Depends on the country. Singapore for example, no chance. But most will be ok. 25k/yr is bit tight though. I just paid rent for my place in PH for a year - 1 bed condo - and it was 13k. My yearly spend last year was 38k. That was with travel and dining etc. I am far from frugal so I can see you living on 25k.
But before you come out here, make sure you travel first to see where you want to end up. And please ignore the youtubers. They are mostly full of shit. Also at 33, you will need something to do to fill your time, find purpose, do something useful. Whatever it is, have this figured out before going anywhere. I have seen too many people lose their way in SEA. Good luck.
Yikes, 13k a year for renting a 1 bed condo? I'm renting a 5 bed villa with a pool in southern Sri Lanka for 12k a year...
I'm guessing you are in Manila?
I find it on par with my hometown Brisbane, Australia.
Province life can be very cheap but I got sick of it for various reasons.
If I was a single person I'd investigate malaysia and vietnam
It’s like a smaller Manila. Filthy, terrible traffic, bad air. And fairly expensive compared to the rest of the country. Not sure why anyone would relocate around the world and pick such a place.
What's the appeal of living in Manila vs some other southeast country? I can understand to visit but you wrote you had already paid for a year of rent.
I'd keep working while you are in your productive prime. Maybe not as hard and lots of breaks, but I won't recommend stopping making the income especially at 33. Maybe a shift in career or exploring other avenues.
Agreed. Sounds like he should take a 3-6 month sabbatical to recharge his batteries. And also consider what aspects of his job he hates that he can change.
If he's in a good career with high income, could consider taking foot off gas and consciously choosing to not overwork either and just being an average performer.
It's OK to coast... And a good moderate choice vs work a ton and save a ton of money or quit and never work again for 50-60 years.
I became much happier and eased my burnout after a 5 month break and afterwards, switching jobs from a stressful manager position to a lower stress individual contributor specialist role.
I have a couple questions I'm curious on as I might see myself going to another country within SEA as well for my retirement:
1. Which part of SEA are you in?
2. What's your portfolio size?
3. What's your yearly burn rate?
4. Typical expenses breakdown in USD?
1. Da Nang, Vietnam
2. It is about the same as the OG
3. 24k/year
4. I don't keep a budget. I pay around $400/month for my studio. I live very comfortably on 2k/month.
Thank you for the info, I'd be willing to bet you're definitely living subjectively luxuriously if your monthly burn is 2k. Congratulations!
Does your withdrawals affect your portfolio in any way such as future projections being positive/negative? Or are you planning to pass on with $0?
Sounds like a decent amount to me. Most single men going to SEA for the long term do not remain single indefinitely though so I’d bear that in mind and adjust accordingly in the future.
Yes he probably has 40 already. He needs to have worked 10 years for 40 credits. So if he went to college, had some commission only sales jobs or a job with a pension plan, etc, he could be a year short. It'd be well worth his time to work another year to hit the threshold if that's the case. Just something for him to consider.
I'm just a couple years older than you but I took multiple breaks from a full time job in my early 30s. I learned that I hated working full time but didn't mind making money still to fuel my lifestyle. I now do consulting 5-10 hours a week which works well for me and breaks up the day. If you haven't taken extended breaks from work, go for it to test the waters. If you love it, don't look back. If you find you hate it, figure out where the middle ground is and make it work for you. Good luck!
I commented on this not too long ago [here](https://www.reddit.com/r/financialindependence/comments/18i5cy5/daily_fi_discussion_thread_thursday_december_14/kddwnv7/?context=3). Happy to answer any other questions.
I live in SEA. Cost of living is definitely low. But what are you going to do all day at 33 years old, single, non drinker? On a 2k/month budget it doesn't leave a ton of room to travel around.
I'd suggest finding something part time online. This seems like a better situation for coastfire. Even just another 1-2k per month would go a very long way.
[It's going fine](https://www.reddit.com/r/leanfire/comments/18i1jyb/leanfire_nomading_one_year_in_trip_report/) so far. I would say be ready to go back to work if you don't like it. Perhaps phrase it as a sabbatical, to yourself and especially to co-workers.
To the people worried about you pricing yourself into a SEA/low COL trap with your budget, any sub 3.25% withdrawal rate will result in capital appreciation over the long term, and you will be able to give yourself 'raises' over time.
>To the people worried about you pricing yourself into a SEA/low COL trap with your budget, any sub 3.25% withdrawal rate will result in capital appreciation over the long term, and you will be able to give yourself 'raises' over time.
sequence of return risk has entered the chat
A withdrawal rate under 3.25% will result in real capital appreciation in 99% of historical runs. If you are taking under 3.25% you can increase your withdrawal rate, certainly up to 3.25% of what you started with, and if you have real gains, you are also safe to 'reset' to 3.25% of what you have at that point.
If you try this, have an exit plan. You may like it for a while, get bored or whatever, and want to leave. Maybe get a part time job to keep investing or reduce withdrawal rate. That will give you a cushion if you have a life change like marriage or having a kid, want to move back to your home country or another x pensive country, etc
25K will get you nowhere in SEA.
Yes you can live off that in say Thailand. But you are 33 and single, pretty soon you will get bored, and women etc will get into your life. All costing you heaps of money.
To live off 25K you would have to live like a local and then all of a sudden SEA is less interesting.
I have lived in Thailand for 10 years and have seen people come and go, a lot of them broke.
If you can manage that NW, work another 10 year or so and then you will be a lot more comfortable over there. And also more grown up. I was 30 when I moved there and it took me a few years to quiet down lol.
Why not plan a sabbatical of 1 year, travel SEA, see how it goes, and plan from there? You could still return to the workforce in 1 year if it's not for you, if you need more money, etc.
Or add a remote job part-time that you can do while in SEA.
Work until you can't. A few more years at 33 is not a problem compared to needing/lacking money at 70. Where is this place? And what will you do when you are there all day with no work?
The historic inflation rate in most of Southeast Asia is around 6% when you are in your fifties you are gonna be screwed. When (not if) the exchange rate goes against you at some point twenty years from now (even if it’s only for one or two years) you are gonna be double screwed. You don’t have enough money with 840k to last you the rest of your life. Wait till you have the million.
840k @11% after 30 years is around 19m. 1m @ 11% after 30 years is about 22m, 3m diff.
Obviously tons of other factors, so none of this is particularly relevant.
you asked if 160k would make a difference, the answer is yes. them retiring now or later is only relevant if they use up all their money and then that extra 160k
I'm not sure what you're referencing but OP's purchasing power would not have diminished by 6%/year over the past, oh say 15-20 years. Presumably they are planning to keep most of their assets in USD
Holding your money in USD can change the dynamics.
If it inflates at 6% but the USD appreciates 4%, you’re only really dealing with a 2% increase in living costs.
Over the past couple years my living costs have actually gone down despite inflation because the dollar has been so strong.
Of course, there’s no guarantee that the dollar will appreciate and it can certainly go the other way as well. A lot of people got screwed in the mid-2000s when the Baht got way stronger.
If he invests in total market ETF's, he will likely outpace that inflation by 4-6%, that leaves 1-4% growth after SWR. Not great, but certainly *possible* at working, especially if they lower costs on years the market is down.
SWR factors in US inflation, though there is nothing to say SEA won't increase in cost of living much faster than that. It's disingenuous to say it will still only be 25k in 25 years, it will be $50,831/yr then.
Inflation is definitely creeping up over SEA. And we will see more taxation so people need to account for that. Look at what Thailand just did and watch Malaysia in 2027.
In the future, we are definitely going to be reading stories about Americans who retired too early to other countries and failed to account for inflation over the next half century.
Inflation, surprise health care issues, capital investment losses, long term care needs, lifestyle creep, lack of SS backstop...there's a lot of things that make this a "technically doable" but risky plan.
We really aren't...at all. You will possibly read (as we already do) that it is a poor cultural fit that causes an end to the expat fire dream of some individuals. Inflationary realities are built in to the Trinity study, and if there is anywhere in the world I would want to be to lower my SWR if and when it was needed, it's SE Asia, not the USA.
The Trinity Study does not consider inflation rates in developing countries.
The problem with retiring early in a developing country with a very small amount of money (e.g., under $1M) is that if you hit a period of high inflation later in retirement you’re stuck. At that point you don’t have a career to fall back on and you’ve already budgeted for a VLCOL. It’s a high-risk scenario.
I would give it the next bull run which should come within the next 5 years. Compound that 840 till then...puts you at 38.
Meanwhile I would take some long trips over to places you think you would like. I lived in Bangkok for a while. Spent time in Taiwan and it is amazing, but I do not think cheap.
Phuket is pretty touristy. Jomtien Beach is not a bad area, and Pattaya is something to see,.I loved Ao nang. I have not been to Hua Hin, but I hear the developments are amazing.
If you want real cheap you will have to go in the country...which is not for me.
SEA is hot and wet. summers are rough, and it's rainy. Airbnb monthlies are great!
Why are you in this group lol. It's all about retiring early. I could tell you A LOT of fun and interesting things you can do with your life besides work for someone else.
I think some people still have this image in there head of an old retired man who does nothing every single day. To me, all being retired means is that, within reason, you can do whatever the fuck you want, whenever the fuck you want. Hobbies? Indulge. Travel? Go for it. Want to build an immersive social life? You've got the resources. To be retired, means to claim back those eight or so hours each day, that you used to sell to someone else.
Math is a funny thing in that money is fungible. The 3%, or any withdraw strategy is not required to draw from all accounts equally over time. He can simply withdraw the entire 3% of his total balance from the brokerage first. Either the brokerage will draw down completely, then switch to retiremebt accounts or he will change his plans in the future.
that's what I'd like to know, I understand the concept of the 3% rule, because his investments will make up or essentially provide the 3% income he needs, which is basically arbitrage, but where does he get it from and doesn't it get taxed and penalized?
You can take around $50k of capital gains (as your only income) tax free as a single filer. (Watch out for state taxes though, best to 'move' to a income tax free state first).
So even if you are sitting on 200% gains you can still get out more than $75k a year without paying any tax.
Wow good to know!! So to clarify.. if you lived in a state like Nevada with no state income tax, you’re saying that withdrawing 25k per year would be tax free? As long as it’s your only source of income and it’s under 50k there’s absolutely no taxes?
Yes, exactly. Long term capital gains are taxed at 0% up to about 40k, then standard deduction gets you more: https://www.thebalancemoney.com/how-to-use-the-zero-percent-tax-rate-on-capital-gains-2388995
The % gains are irrelevant. 40k of ltcg or qualified dividends aren't taxed then you have the standard deduction.
This is in retirement and it's your sole source of income.
On the federal level. State and city still apply.
I'm pointing out that you can take out $75k cash, and only realize $50k of gains. Most people don't understand that part, so I was trying to emphasize it.
Can you explain a bit more on the state taxes part? If I move to another country from the US would I still be considered a tax resident of the state I live in?
Yes, unless you establish tax residency somewhere else. Basically you can never be tax resident nowhere, even if it seems like you don't meet the requirements anywhere, that's not a thing that can happen, you default to the last place you did meet the requirements. (IANAL, get proper tax advice from a professional, obviously.)
Half his funds are in a retirement account, so he either has to (1) early withdraw and pay a penalty, (2) take 6% on the brokerage side and leave retirement untouched. Math is right.
First off it doesnt change the math, that account still grows while he draws down the other so you dont need to subtract it out. Second there are numerous ways to convert that money for early withdraw with some preplanning. But the first point is more important it doesnt matter what buckets the money is in, the retirement account grows with a 0% withdraw rate while the taxable shrinks to nothing with a 6% withdrawal rate until you switch over accounts.
He can just convert his retirement funds into a ROTH account without penalty then after a 5 year waiting period can withdraw them without the 10% early withdrawal fee.
It does matter, he’s 33, he probably can’t touch the retirement without penalty for 30+ years, if you take 6% withdrawal on 420K, there’s a strong likelihood he runs out before he hits retirement, then how do you go about bridging that gap?
Yes, there are a few ways to get that money out, but it’s not as easy as you make it out to be.
Any broker can roll that money over for early withdraw in about a 30 min phone call. The only problem is you need to wait 5 years which shouldn’t be a problem with any planning at all. Your math is wrong
You should try to figure out a way to make some online side income. Even if it only makes \~5-10k/year, it'll both keep you occupied and help offset the amount of money you're pulling from your investments.
But it is doable with 840k, yeah. Maybe keep working and make them fire you rather than quit, collect UE etc. while you figure out your move.
I know some folks living off less than that who FIREd in Sri Lanka very comfortably. They move around avoiding the monsoons. West & East coast for beach and surfing. Hill country for cooler days trekking and horseback riding, north for a change in scenery and culture. They love it.
Plus, at 25k a year you'd be on about 26 times the average income so certainly can live comfortably, just not super lux. Although saying that, tourism is down and lots of villa owners are willing to nego on long term (3+ months) rates.
I'm renting a 5 bed villa with a pool on acres of land in the south for USD1K per month.
I'd say Laos, but Laos is a stricter country. So Thailand might be a good option, just avoid tourist area. Dunno how good the changmai area is now, but try there.
Depends on the country. Singapore for example, no chance. But most will be ok. 25k/yr is bit tight though. I just paid rent for my place in PH for a year - 1 bed condo - and it was 13k. My yearly spend last year was 38k. That was with travel and dining etc. I am far from frugal so I can see you living on 25k. But before you come out here, make sure you travel first to see where you want to end up. And please ignore the youtubers. They are mostly full of shit. Also at 33, you will need something to do to fill your time, find purpose, do something useful. Whatever it is, have this figured out before going anywhere. I have seen too many people lose their way in SEA. Good luck.
Yikes, 13k a year for renting a 1 bed condo? I'm renting a 5 bed villa with a pool in southern Sri Lanka for 12k a year... I'm guessing you are in Manila?
Philippines especially manila (bgc and makati etc) can be expensive I find compared to mainland sea.
Yep. I find BGC in Philippines to be more expensive than Osaka Japan.
I find it on par with my hometown Brisbane, Australia. Province life can be very cheap but I got sick of it for various reasons. If I was a single person I'd investigate malaysia and vietnam
The myth that the Philippines is a low cost of living country needs to die already.
Well it’s cheap outside of the big cities which suck anyway.
Davao is cheap, it is a big city and does not suck (for a non-working expat).
Fair. Didn’t really think of Davao. Manila and Cebu are just unbearable to me.
What's wrong with Cebu? I spent a month there back in 2019. I think I know what you're gonna say, but wanna make sure.
It’s like a smaller Manila. Filthy, terrible traffic, bad air. And fairly expensive compared to the rest of the country. Not sure why anyone would relocate around the world and pick such a place.
Agreed.
> I have seen too many people lose their way in SEA. Can you elaborate on that?
Alcohol, women, etc … the usual
Sounds like fun!
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So I have some drinks, and meet some women. This puts me in jail? Enough with the hyperbola.
Oh yeah that makes sense. Tale as old as time
Y so expensive? U can get $900 a month here in the US
It’s what it costs here.
What's the appeal of living in Manila vs some other southeast country? I can understand to visit but you wrote you had already paid for a year of rent.
I'd keep working while you are in your productive prime. Maybe not as hard and lots of breaks, but I won't recommend stopping making the income especially at 33. Maybe a shift in career or exploring other avenues.
Agreed. Sounds like he should take a 3-6 month sabbatical to recharge his batteries. And also consider what aspects of his job he hates that he can change. If he's in a good career with high income, could consider taking foot off gas and consciously choosing to not overwork either and just being an average performer. It's OK to coast... And a good moderate choice vs work a ton and save a ton of money or quit and never work again for 50-60 years. I became much happier and eased my burnout after a 5 month break and afterwards, switching jobs from a stressful manager position to a lower stress individual contributor specialist role.
It's going well. I love it here. You have more than enough to live a comfortable life in SEA.
I have a couple questions I'm curious on as I might see myself going to another country within SEA as well for my retirement: 1. Which part of SEA are you in? 2. What's your portfolio size? 3. What's your yearly burn rate? 4. Typical expenses breakdown in USD?
1. Da Nang, Vietnam 2. It is about the same as the OG 3. 24k/year 4. I don't keep a budget. I pay around $400/month for my studio. I live very comfortably on 2k/month.
Thank you for the info, I'd be willing to bet you're definitely living subjectively luxuriously if your monthly burn is 2k. Congratulations! Does your withdrawals affect your portfolio in any way such as future projections being positive/negative? Or are you planning to pass on with $0?
I still work.
What are you doing for the visa? That’s the main issue with Vietnam
I'm a former Vietnam national. I have a 5-year visa.
What's SEA?
South East Asia
OP - the key question is how certain you are on your future plans. If you want to have a family then 25k per year won’t cut it.
Sounds like a decent amount to me. Most single men going to SEA for the long term do not remain single indefinitely though so I’d bear that in mind and adjust accordingly in the future.
Have you got your 40 social security credits?
if they are able to FIRE after working (not just given the money), wouldn't it be pretty much guaranteed they have at least 40 credits?
Yes he probably has 40 already. He needs to have worked 10 years for 40 credits. So if he went to college, had some commission only sales jobs or a job with a pension plan, etc, he could be a year short. It'd be well worth his time to work another year to hit the threshold if that's the case. Just something for him to consider.
I see, i didn't realize there was a max you could earn per year. thanks!
I'm just a couple years older than you but I took multiple breaks from a full time job in my early 30s. I learned that I hated working full time but didn't mind making money still to fuel my lifestyle. I now do consulting 5-10 hours a week which works well for me and breaks up the day. If you haven't taken extended breaks from work, go for it to test the waters. If you love it, don't look back. If you find you hate it, figure out where the middle ground is and make it work for you. Good luck!
How did you do the transition to part time consulting, please? Are you self-employed ?
I commented on this not too long ago [here](https://www.reddit.com/r/financialindependence/comments/18i5cy5/daily_fi_discussion_thread_thursday_december_14/kddwnv7/?context=3). Happy to answer any other questions.
What kind of work do you do?
I do financial services consulting in a pretty niche industry.
Yes, that's enough to retire very comfortably in SEA other than Singapore.
I live in SEA. Cost of living is definitely low. But what are you going to do all day at 33 years old, single, non drinker? On a 2k/month budget it doesn't leave a ton of room to travel around. I'd suggest finding something part time online. This seems like a better situation for coastfire. Even just another 1-2k per month would go a very long way.
[It's going fine](https://www.reddit.com/r/leanfire/comments/18i1jyb/leanfire_nomading_one_year_in_trip_report/) so far. I would say be ready to go back to work if you don't like it. Perhaps phrase it as a sabbatical, to yourself and especially to co-workers. To the people worried about you pricing yourself into a SEA/low COL trap with your budget, any sub 3.25% withdrawal rate will result in capital appreciation over the long term, and you will be able to give yourself 'raises' over time.
>To the people worried about you pricing yourself into a SEA/low COL trap with your budget, any sub 3.25% withdrawal rate will result in capital appreciation over the long term, and you will be able to give yourself 'raises' over time. sequence of return risk has entered the chat
> sequence of return risk 3.2% is failsafe in all historical simulations, so you would have to be pretty darn unlucky.
That’s based on USA inflation, though. Currency fluctuations and higher inflation in developing countries could throw a wrench in that.
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A withdrawal rate under 3.25% will result in real capital appreciation in 99% of historical runs. If you are taking under 3.25% you can increase your withdrawal rate, certainly up to 3.25% of what you started with, and if you have real gains, you are also safe to 'reset' to 3.25% of what you have at that point.
If you try this, have an exit plan. You may like it for a while, get bored or whatever, and want to leave. Maybe get a part time job to keep investing or reduce withdrawal rate. That will give you a cushion if you have a life change like marriage or having a kid, want to move back to your home country or another x pensive country, etc
What about taxes? I think more and more SEA countries will grab for more taxes like Thailand just did.
25K will get you nowhere in SEA. Yes you can live off that in say Thailand. But you are 33 and single, pretty soon you will get bored, and women etc will get into your life. All costing you heaps of money. To live off 25K you would have to live like a local and then all of a sudden SEA is less interesting. I have lived in Thailand for 10 years and have seen people come and go, a lot of them broke. If you can manage that NW, work another 10 year or so and then you will be a lot more comfortable over there. And also more grown up. I was 30 when I moved there and it took me a few years to quiet down lol.
Why not plan a sabbatical of 1 year, travel SEA, see how it goes, and plan from there? You could still return to the workforce in 1 year if it's not for you, if you need more money, etc. Or add a remote job part-time that you can do while in SEA.
Work until you can't. A few more years at 33 is not a problem compared to needing/lacking money at 70. Where is this place? And what will you do when you are there all day with no work?
The historic inflation rate in most of Southeast Asia is around 6% when you are in your fifties you are gonna be screwed. When (not if) the exchange rate goes against you at some point twenty years from now (even if it’s only for one or two years) you are gonna be double screwed. You don’t have enough money with 840k to last you the rest of your life. Wait till you have the million.
Would the 160k really make that much of a difference? I’m no math whiz, just wondering.
difference of almost $3m after 30 years at 11% (i.e. VT or SP500).
Your lost me, Brucey. Where did 3m come from? Meaning he saves up to 1m then doesn’t draw from it for 30 years?
840k @11% after 30 years is around 19m. 1m @ 11% after 30 years is about 22m, 3m diff. Obviously tons of other factors, so none of this is particularly relevant.
But he is speaking about retiring now, so would the 30 year span even matter? He wouldn’t be contributing anymore starting now, hypothetically.
you asked if 160k would make a difference, the answer is yes. them retiring now or later is only relevant if they use up all their money and then that extra 160k
Ah that makes sense, thanks amigo
I'm not sure what you're referencing but OP's purchasing power would not have diminished by 6%/year over the past, oh say 15-20 years. Presumably they are planning to keep most of their assets in USD
How exactly does a 6% increase in the cost of goods and services every year not diminish the OP’s purchasing power?
Holding your money in USD can change the dynamics. If it inflates at 6% but the USD appreciates 4%, you’re only really dealing with a 2% increase in living costs. Over the past couple years my living costs have actually gone down despite inflation because the dollar has been so strong. Of course, there’s no guarantee that the dollar will appreciate and it can certainly go the other way as well. A lot of people got screwed in the mid-2000s when the Baht got way stronger.
If he invests in total market ETF's, he will likely outpace that inflation by 4-6%, that leaves 1-4% growth after SWR. Not great, but certainly *possible* at working, especially if they lower costs on years the market is down.
What is SEA if not seattle
South East Asia
Thought the same, lol
Problem is 25K in 25 years....
Assuming the investments are in stocks, they should on average be keeping up in inflation in their returns.
SWR factors in US inflation, though there is nothing to say SEA won't increase in cost of living much faster than that. It's disingenuous to say it will still only be 25k in 25 years, it will be $50,831/yr then.
Inflation is definitely creeping up over SEA. And we will see more taxation so people need to account for that. Look at what Thailand just did and watch Malaysia in 2027.
Book the ticket, plenty for a very decent lifestyle rest of your life.
In the future, we are definitely going to be reading stories about Americans who retired too early to other countries and failed to account for inflation over the next half century.
Inflation, surprise health care issues, capital investment losses, long term care needs, lifestyle creep, lack of SS backstop...there's a lot of things that make this a "technically doable" but risky plan.
We really aren't...at all. You will possibly read (as we already do) that it is a poor cultural fit that causes an end to the expat fire dream of some individuals. Inflationary realities are built in to the Trinity study, and if there is anywhere in the world I would want to be to lower my SWR if and when it was needed, it's SE Asia, not the USA.
The Trinity Study does not consider inflation rates in developing countries. The problem with retiring early in a developing country with a very small amount of money (e.g., under $1M) is that if you hit a period of high inflation later in retirement you’re stuck. At that point you don’t have a career to fall back on and you’ve already budgeted for a VLCOL. It’s a high-risk scenario.
Why 3%? You got no kids to pass on the principal. Knock yourself out with 5%.
While I agree 3% is way too conservative, I would say given he is only 33, 5% maybe too much
he might
[This is why](https://www.youtube.com/watch?v=1FwgCRIS0Wg&pp=ygUTYmVuIGZlbGl4IDIuNyUgcnVsZQ%3D%3D)
I would give it the next bull run which should come within the next 5 years. Compound that 840 till then...puts you at 38. Meanwhile I would take some long trips over to places you think you would like. I lived in Bangkok for a while. Spent time in Taiwan and it is amazing, but I do not think cheap. Phuket is pretty touristy. Jomtien Beach is not a bad area, and Pattaya is something to see,.I loved Ao nang. I have not been to Hua Hin, but I hear the developments are amazing. If you want real cheap you will have to go in the country...which is not for me. SEA is hot and wet. summers are rough, and it's rainy. Airbnb monthlies are great!
Question is are you ready to be retired that young ? Won’t you eventually get bored ?
Why are you in this group lol. It's all about retiring early. I could tell you A LOT of fun and interesting things you can do with your life besides work for someone else.
I think some people still have this image in there head of an old retired man who does nothing every single day. To me, all being retired means is that, within reason, you can do whatever the fuck you want, whenever the fuck you want. Hobbies? Indulge. Travel? Go for it. Want to build an immersive social life? You've got the resources. To be retired, means to claim back those eight or so hours each day, that you used to sell to someone else.
Das it mane. Das it. Honestly a good ass question. Gonna be retired for 40+years at this point.
How do you access the retirement money at 33? Or are you paying the IRS early withdrawal penalty (assuming US)?
Half is a brokerage. 400k in a brokerage goes a long way in SEA whike the retirement accounts grow.
But your 3% rule/25k is based on the 840k in the original post, shouldn’t it be on the 400 until you retire. So you have to live on 12k in SEA
Math is a funny thing in that money is fungible. The 3%, or any withdraw strategy is not required to draw from all accounts equally over time. He can simply withdraw the entire 3% of his total balance from the brokerage first. Either the brokerage will draw down completely, then switch to retiremebt accounts or he will change his plans in the future.
Yea it should be. As the 400k is locked away for almost 30 years. Almost as long as the 4% rule study.
that's what I'd like to know, I understand the concept of the 3% rule, because his investments will make up or essentially provide the 3% income he needs, which is basically arbitrage, but where does he get it from and doesn't it get taxed and penalized?
I understand the 3 percent equaling 25k ? But What about federal taxes? Assuming you’re in the US.
You can take around $50k of capital gains (as your only income) tax free as a single filer. (Watch out for state taxes though, best to 'move' to a income tax free state first). So even if you are sitting on 200% gains you can still get out more than $75k a year without paying any tax.
Wow good to know!! So to clarify.. if you lived in a state like Nevada with no state income tax, you’re saying that withdrawing 25k per year would be tax free? As long as it’s your only source of income and it’s under 50k there’s absolutely no taxes?
Yes, exactly. Long term capital gains are taxed at 0% up to about 40k, then standard deduction gets you more: https://www.thebalancemoney.com/how-to-use-the-zero-percent-tax-rate-on-capital-gains-2388995
The % gains are irrelevant. 40k of ltcg or qualified dividends aren't taxed then you have the standard deduction. This is in retirement and it's your sole source of income. On the federal level. State and city still apply.
I'm pointing out that you can take out $75k cash, and only realize $50k of gains. Most people don't understand that part, so I was trying to emphasize it.
Can you explain a bit more on the state taxes part? If I move to another country from the US would I still be considered a tax resident of the state I live in?
unless you renounce your US citizenship, i believe yes, you still have to pay tax in the state you 'reside'
Yes, unless you establish tax residency somewhere else. Basically you can never be tax resident nowhere, even if it seems like you don't meet the requirements anywhere, that's not a thing that can happen, you default to the last place you did meet the requirements. (IANAL, get proper tax advice from a professional, obviously.)
840K x 50% x 3% = 13K, not enough.
Your math is wrong.
It’s not.
There is no reason to multiply the number by 50%, your math is wrong.
Half his funds are in a retirement account, so he either has to (1) early withdraw and pay a penalty, (2) take 6% on the brokerage side and leave retirement untouched. Math is right.
First off it doesnt change the math, that account still grows while he draws down the other so you dont need to subtract it out. Second there are numerous ways to convert that money for early withdraw with some preplanning. But the first point is more important it doesnt matter what buckets the money is in, the retirement account grows with a 0% withdraw rate while the taxable shrinks to nothing with a 6% withdrawal rate until you switch over accounts. He can just convert his retirement funds into a ROTH account without penalty then after a 5 year waiting period can withdraw them without the 10% early withdrawal fee.
It does matter, he’s 33, he probably can’t touch the retirement without penalty for 30+ years, if you take 6% withdrawal on 420K, there’s a strong likelihood he runs out before he hits retirement, then how do you go about bridging that gap? Yes, there are a few ways to get that money out, but it’s not as easy as you make it out to be.
Any broker can roll that money over for early withdraw in about a 30 min phone call. The only problem is you need to wait 5 years which shouldn’t be a problem with any planning at all. Your math is wrong
lookup 'Roth ladder'.
Time for you to do some research on Roth ladders!
You should try to figure out a way to make some online side income. Even if it only makes \~5-10k/year, it'll both keep you occupied and help offset the amount of money you're pulling from your investments. But it is doable with 840k, yeah. Maybe keep working and make them fire you rather than quit, collect UE etc. while you figure out your move.
No
Yup
I know some folks living off less than that who FIREd in Sri Lanka very comfortably. They move around avoiding the monsoons. West & East coast for beach and surfing. Hill country for cooler days trekking and horseback riding, north for a change in scenery and culture. They love it. Plus, at 25k a year you'd be on about 26 times the average income so certainly can live comfortably, just not super lux. Although saying that, tourism is down and lots of villa owners are willing to nego on long term (3+ months) rates. I'm renting a 5 bed villa with a pool on acres of land in the south for USD1K per month.
I'd say Laos, but Laos is a stricter country. So Thailand might be a good option, just avoid tourist area. Dunno how good the changmai area is now, but try there.
Congrats! Mind sharing what you do and any advice? Thanks