As the cost of retirement and healthcare continue to rise, many people start thinking about joining the growing number of seniors who have chosen to retire abroad. One destination that has long been on the radar of expat retirees is Thailand, a country in southern Asia known for its natural beauty, pristine beaches and friendly people. Adding to its appeal as a top retirement destination is its affordable cost of living, which, according to International Living, a publishing group that covers living and retiring overseas, is one of the lowest in the world.
No matter what your retirement budget looks like, you may be able to live better – and make your dollars stretch longer – if you retire overseas (see Retirement: U.S. Vs. Abroad).
Each year, International Living publishes its Global Retirement Index, which ranks retirement destinations around the world based on factors like climate, health care, benefits and discounts, and cost of living. For the 2015 Index, Thailand scored a 92 (out of a possible 100) in the Cost of Living category, matching Belize, Cambodia, Ecuador, Guatemala and the Philippines, and surpassed only by Nicaragua and Vietnam, which each earned a perfect score of 100.
Here, we take a quick look to see if it’s possible to retire in Thailand with $200,000 in savings and suggest some tips for making your money last longer.
Living on $1,500 to $2,000 a Month
To get a retirement visa in Thailand, you need either a monthly income of at least 65,000 baht (about $2,000) or a bank account balance of at least 800,000 baht (about $25,000) – or some combination of income and money in the bank that equals 800,000 baht. It turns out that the $2,000-a-month income requirement is actually a good starting point for what a retired couple can live off comfortably in Thailand. “This would provide for a basic but comfortable lifestyle,” says Steven LePoidevin, InternationalLiving.com Thailand Correspondent.
The typical Thai resident lives on less than $1,000 a month. While expats could follow suit, most would not be comfortable with this budget since it would mean living in a tiny apartment, eating only local food and foregoing health insurance, travel and entertainment. Instead, most budget-conscious expats should plan on a bare minimum of $1,500 a month, according to LePoidevin.
Some quick calculations shows that if you live on $1,500 a month, your $200,000 in savings would last about 11 years ($200,000 ÷ $1,500 = 133.33 months, or 11.11 years). Live on the more realistic $2,000-a-month budget and your savings would last about eight years ($200,000 ÷ $2,000 = 100 months, or 8.33 years). This is, of course, an overly simplified example that assumes your monthly expenses always stay the same over the years, and that you have no other money coming in or going out.
More Than Savings
In addition to $200,000 in savings, you may have other sources of income during retirement, particularly Social Security. Nine out of 10 Americans 65 and older receive Social Security benefits, representing about 38% of the income of the elderly. The average retired worker’s Social Security benefit is $1,341 per month for 2016, which would come close to covering a shoestring $1,500-a-month retirement budget in Thailand, or at least account for a big chunk of the more comfortable $2,000-a-month budget. If you add $500 a month from your savings to that benefit, calculating by the same formula, your cash would last just over 33 years. (And, of course, you could have two benefit checks coming in if you're a couple.)
Average Cost to Rent and Buy
The amount you pay for rent in Thailand – like anywhere else – depends on the location, size and condition of the property. According to city and country database Numbeo, the average monthly rent for a one-bedroom apartment in the city center rounds up to $331; outside the city center the rent drops to an average of $195 per month. For three-bedroom apartments, the average rent is $905 inside the city and $487 elsewhere.
Foreigners are not allowed to own land in Thailand, but are able to purchase units in an apartment or condominium project as long as at least 51% of the building is owned by Thai citizens. According to Numbeo, the average cost per square foot to buy in the city center is $222; outside the city, you’re looking at an average of $137 per square foot, or about $137,000 for a 1,000 square foot unit. For more information, see Top 7 Cities For Retiring In Thailand.
Making Your Money Last
If you retire somewhere that you have enjoyed visiting in the past, it can be a difficult to switch gears from a carefree vacationer to retiree on a budget. One mistake many new expats make – no matter where they live abroad – is acting (and spending) like they’re on vacation. While splurging on vacation is fairly standard, spending that kind of money during retirement can quickly burn through your entire retirement budget.
To avoid over-spending and keep your budget in check, it’s important to find out where the locals shop for meals, groceries, nightlife, entertainment, attractions and the like. Then, you can buy things at the “local” rate instead of the “tourist” rate, which is hugely important in maintaining a low cost of living. Chances are, you already do this at home without thinking, shopping where you know you can find the best deals and avoiding the places that are overpriced – or priced for tourists.
The Bottom Line
It’s impossible to forecast whether $200,000 would be enough to last your entire retirement – even in a country like Thailand that has a low cost of living. People today are living longer, so there’s always the risk of outliving your retirement nest egg. To many people, however, retiring abroad means the chance to enjoy a better quality of life, new experiences, beautiful surroundings as well as the opportunity to make their retirement dollars stretch further. For more information, see How Much Money Do You Need To Retire In Thailand?
Note: The U.S. Department of State has issued no specific travel warnings about Thailand. However, on August 11 and 12, 2016, multiple bombing incidents occurred in a number of Thai locations, including Hua Hin, Phang Nga, Trang, Surat Thani, and Phuket. Thai authorities reported at least four deaths and 37 injuries. Click here for the U.S. Embassy and Consulate's warning. Its advice for residents and travelers: "Regularly monitor the State Department’s website, where you can find current Travel Warnings, Travel Alerts, and the Worldwide Caution. Read the Country Specific Information for Thailand."
For further in-country help: "The American Citizen Services Unit of the U.S. Embassy is located at 95 Wireless Road in Bangkok, and can be reached by calling +66-2-205-4049, or by e-mailing email@example.com. The Embassy’s after-hours emergency telephone number is +66-2-205-4000. You can also follow us on Twitter @acsbkk."
Also be aware of the State Department's Worldwide Caution, updated on March 3, 2016, about the continuing threat of terrorist actions and violence against U.S. citizens who travel or live abroad. The caution – which pertains to travel in Europe, the Middle East, North Africa, Africa, South Asia, Central Asia, East Asia and the Pacific – states: “Recent terrorist attacks, whether by those affiliated with terrorist entities, copycats, or individual perpetrators, serve as a reminder that U.S. citizens need to maintain a high level of vigilance and take appropriate steps to increase their security awareness.”
U.S. citizens traveling or residing abroad are encouraged to enroll in the Department of State’s Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you and/or your family in case of an emergency.