How to Retire On $500 Per Month

http://jetsetcitizen.com/cheap-travel/can-you-retire-on-500-per-month/

by mhb • 17 years ago

63 83 17 years ago

jetsetcitizen.com

Dilpil2• 17 years ago

How exactly does one make six percent a month from safe investments?

netsp2• 17 years ago

Until recently that was close to the interest rate from a basic savings account in Australia.

JacobAldridge• 17 years ago

One doesn't. The article suggests 6% annually.

That's currently a slight stretch given interest rates in most OECD nations, but definitely achievable without effort over a longer term (eg, 6% pa for 10 years).

patio11• 17 years ago

six percent a month

Six percent annually.

That said, it is a fantasy, unless you intend on your retirement getting cut short by death prior to you exhausting your money. The standard recommendation for someone who is much older (i.e. can rely on death to moot insolvency with greater probability) is that the safe withdraw rate is 4%.

With a withdraw rate of 4% and a standard mix of stocks and bonds you can be fairly confident that, assuming the future looks something like the past, you will not run out of money within your lifetime. (Most people will in fact see their money "go infinite", i.e. their portfolio expands faster than their withdraw rate and when they eventually pass away their heirs and government get to toast their name quite a bit. However, the prudent investor doesn't plan on being "most people", they plan on being the unlucky sod who bought at the top and sold at the bottom.)

pfedor• 17 years ago

And let's not overlook that it's 4% before taxes. So in reality, closer to 3%

netsp2• 17 years ago

Consider the context. He's not talking about an invulnerable plan for when you can no longer work. He's just sort of playing with numbers to see if you can live without a job by being somewhere heap & what that would look like.

Some of the applications sound a lot more like a careers break, vacation, or a few years off to volunteer.

Naturally, you'd need to consider how much you need, what are acceptable risk & such depending on your application.

His high low estimates for how much you need also vary almost 7/1.

kvh• 17 years ago

minus inflation...

gambling8nt• 17 years ago

The biggest problem with the 6% figure is that it ignores inflationary pressure. If you're stuck with extremely low risk investments (as you are once retired), you should really be looking at levels around 1 to 2% over inflation. At 2% over inflation (long term rate around 5%), withdrawing 6% annually (growing the withdrawal amount to keep up with inflation), you'll only last about 20 years, assuming no mishaps. Withdrawing 4%, the commonly recommended value, lasts more like 35 years; the average American retirement isn't that long, but it has a significant increase in expenses at the end.

Retric• 17 years ago

"you'll only last about 20 years" 20 years is long enough to take on a fair amount of diversified risk, which up's your return, which let's you take on more risk etc.

Also a 60 - 40 stock/bond is actually safer than a pure bond portfolio because of inflationary risks and has a higher expected return over 10+ years. The only real trick is to avoid single investments, be they a stock or an industry.

mynameishere• 17 years ago

Long treasuries will get you over 4 percent right now,

http://finance.yahoo.com/q?s=tlt

...that's as safe you'll get.

Insured munis at 5

http://finance.yahoo.com/q?s=pza

Emerging at 6

http://finance.yahoo.com/q?s=emb

Junk at 13

http://finance.yahoo.com/q?s=jnk

Mix and match.

nostrademons4• 17 years ago

That's 4% nominal returns though - you have to subtract inflation from that. TIPS are going for less than 2% yield.

For 3% inflation, you need 7% nominal returns to make 4%. You're already into pretty risky territory there.

Dilpil2• 17 years ago

Yeah, as many have pointed out, I meant per year. Still a fantasy.

jrnkntl2• 17 years ago

I am living in Bangkok right now at €500 (euro, ok) a month and before I clicked this I was wondering if it would mention Asia. You won't believe how many 'old western people' actually live here in Thailand (mostly the coast areas) or Indonesia for that matter.

kqr2• 17 years ago

What do you do for healthcare? Do you have insurance or pay out of pocket?

rgrieselhuber• 17 years ago

Will be curious to see his answer but health care standards are high (if you can pay) and, compared to Western rates, ridiculously affordable in Thailand.

thomaspaine• 17 years ago

Health care is ridiculously cheap in Thailand compared to the US. A hospital visit a little outside of Bangkok cost me about 1500 baht ($40), including medication. It was a simple out-patient procedure, but I'm sure it would have been several hundred dollars if I had to pay out of pocket for the same procedure in the US.

Also, prescription medications are fairly cheap and you generally don't need a prescription. I got my allergy medication for $20, which is normally about $60 here if you don't have insurance.

jrnkntl2• 17 years ago

I still have my Dutch health and extended travel-insurance; besides that I have a work permit here and insurance of the company I work for. So that's like double safe.

But yeah, it is ridiculously cheap; just had a blood and regular check up last week for 300 baht (~$9, ~€6)

grandalf• 17 years ago

A better title would be "How to leverage your income far more effectively".

How much money do most of us flush on rent, cars, overpriced houses, and other things. If you add it up over 10-15 years the opportunity cost of living in the US is over $1M for most people.

All that so that we can eat a horrible western diet, watch cable news, and work for prestigious firms in hopes of retiring at 70.

elai• 17 years ago

And get paid western wages. If you live in thailand you get paid thailand wages, and thailand connections for the most part, which are locally adjusted for the cost of living downwards.

mjnaus3• 17 years ago

Not if you live here (Thailand) and contract for westerm companies.

fuzzbang6• 17 years ago

Living in Thailand doesn't mean you have to work in Thailand. That is the crucial difference...

I live here (Thailand) and do contract work at near western rates. That means I can live for months off the revenue from a single project.

To be fair though, the cost of living in Thailand is higher than the article makes out. Rent is quite high (if you want to live in a good location), and having western food all the time gets expensive. Expect to spend about 30k THB per month on ChefXP and FoodByPhone.

As for a variety of foods, Bangkok is hard to beat. Except for the lack of decent mexican food (Sunrise Taco should be burned down), we have pretty much anything you could want to eat... and it can be delivered to your door w/in 45minutes for less than you'd pay in the US.

Bangkok is a 24hr city. You can get good food any time day or night. There are always things to do no matter what the hour... ผมรักกรูงเทพฯมากๆเลย

I've lived on 4 continents (Africa, N. America, Europe, Asia), and I seriously believe that Thailand is the best country for living.

Keyframe5• 17 years ago

I can testify that is not true. It really depends on what you are working, I have been payed a pretty good sum of money while working there, as well as my Thai buddies - pay was on the level you would expect anywhere in the world for that kind of job. And I have witnessed several foreigners (farangs) that were payed significantly more than their thai counterparts.

nostrademons4• 17 years ago

> If you add it up over 10-15 years the opportunity cost of living in the US is over $1M for most people.

And you get the opportunity of living in the U.S. I certainly think this is worth >$1M over a lifetime.

I like living in the U.S. I like having a car, and the associated freedom to take a day trip anywhere in the Bay Area. I like living in a suburban neighborhood where's there's trees and greenery, and yet stores, restaurants, and other conveniences are all nearby. I like being able to work on exactly the same stuff I do for fun and yet get paid for it. I like that I'm surrounded by some of the best & brightest immigrants from around the world in my job. I like my "horrible western diet", which basically consists of being able to eat whatever variety of food I feel like. I can have Mexican for lunch, fresh fish for dinner, Belgian waffles for breakfast the next day, Indian food for lunch, and Chinese for dinner. Is there any other country where you'll get similar variety?

Whenever I've visited other countries (notably China, but also Germany/Austria/New Zealand), I've always felt that they were nice places to travel, but I certainly would not want to live there. Well, except New Zealand. I could imagine retiring there, but I'd hate to waste my 20s and 30s there.

Happiness is knowing what you want, going for it, and having the courage to say "Nope, I don't think so" when people tell you you ought to want something else.

nazgulnarsil7• 17 years ago

New Zealand is right out for me....giant $%^&ing spiders.

I've considered eastern europe, argentina, spain (cheapest european country supposedly) and singapore.

timcederman• 17 years ago

Not all people in the US get to have Google food every day. :)

Pretty harsh to say New Zealanders are wasting their 20s and 30s by staying there.

fuzzbang6• 17 years ago

You know, you can have a car in other countries as well. In Jakarta you can have a car and driver for less than the cost of a car in the US.

Personally, I think everyone should live in a different country for at least one (1) year. You'll gain a lot of perspective on your own country in the process. Just like learning another language teaches you more about your native tongue, so living in another country teach you about your own culture. Combine the two (new language, new country) for a serious eye opening.

For example, the Thai language has no words for "yes" or "no". There are no yes/no questions in Thai.

Only after being removed from pervasive US media do you recognize how much hollywood movie content is US centric and self-referential.

Honestly, if you love living in the US, go live somewhere else in the world for one year. You'll either love the US more, or you'll decide that you enjoy living somewhere else more than you anticipated. Either way, you'll have gained invaluable life experience.

biohacker42• 17 years ago

Local atmosphere > national atmosphere.

Obviously the national laws and economy do play a role, but it's a smaller role then the local economy/politics. Consider rural Kansas, vs. the Bay Area.

The Bay Area is great but you apparently missed out on the great places in Germany/Austria when you visited them.

And it's easy to miss out on the great places, they are few and far between, and they are spread out all over the world.

h1bored• 17 years ago

Holy crap, you need to get out more if you think that the Bay area is somehow magical because you can have a variety of foods, work with smart people and take day trips to fun place.

I live and work here and frankly its no better or worse than many other places I've lived or worked.

ibsulon• 17 years ago

wait... live comfortably on 2,000 a month, and live on 4,000 a month as a king?

Heck, I live on around 3,000 a month (after fairly aggressive savings by American standards) in a middle sized city and it's very comfortable. I could live comfortably on 2,000 a month if I wasn't working! (That's for one, mind you.)

fuzzbang6• 17 years ago

Well, 4k USD per month is ~130k THB. The purchasing power of the Baht means that that is about equivalent to ~10k USD. (As an example, a can of Coke costs 12 THB in a 7/11).

130k will buy you a lot of luxury in Thailand. You can get a very good condo for 30k per month. You can each out for every meal of every day for about 1.5k per diem, so 45k for food. That still leaves 55k for spending on going out, buying clothes, utilities, gadgets, etc. etc. That is more than "comfortable".

Even 70k per month is more than enough for a very comfortable lifestyle. Local food costs < 100 THB per meal, so you could eat for less than 300 THB per day. A reasonable condo is only 20k if you're willing to live away from the tourist areas.

socratees• 17 years ago

Why would you want to live in a place with a lesser standard of living than US?

lionhearted2• 17 years ago

Standard of living isn't everything. One of the best times of my life was in China, lifting weights, hiking up mountains, spending nights in temples, drinking tea, and meeting local people some of whom had never seen a white person before.

If you've never spent 3+ weeks in a country that's very different economically/socially than your own, I'd recommend it. You might like it, might not. I've had mixed experiences with different countries. I quite enjoyed China and Malaysia, Eastern Europe not so much.

But we all have different tastes - there's a meme in the USA that it's the "greatest country in the world" - I reject the notion that there is a greatest country in the world. Just different places for different people at different times in their lives.

sielskr• 17 years ago

How much did it cost you for how many weeks in China?

fluffster• 17 years ago

there's a meme in the USA that it's the "greatest country in the world"

There's the same meme in India, and perhaps in other countries too. It is a bit silly to think like that, especially when most people haven't really travelled to many countries. I used to think the same but once I started travelling my views changed. Definitely worth a try.

gexla3• 17 years ago

There are some elements of standard of living which are measurable, such as services, infrastructure and other things. But some elements are can't be measured and are up to the preferences of the individual. I can still be happy in the Philippines with an otherwise lower standard of living. If you get the opportunity to live abroad, do it.

theoneill• 17 years ago

I would be more convinced by someone writing about how they'd done this than how they planned to.

winanga• 17 years ago

Check out http://locationindependent.com/blog/ - written by a couple that are "still travelling between some of their favourite countries including Thailand, South Africa and the Caribbean"

gexla3• 17 years ago

I do it. My base expenses are less than $500 / month in the Philippines.

10,000 furnished apartment. ~5,000 food ~2,500 visa ~1,300 internet ~1,200 electricity

Total: 20,000 / 47.5 = $421

I'm probably forgetting some things. There are misc expenses which would bring me up to the $500.

That's not to say I actually live here for that though. Those are my actual expenses and I can get by with just those but I choose to have a little more fun. Beer is really cheap here but it adds up if you go out a lot. A 1/4 lb McD's meal is 135 pesos, so your expenses go up if you eat out a lot.

You can nearly cut that rent fee in half if you go for an unfurnished apartment but you have to pay more initially to put in your own furnishing.

You won't be traveling on a budget that low but you have to leave the country once every 16 months (I think) for a visa run if you are on a tourist visa.

Another big one is taxes. So if you are running your own business then you have to make $500 / month after taxes.

I would say that $750 is a pretty decent figure for a single person not living high on the hog. As the article mentions, for $4,000 / month you can live like a king.

Anything I'm forgetting?

ETA: This is for Dumaguete in the Philippines. Cebu is more expensive and Manila is more expensive than Cebu.

ETA2: I didn't add local travel expenses because if you stay in Dumaguete for a decent amount of time you might as well buy a motorcycle for around PHP 40,000. Gas is cheap because you don't use much. Dumaguete has banned taxis so your only option is a trike which typically costs a total of PHP 60 to go downtown and back.

asmosoinio• 17 years ago

/You won't be traveling on a budget that low but you have to leave the country once every 16 months (I think) for a visa run if you are on a tourist visa./

I have a different experience: I am from Finland. Tourist visa when entering the Philippines is valid for only 3 weeks, after which it can be extended for 1 month, and after that for 2 months. The 2 month extension costs 4700 PHP.

Might be different for other nationalities but Finns usually get quite good deals on visas.

mjnaus3• 17 years ago

Doing it in Thailand (have been for almost 5 years):

rent: 90 euro, car: 65 euro, food/drinks: 300 euro, visa: 10 euro, health insurance: 15 euro, other: 50 euro

Me and my girlfriend life a very comfortable lifestyle and we really don't cut back that much; eating out here is cheap (as long as you stay away from tourist spots) and we take regular short trips around Thailand and other parts of south east asia.

Luc• 17 years ago

How do you handle visa? Are you on a tourist visa, working over the internet?

eleitl• 17 years ago

> and you made 6% annually from safe investments

6% and "safe" these days does not sound doable.

fuzzbang6• 17 years ago

It seems like there is a lot of BKK based people here. Anyone want to meet up for a beer?

jim.farang gmail.com

msluyter• 17 years ago

I'm curious about safety. I know this is probably an exaggeration based on too much media exposure, but my impression is that some of these places have high rates of kidnapping and the like. And it seems that if you were a westerner, especially if you were old, you'd stand out as a target.

mariana• 17 years ago

The funny thing to me about this article is I am already living in a country where you can live reasonably well with 500$/mo (I born and live in Venezuela). But you know what? This cheap third world country is a big piece of shit because of its political situation (Chavez).

So, from my point of view, I am just planning how to leave my country. But move to another third world country?? No way man... I would prefer to live in a expensive first world country and work as developer/codemonkey/entrepreneur/whatever.

So, if you choose to "retire" to a cheap third world country, check its political situation and background. Now, if you just don't care to be rescued by UN blue helmets when shit hits the fan, just be my guest...

How to Retire On $500 Per Month

Related Stories