Living in SE Asia
Introduction
Why not consider living in SE Asia as an investment strategy? Want to retire earlier? Or need to limit your spending until the Age Pension kicks in? If you own your home, then moving to SE Asia may be the investment strategy for you. That it comes with a relaxed and all-year-round tropical climate is the cherry on top. Read this article to find out more.Don’t Have Enough to Retire? Treat SE Asia as an Investment Move.
It’s a common feeling to not have enough money to retire. For decades if not centuries one strategy was for some city people to move to regional areas, and for some regional people to move to more rural centres to unlock capital and to have their money go further.
My hometown is Casino in Northern NSW. For decades we have seen people from Sydney, Melbourne, and Brisbane etc move to Byron Bay (now extremely expensive), Brunswick Heads, Lennox Heads, Ballina etc. This movement has pushed up prices in those areas, only to see some people in those areas move a little inland to towns like Casino, Kyogle, and Lismore where once again their funds go further.
But what if you don’t want to move or sell your home? But you also don’t feel like you quite have enough money to retire … and the Age Pension is still years away?
View a Move to SE Asia as a Short-Term Investment Strategy
Why not rent your home and move to SE Asia? The potential savings can be significant – even over a 5-year period.
The Retire to Asia Retirement Calculator in Table 1 and Graph 2 of the outcomes section highlights these potential savings.
Take This Factual Example of the Financial Benefits of Moving to SE Asia
A couple in Newcastle owns their home. They can rent this out for $41,600 pa nett ($800 pw). In Hua Hin in Thailand, they rent a 2-bedroom condo overlooking the beach for $19,500 pa ($375 pw). They could have rented something much cheaper and still very nice but wanted a little more luxury.
Their planned retirement spend back home is $800 pw, or $41,600 pa.
How Much Can They Save by Living in Hua Hin, Thailand?
The table below (which is Table 1 from the Retire to Asia’s Retirement Calculator) highlights the savings in year 1 alone:
Possible savings
How to Interpret the Cost Savings of Living in Hua, Hin, Thailand
There are 4 elements in the above table to be considered:
- How much cheaper is Hua Hin than Newcastle? Considering food (groceries and eating out), utilities, a variety of entertainment, drinks (all types), transport and so much more – the list is extensive, an equivalent spend of $41,600 pa in Newcastle is equivalent to $25,409 pa in Hua Hin.This represents a saving of + $16,191 pa for a comparable lifestyle just by moving to Hua Hin.
- Add property into the equation. They will need to pay $19,500 pa to rent in Hua Hin. However, they will receive $41,600 pa by renting their home in Newcastle.This represents a net benefit to them of + $22,100 pa.
- Amend for health insurance costs. We would always recommend taking out International Private Health Insurance if you are moving overseas. This comes with a cost, in this case about $7,000 pa total for this couple.
Currently, they pay about $6,250 pa in Australian Private Health Insurance premiums. They can pause this cover for several years whilst they are overseas (check with your own Australian Health Insurance provider to see whether this is available to you). As they will no longer be paying this premium it is a savings to them.Net insurance cost is therefore only – $750 pa.
- The financial benefit in year 1 is derived by simply adding the above 3 outcomes.In this case:
Cost of living savings $16,191
Property differential $22,100
Health insurance differential ($750)
Total annual savings $37,541 paThis means that this couple for a comparable lifestyle can save $37,541 pa from year 1 if they were to relocate to Hua Hin, Thailand from Newcastle. This also means that it’s $37,541 pa that they don’t need to draw down from their superannuation or investments to support their retirement lifestyle.
Financial Benefit over Time from Living in Hua Hin, Thailand
Graph 2 in Retire to Asia’s Retirement Calculator highlights the savings over time. This graph shows that if this $37,541 was not spent and retained within superannuation or other investments, and had a typical ‘balanced’ rate of return their savings compounded over time would be:
Over 1 year $37,541
Over 3 years $122,400
Over 5 years $221,700
Over 10 years $546,000
Over 25 years $2,450,000
Accumulated Savings/Deficit
SE Asia as an Investment Strategy
We are retiring earlier, and at the same time the age to receive the Age Pension is rising. We see this strategy as beneficial to those that are wanting to use their principal residence back home to create income without selling it. This should limit the need to draw down on superannuation or investment funds over time and keep more money in your pockets. All whilst living it up in tropical SE Asia.The strategy would be highly beneficial for those that are wanting to retire earlier, will require the Age Pension but are not yet at Age Pension age.
Visit our REtire to Asia Calculator
Once again please use our FREE Retirement Calculator to see how your unique situation will play out.Warning: The above is very general in nature and does not consider anyone’s unique tax, social security, or investment circumstances. It is for illustrative purposes only. Retire to Asia recommends you seek professional advice to determine how the above strategy may affect you. If you require professional advice, both Jeff and I worked within the financial services sector for many decades and know many reputable people that you can speak with. Just ask we are here to help.
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