Retire In The Philippines With $200,000 Of Savings?

[i am bob]

For those of us who have small children or grandchildren, the best thing we can do for them is to drop a thousand dollars (CDN, US, what ever) into registered higher risk fund that reverts to a low risk fund at the age of 35 or so. No access until either they reach age 50 AND/OR retirement.

It's too late to start for most of us but at least our kids will have a future retirement reasonably trouble free!

[Tukaram (Tim)]

Both my jobs have a point system for retirement.  Number of years worked + current age has to = at least 80 points.  That qualifies you for a bigger pension, and the lump-sum option.  I am not retiring on points, simply age (55 for one job 60 for the other).  So I will not have the lump sum disbursement as an option.  Which is fine with me as I like the lifelong monthly payout idea.   And I can take various amounts depending on how I want my beneficiary to get paid when I am gone.

 

Now I just have to get to retirement age....  :tiphat:

[ironmaiden]

For those of us who have small children or grandchildren, the best thing we can do for them is to drop a thousand dollars (CDN, US, what ever) into registered higher risk fund that reverts to a low risk fund at the age of 35 or so. No access until either they reach age 50 AND/OR retirement.

It's too late to start for most of us but at least our kids will have a future retirement reasonably trouble free!

What about building a house, so you don't need to pay rent anymore? You then also don't need to worry anymore how much money you got in the bank when you die, cause there still is the house that can be inherited by your wife or children. They can then do as they please, live in it or sell it. Of course, you need the money to build a house first but if you're not too old yet you will be paying rent all those years and that adds up too...

[i am bob]

True! My post was more for our children and grandchildren as I don't think pensions will be enough to support them when they get to retirement age.

As for my wife? I will be leaving her with a house and unfortunately only a small insurance but it pays out for any death. Do she can support herself, I intend for her to go back to school and get her doctorate. And she will be guaranteed income from any books i write that are sold for most of her lifetime.

[bows00]

Unfortunately, I was one of the latter.

 

So how good is that figure of 200,00K in the title of this thread?  Here is my story on 2 1/2 times that amount:

 

Retiring with a $500,000 savings account.  Will it work for me?

 

I’m an idiot.  I know I am because most of my friends tell me that.  They wonder how I could retire with $500,000 in the bank and not have money now.  I am going to tell you about that so you can learn how not to be an idiot.

 

On May 1, 2008 I retired with 500K in my account and moved to the Philippines a happy man.  I planned to live on $2,000 a month so I kept the first year’s money in an easily accessible account and kept an additional 10K for moving expenses.  Then I put 10% (50K) in a high risk growth account and the remaining money I invested with my broker.  He is a well-respected broker who had been earning 8 to 10% consistently for the people I knew who gave me a referral.  His firm is highly ranked as a safe investment company.  I invested 416K with his firm.

 

Then came the world crisis of late 2008.  By early 2009 I had lost all my my high risk investments and 30% of my main portfolio.  I still needed to live so I withdrew 24K that year and that left a balance of 266K in my savings account.  Still not bad right?  This broker had been earning 10% per year for my friends so at 10% I could still live on 26K per year.

 

5 years go by.  My savings account never sees a 10% annual return, in fact it is only making about 1% per year.  That’s nothing.  With 5 x 24 = 120K coming out, my saving are now down to 146K.  Now I realize the chance of living off the interest is done for so I split the 146K into 10 and realize I can survive 10 years at $1,000 a month and still have a little left over.  It can be done, right?

 

And then the Canadian dollar falls to 33 pesos.  End of story.  Your mileage may vary.

 

 

EDIT:  To show the other side, I have a friend/neighbor who retired 1 year after me with 500K and a small pension.  He was NOT hit by the world crisis and he managed his own money in the stock market and got lucky.  He is doing extremely well with that amount.  Again, your mileage will vary.

This is a good lesson on the need to have a solid DECUMILATION PLAN. Most of us have a good idea on how to ACCUMULATE

[bows00]

Oops, posted without finishing my point...

So once you have accumulated your set number, be it $200K or $500K, you have to change your strategy so your money will last. You don't want to be withdrawing from long term investments (like equities) when they are down. A bucket strategy is a viable plan, where you draw down from your bank savings while you allow your stocks to recover.

If you left your stock investments alone, from 2008 to 2012, you would have made your money back and then some... so the key is to have enough savings to draw down from when your stocks are recovering. And when your stocks bounce back, you can transfer your gains back into the bank, and sit tight for the next bear market... rinse and repeat until your life runs out...

[usa32]

Dave ,

 

Sorry to hear about your trouble. If you are truly retired and plan on never working a day in your life. There should of been NO high risk investments.

 

You should have had a diversified portfolio, of maybe 30 percent stocks(mutual funds) 60 percent bonds/fixed income, and 10 percent cash. Even with your bad timing, if you were invested correctly, you would of been just fine. You probably would of lost 10 percent, maybe 15 percent of your overall portfolio in 2008-2009.  You still could make small draws, and you could of rode it out, and probably would of had a portfolio, still worth about 450k or so today, even with withdrawals.

 

 

 

 Unfortunately, I was one of the latter.

 

So how good is that figure of 200,00K in the title of this thread?  Here is my story on 2 1/2 times that amount:

 

Retiring with a $500,000 savings account.  Will it work for me?

 

I’m an idiot.  I know I am because most of my friends tell me that.  They wonder how I could retire with $500,000 in the bank and not have money now.  I am going to tell you about that so you can learn how not to be an idiot.

 

On May 1, 2008 I retired with 500K in my account and moved to the Philippines a happy man.  I planned to live on $2,000 a month so I kept the first year’s money in an easily accessible account and kept an additional 10K for moving expenses.  Then I put 10% (50K) in a high risk growth account and the remaining money I invested with my broker.  He is a well-respected broker who had been earning 8 to 10% consistently for the people I knew who gave me a referral.  His firm is highly ranked as a safe investment company.  I invested 416K with his firm.

 

Then came the world crisis of late 2008.  By early 2009 I had lost all my my high risk investments and 30% of my main portfolio.  I still needed to live so I withdrew 24K that year and that left a balance of 266K in my savings account.  Still not bad right?  This broker had been earning 10% per year for my friends so at 10% I could still live on 26K per year.

 

5 years go by.  My savings account never sees a 10% annual return, in fact it is only making about 1% per year.  That’s nothing.  With 5 x 24 = 120K coming out, my saving are now down to 146K.  Now I realize the chance of living off the interest is done for so I split the 146K into 10 and realize I can survive 10 years at $1,000 a month and still have a little left over.  It can be done, right?

 

And then the Canadian dollar falls to 33 pesos.  End of story.  Your mileage may vary.

 

 

EDIT:  To show the other side, I have a friend/neighbor who retired 1 year after me with 500K and a small pension.  He was NOT hit by the world crisis and he managed his own money in the stock market and got lucky.  He is doing extremely well with that amount.  Again, your mileage will vary.

 

[stevewool]

 

and the rest of the money will be put away in savings accounts, you may say you are not making any money from that , and you are correct but i know i am not losing any either,

Steve

Sounds like your a pretty sensible guy, however eg: even at to 2% interest per year, with inflation at 2;1/2 per year, your losing money.

Go the Philippines and you will see inflation higher in some circumstances!

Not forgetting being British, health insurance is a big question too.

Retirement age is rising here in UK also, before you are able to get your pension, although there is now plans to allow you to take your pension in one lump sum.

Good luck with whatever decision you come to...JB

 

Health insurance well at this moment i am not going to bother with that, unless i can find it at a reasonable price,

My date to official retire is when i reach 67, 10 years time, but i am going when i hit 58 i hope,

[stevewool]

You can take out private and work place pensions in a lump sum but not the state pension. This is a good thing as then the state pension is something to always fall back on. It is worth getting a pension forecast because then you will know if you have paid enough in to receive the full amount. Which gives you the opportunity to top up if need be.

I have been working since 17, so i know i have paid enough into the state pension  when i retire at the age of 58, and like you say its a good figure to look forward to if i last that long

[mogo51]

I know very few people that have $200K at retirement.  If that was a requirement then none of us would have retired here  :)

I dont have $200k in Super Fund, but I have some which will be very helpful to supplement the government pension

I receive. But even if I did have $200k it is still not enough to live a reasonable life and I would still seek

a cheaper living alternative.