have met so many people who had unexpected heart attacks or strokes, and wished they had been in a better position.
It is easy to say `I love my job, I will work until I drop`, but it is easier said than done.
It is something to bring out of your arsenal, if needed. Imagine you are playing a computer game, or going to war.
You would prefer to have all the options available to you;
Same in personal finance. You don’t want to box yourself in and say `never`.
Is Thailand a good country to retire?
In some ways it is. Let’s say you have a local wife or husband, have lived there for years as a working age expat, so know the language, then yes it can be.
Likewise, I have met many happy retirees in Thailand. The main issue is how much the government moves the goalposts.
Take something which is happening right now. The Thai Government is making it harder to renew visas.
Many expats are needing more expensive health insurance policies, to get a renewed visa
That is just one example of how the rules are being tightened. So many expats are leaving Thailand, or panicking about the increased costs of healthcare, visas and a rising Thai Bhat.
In effect, as more and more tourists are visiting Thailand, the government doesn’t need retiree money.
So it will probably get harder, as times goes on, to retire in Thailand, unless an expat has a lot of money.
So in much the same way that to retire in Singapore often requires an investment visa (like $1m+), Thailand might eventually move in that direction.
There are other places for residency, that are more relaxed, which also offer sand, beaches and 0% on overseas income.
So overall not as good as before, and not the best place for retirees and some nomads, but not the worst either.
Is it really possible to still retire in Thailand on $1000 per month and live like a king?
Not anymore. In some parts of Bangkok, you will struggle on 1k a month, even after tax.
In Chang Mai or some other parts of Thailand, you can get by on $1,000, especially if you have a dual income or own your own property already (meaning no rental costs).
Wouldn’t say you will live like a king though. You may be able to afford things you can’t back at home, like a cleaner and so on.
For retirees in particular, they often underestimate costs, due to things like health insurance costs.
What proportion of a weekly salary should be saved for retirement?
The old-fashioned `rule of thumb` was 10%. However, we are all living longer.
Retirement used to mean 5–10 years. These days, 10% only works if you start investing early.
If you are 30, and especially 40, you need to save and invest as much as possible, to make retirement at 60 or 65.
It also depends on how much you want in retirement. $1M or $2m sounds like a lot to most people.
Just remember how much it `buys` in a 30-year+ retirement;
Added to that, jobs are becoming more unstable. People can no longer plan for 40 years in the same company.
Given all that, people should fix the roof, when the sun is shining.
Why is investing a better option to retirement rather than saving?
Saving money usually means putting it in the bank. In that case, you will earn more than having it under the mattress, but you will struggle to even match inflation;
So in 99% of countries interest rates are either:
- Negative. So inflation will eat into your savings
- Just about positive. 0.1%-1% above inflation
- Positive but in this case, the currency and country itself is often high risk. Look at the graph above and notice what has happened to the Brazilian and South African currencies.
So you can’t realistically save your way to retirement, unless you are very high income and exceptionally frugal AND are extremely careful about how much you withdraw in retirement.
Even if you have $5m in your retirement pot in retirement, you would struggle to last 30–35 years in retirement, in most developed countries, assuming negative interest rates.
As you withdraw money and inflation eats into your pot, it will soon go.
For example, you withdraw $50,000 a year in year 1, but the amount isn’t paying much interest. 20 years later, you may have to withdraw $80,000, just to have the same quality of life.
All the while, inflation has eroded the $5m, and of course, most people can’t make it to $5m.
So you need to invest in assets that beat inflation.
How do people retire at age 40 and live off of dividends?
Usually by:
- Living below their means
- Investing for the long-term
- Reinvesting dividends in their 20s and 30s
- And then withdrawing money later on
I would mention one point, however. Dividends isn’t a free lunch.
Most dividends stocks don’t beat the overall stock market. If it was so easy to just pick the stocks with the highest dividends, and beat the S&P500, everybody would do that.
Too high dividends can actually be a bad sign. It can show that the overall stock price will lag.
Likewise, even with individual stock indexes, dividends aren’t all that matters.
Look at the UK vs US markets in recent times. The UK market has a much better dividend yields (4.5%).
However, the overall market hasn’t performed as well as the US Market.
It is safe to withdraw 4% of a portfolio in retirement though, even if the retirement is 30+ years.
So withdrawing say $40,000 of a $1m portfolio is safe, even if the market is only giving 2%-3% dividends.
Ultimately, if the markets is producing 9%-10% adjusted for reinvesting dividends (the US average), but you also have money in government bonds for diversification, 4% is safer than 5% because of things like inflation and unexpected things like markets performing less well during a period of time.
Can I retire in Canada with a million dollars?
It depends on where you live in Canada. In some of the cheaper places, then yes.
In many places, it will be tighten then you might expect. $1m = about $40,000 of yearly income in retirement, assuming you are investing it right:
And ideally you should replace about 70%-75% of your income in retirement.
Further Reading
On the article below, I focused on:
- Is it really true that you need to be a business owner to earn a lot of money, or can salaried employees get rich too?
- Is the way that the media reports on “the rich” and “billionaires” really accurate?
- Did the 0% interest rate environment change how I invested assets?
- Does having a lot of money allow you to live a stress-free live?
To read more, click below
