How to achieve retirement in Thailand with $2.5M in assets as a 41-year-old Californian? Do I need the help of a professional?

Updated: October 18, 2023 at 9:11 a.m. ET

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I want to take early retirement and move to Bangkok, Thailand. How can this be done as soon as possible?

Question:

I am 41 years old, an emergency room nurse, and make $150,000 per year. I have a net worth of about $2.5 million dollars, which is divided as follows:

• 1.3 million dollars in cash, yielding about 5% per year
• 220,000 dollars in a 401(k)
• $250,000 into a private real estate fund
• $500,000 to the health care retirement fund
• I get about $4,000 a month for serving in the military

The rest is a share in my house, worth about $1 million dollars, on which I owe about $600,000. I live in San Diego, my wife of 36 years and she stays at home. I have lifetime health insurance from the military. I really want to retire so I plan to move to Thailand because of its lower cost of living. I want to move there and retire no later than age 45 and budget about $5,000 a month for expenses. Do you have any tips so I can retire earlier?

Response:

You've done a great job accumulating capital by age 41, but the professionals we spoke with noticed some red flags. So first, we got advice on whether you should go to an advisor - this free tool can help you find an advisor who can fit your needs - and make a financial plan once so you can make sure you're going in the right direction.

We also asked professionals how you can retire early. Should you hire a professional to make your dream come true? Right now, you have about half of your capital in cash - and even with excellent rates, this may not be the best path for your future retirement plan because historically, stocks have been the best way to fight inflation over time.

"I suggest discussing this point with a financial planner," says certified financial planner Alonso Rodriguez Segarra of Advise Financial.

Looking for a new financial advisor? This free tool can help you find an advisor that may fit your needs. Certified financial planner Joe Favorito of Landmark Wealth Management raises similar concerns.

Do you have a problem with your financial advisor or want to hire one? Send your questions or concerns to [email protected].

While accumulating capital at such a young age is quite an accomplishment, retiring at a young age also means giving up significant future earnings.

"You have to provide money for yourself and your wife for maybe 50 years. If you try to go back to work later, you may not be able to earn as much as you do now. Given the many uncertainties and the very long period you need to secure your assets, it's an ideal situation to consult with a financial advisor," says James Royal, chief investment writer at Bankrate.

He adds that a financial advisor can also help you create a budget that will help you not deplete your assets. You may need more than just the help of a financial advisor, as tax planning can be another potential challenge.

"It's important to work with a tax professional to determine how your taxes will work in the U.S. and Thailand," says certified financial planner Ryan Heiss of Flynn Zito Capital Management.

Can you retire sooner than you think? It is difficult to give you a detailed answer without knowing the exact costs you will face in Thailand.

"What I can tell you is that a person planning to retire at 60 probably shouldn't spend more than 4% of their liquid net worth annually, and if you're planning to retire at 45, I would probably cut that in half to 2% annually," Favorito says.

This implies that you maintain at least a 50/50 split between stocks and bonds in your investment portfolio.

"Whether it will be enough or not is hard to answer until there is a breakdown of overseas spending," Favorito says.

A simple way to look at your situation is this: today you already receive a military pension of $4,000 per month, and you figure you need $5,000 for retirement, so each month you are $1,000 short.

"To get that amount, you can have $240,000 in the money market, and you're going to get that $1,000 a month at current rates," says certified financial planner Alonso Rodriguez Segarra of Advise Financial.

Still, professionals say life is long, and having half your capital in cash, even with excellent rates, can be a problem if inflation drains your purchasing power.

Certificates of deposit can also be risky in the sense that historically they have not kept pace with inflation and there is a risk of reinvestment.

"This is especially true for those who plan to retire at age 45. We typically plan for retirement at age 30, and depending on your life expectancy, you may need your investments to generate income for a much longer period," says certified financial planner Ryan Heiss of Flynn Zito Capital Management.

Another red flag could be REITs. Favorito says to be careful with private REITs.

"Some have performed well, but many are extremely deceptive in the way they sell and have not returned what was expected," he says.

Aside from investments, one of the biggest drawbacks to your plan is health care.

"It's great that you have health insurance for life from the military, but it's important to understand what kind of health care you'll have when you move overseas. Will you have the same insurance or are there possible gaps when you move to Thailand? Will your wife be covered by this insurance? This can eat up a significant portion of your monthly budget if the same health insurance is not available overseas," says Heiss.

In addition, Royal says the advisor can also model other scenarios, such as high inflation, which can gradually eat away at your buying power.

"These scenarios can tell you when you can retire with your desired standard of living and, importantly, give you confidence that you're making the right decision," Royal says.

“You can also rent out your house when you move to Bangkok and use the income to cover your monthly mortgage payments. This way, your expenses won’t increase, and you’ll be able to assess the situation before deciding whether you want to sell the property and add the funds to your retirement portfolio,” says Segarra.

Do you have a problem with your financial advisor or want to hire one? Send your questions or concerns to [email protected].

The questions have been edited for brevity and clarity.