Retiring in Thailand…

… or in any other place with a low cost of living, low taxes, and a solid infrastructure.

I have been in Thailand now for 8 years. Originally the plan was to work here only for a year and then to move back to Korea, China or Japan. However, things seldom turn out as planned and usually something happens that requires us to adjust. For me, the career opportunities in Thailand kept just popping up and there was simply no reason to go anywhere else.

Having lived and worked here for a while, I often get asked about the idea of retiring in Thailand and I would say that by now, I probably wouldn’t think of retiring anywhere else.

In the first line of this article, I already brought up some crucial points, but let me put a small list together for you for a more detailed overview:

  • Low cost of living: A small house with 3 bedrooms, 2 bathrooms, a garden, garage, fully furnished with gardener service, water, electricity will cost you approx THB 25.000 a month in Phuket, Pattaya or even less in Chiang Mai. That’s 650 EUR.
  • Low taxes: Planning on retiring on my stock account(s), I might benefit in Thailand from a low 10% tax on dividends and no tax on profits from capital gains.
  • Safety: I almost always felt and still feel safe here. Surely you got to use your common sense, study a little bit about your area where not go by night and avoid picking fights with locals or with tourists, but then you will have no need to worry about almost anything. One point that you might want to keep in mind is that free speech is limited here, so spilling out your political views or pursuing certain legal matters might not always be a smart move.
  • Medical support: Private hospitals offer excellent medical support throughout Thailand and a private insurance that will cover you in almost any serious situation will cost you THB 30.000 a year. That’s 750 EUR. Simple medical services usually need to be paid by yourself, but those costs are truly negligible, with a regular doctor visit usually not costing more than 1500-2000 THB – including medication. That’s roughly 40-55 EUR. Also, just so you know, it never happened that I needed to wait longer than 15 minutes for a doctor to be available for me, even if I came without an appointment.
  • Infrastructure: Excellent road conditions, stable water, and electric supply, fast internet, and no issues whatsoever with buying anything you want or need offer great convenience across the country.
  • Culture: Friendly and helpful people. Of course one should always be careful whom to trust, but you won’t find another country where it’s so easy to talk and get along with people like in Thailand.
  • Food: Thai food is excellent, but you can find here anything that you like. Asian food is very affordable, imported goods, especially from Europe, tends to be expensive. Cheese is a true luxury here and so is good wine, but if you want to keep saving, then street food will be your favorite place to hang out at. You can literally fill your stomach with sticky rice, sweet pork and fried chicken for 60-80 THB a meal. Approx. 1,5-2 EUR.
  • Language: For me, Thai is quite difficult as I am not very good with hitting the tones. Similar to the Chinese language, it requires a lot of practice and while the grammar is rather simple, speaking is a challenge. However, I believe that the majority of people can learn it quicker than I. My brain is geared more towards Korean (which I speak fairly good) and Japanese. Chinese and Thai is just not my thing… however, to get back to the topic, you get along with a mix of Thai and English pretty well. Thai + English = TENGLISH. Grab a few Thai words so you can pinpoint or emphasize what you want to say, combine it with English and in most cases, you will be good to go.
  • Weather: Chose your region wisely and you will enjoy great weather. Thailand is actually quite big and has many different regions. For retirement, I am planning to move up to the north where it’s not that hot and the rainy season not that long. You will mostly enjoy a lot of sunshine (we got here more sunny days a year than Italy) and temperatures that do not require to have any jackets in the closet – all year long.

These are the most important things that come up to my mind for now. If you would like to know more details on anything, just leave me a comment and I will add more to the list.

Of course, there are also downsides. As we like to say, the grass is always greener on the other side, Thailand has some specific issues that might require some adjustments in attitude and expectations:

  • General lack of law enforcement: In 8 years, I have never seen the police pulling crazy drivers or damaged cars over or enforcing the law when it comes to disputes. You can rely on the police when things get serious, but for anything that is not life-threatening, the police will usually let the involved parties clarify the issue among themselves and try to net get involved.
  • General lack of rules and regulations: Again, as long as there is no serious danger to anyone else, people can pretty much do here what they want. While you get a great sense of freedom, it can also create some frustrations along the way. For example, if your neighbor plays loud music every day until 3 am, there is literally nothing you can do and no one who would have any right to stop your neighbor from doing it.
  • Dangerous traffic: Thailand has the 2nd highest rate of fatal road accidents in the world. Cars are not monitored for damage by the police, plenty of people on the road have none or expired driving licenses, there is no effective road patrol by the police anywhere in the entire country and the worst of all is the huge amount of damaged motorbikes and scooters on the road. When driving in the late evening or night, you have to really seriously watch out all the time for scooters that appear out of nowhere on the road, without any lights and the people sitting on them with dark clothes and without any safety helmets. In the 8 years that I spent in Thailand, I have seen more people dying than anywhere I have been before, and most of those people were involved in car or motorbike accidents.
  • Mosquitos, insects, and wildlife: This is probably the most annoying part of all. You can’t get out from bed without something biting you. Mosquitos are literally everywhere, so are ants and all kinds of other insects. While you do get used to it, it never goes away. You can learn to live with it, but you will surely never embrace it. Other things to keep in mind are basic protection measures against snakes, scorpions, commodores, geckos, and plenty of other animals that are strolling around everywhere. The geckos, in particular, are quite annoying, as they tend to crawl in everything and everywhere. So if you are living here, make sure to always lock up and close off all your food properly. You don’t want to pour your cereals into a bowl in the morning and watch a gecko jumping off out the box.
  • Stray dogs and cats: I could have put this one into the point above, but it’s such a big problem that I think that it deserves to be listed separately. Thailand has a huge problem with stray dogs and cats. Since pet ownership is not regulated and most people don’t want to spend money on animal care, most of the pets here are neither sterilized nor castrated and tend to multiply rather quickly. Unfortunately, most of those pets end up on the streets. It’s not only sad, but it’s also a little dangerous. They tend to run in front of cars and motorbikes, stroll in the dark in search of food and of course also spreading diseases. Just a few months ago there was a quite big rabies outbreak all across the country. This is something that most of us didn’t hear about for many years in Europe.

So, to sum it up, if you are flexible enough to adjust to a more “free” and less regulated type of life, can adapt to the food and sometimes close one eye to all those things that are different from “home”, then you can enjoy a very comfortable retirement in Thailand with a frankly pretty low living cost of something around 80.000 THB per month for 2 persons. That’s 2000 EUR a month or 24.000 EUR a year. This is a pretty good deal.

Following the 4% rule, you would need to save up 600.000 EUR to be able to retire here at the above mentioned annual cost basis. A significantly lower number compared to Europe or the US, where you would need to double that amount to reach a comparable lifestyle.

So yes, I think retiring in Thailand is a great idea.

How much risk is enough?

As I am writing these lines, I am watching the TV Show “Billions”. The 3rd season just came up on Netflix and I am bound to my bed due to an unfortunate dengue fever infection, thus the perfect opportunity for some entertainment.

Watching “Billions” I can’t help but wonder about the life-style of the top 1%. These super rich individuals don’t impress me by their expensive cars, big houses or the fancy restaurants or the cigar clubs they visit. What is rather impressive, however, is their determination, competitive spirit and extreme risk tolerance to stay ahead in the game of money.

Sure, it’s just a movie, but from my own past working in a bank AND from what we know about the last financial crisis, we do know that there are indeed such people – cheating their ways to riches in unscrupulous ways, always with one leg in a prison and the other chasing for the next opportunity…

Which brings me to the point: How do we estimate our own risk tolerance?

Low risk offers low opportunities. But higher risk & higher stakes can produce significantly higher returns.

So what is your risk level? Understanding your own psyche is so important, because after understanding your risk tolerance, the next step is to align your expectations on returns, your investment methodology and your required contributions to your risk tolerance.

I.e., if you prefer to be cautious with your money, then stocks might be not immediately the right investment vehicle for you. Stocks go up and down every day, sometimes more, sometimes less. It takes time and experience to learn to be able to deal with this emotionally. Let’s say you put 10.000€ in a stock account, put it all in into a few selected companies – and when you wake up the next morning, the value might have slipped down to 9.500€. Will this make you sweat? Will you worry and start checking your account every hour or so to see whether these losses are going to turn back into profits? What if the market drops and your stock value goes down another 500€? Can you still sleep well at night?

Say you prefer to work with bonds that produced historically 3-4% lower returns than stocks. This would mean that to reach the same target within a similar time-frame, you would need to save/invest more to realistically expect to hit the same target.

When reaching for FIRE, checking for your actual risk tolerance might be the wrong approach though. Instead, you might need to ask yourself how badly you really want it, and accept to go for a higher risk level.

Risk tolerance can be trained

Now the good news is that as humans, we are highly adaptable and the more often we expose ourselves to risk factors, the faster we may be able to learn to manage those risks.

Watching your stocks drop the first time can be an emotional experience, but after a while, seeing your portfolio going up and down day-in and day-out, you might not care about those short term changes at all. What kept you awake at night on the first day won’t bother you once you gathered some experience, even if the concerning factors at play grow larger.

So, when is it enough risk? Certainly it’s something that everyone needs to discover by and for oneself, but don’t dismiss stocks just due to a lack of experience or because you think they are a risky investment. At the end of the day, managing risks means, among all, to manage our emotions – and the better we learn to do that the easier it will feel to go for opportunities once they reveal to us themselves.