Early Retirement Math - What I am not thinking of?

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wantrepreneur
Posts: 30
Joined: Tue Jul 02, 2013 1:55 am

Early Retirement Math - What I am not thinking of?

Post by wantrepreneur » Mon Jan 08, 2018 3:11 am

Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".
- SWR is well below 4% that's commonly accepted in early retirement, and 3% to 3.5% that conservative estimates recommend.
- I have run several scenarios in both FIRECalc and Vanguard's Nest Egg calculator to ensure the success rate is close to 100% at above mentioned SWR.

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Not sure what I will do after quitting my current job. Priority is spend time with wife, kids, and parents. I have worked in tech throughout my 15 year career and have expertise in intersection of public policy + tech so will likely explore assignments once I get bored of "retired" life style.

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?

NightFall
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Re: Early Retirement Math - What I am not thinking of?

Post by NightFall » Mon Jan 08, 2018 8:04 am

If you will really draw 60K-75K from 5.4M per year, you should be golden. I don't know India's support structure very well, but (in the US) healthcare is an unknown expense that would be the most worrisome piece... although still not that worrisome at this level.

MikeG62
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Location: New Jersey

Re: Early Retirement Math - What I am not thinking of?

Post by MikeG62 » Mon Jan 08, 2018 8:14 am

wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
A withdrawal rate that low is typically considered to result in the portfolio lasting indefinitely. Put another way, if you run out of money with a 1.25% to 1.5% withdrawal rate (because future returns are so low and/or inflation so high), so will everyone else.

Living off dividends vs. reinvesting them and periodically selling equities to generate cash flow is considered six of one half dozen the other and has been covered many, many times on these forums. Use the search feature to find some of those threads. FWIW, I early retired two years ago (at 53) and this past summer suspended reinvestment of dividends in my taxable accounts. I use the dividends plus interest on my muni bond portfolio to fund a sizable portion of my cash flow needs. I just find it easier, although some might argue that reinvesting them and strategically selecting lots to sell might be more tax efficient. For me, my effective Federal tax rate is in the low single digit range (because a large part of my taxable income comes from qualified dividends - which are taxed at 0%). So I don't see a lot of benefit in changing how I am doing things from a tax efficiency perspective. YMMV.
Real Knowledge Comes Only From Experience

cherijoh
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Re: Early Retirement Math - What I am not thinking of?

Post by cherijoh » Mon Jan 08, 2018 8:27 am

wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".
- SWR is well below 4% that's commonly accepted in early retirement, and 3% to 3.5% that conservative estimates recommend.
- I have run several scenarios in both FIRECalc and Vanguard's Nest Egg calculator to ensure the success rate is close to 100% at above mentioned SWR.

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Not sure what I will do after quitting my current job. Priority is spend time with wife, kids, and parents. I have worked in tech throughout my 15 year career and have expertise in intersection of public policy + tech so will likely explore assignments once I get bored of "retired" life style.

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
The first question that sprang to mind when you mentioned Tech and an 85% stock AA was whether you own any individual stocks (like that of your former employer) or if you have a diversified portfolio? Your AA is perfectly appropriate for a 37 yo planning to work for 20+ more years, but it seems pretty risky to me as a retirement portfolio - especially if it contains a huge investment in individual stocks.

J295
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Re: Early Retirement Math - What I am not thinking of?

Post by J295 » Mon Jan 08, 2018 8:33 am

Your plan seems reasonable. You have a strong mind and a strong back, and with adaptability if things don’t go quite according to plan you will find a way to manage.

Good for you!
Life has so much to offer, and i’m guessing you are the kind of person that has much to offer to life and you will have additional freedom to do so.
Best of luck

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WoodSpinner
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Re: Early Retirement Math - What I am not thinking of?

Post by WoodSpinner » Mon Jan 08, 2018 9:11 am

OP,

I was wondering if their are any issues around taxation, currency conversion, or ability to move money that worry you? Are you subject to both US and India taxes? Will you be able to continue holding these investments if you are living in India?

I don’t know the answers and would love to learn more.

Congrats you have done well, enjoy your family!

WoodSpinner

OnTrack2020
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Re: Early Retirement Math - What I am not thinking of?

Post by OnTrack2020 » Mon Jan 08, 2018 9:45 am

I'm assuming funds for your child's education have been factored into this; I have no idea how much costs for education are in your home country.

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Watty
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Re: Early Retirement Math - What I am not thinking of?

Post by Watty » Mon Jan 08, 2018 11:28 pm

wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
One thing you should look into is how estate taxes and things like inherited US retirement accounts will work. The US estate tax laws for non-resident aliens can be terrible.

Topic Author
wantrepreneur
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Re: Early Retirement Math - What I am not thinking of?

Post by wantrepreneur » Tue Jan 09, 2018 12:10 am

On healthcare in India, it's all private and affordable. There is a reasonable health insurance system so we should be okay.

@MikeG62 - thank you for confirmation re: using dividends, I will read through the previous posts. I read through a few but will go through more to better understand how others have gone about it.

On being overly invested in my current/previous employer stock, it is a challenge I am solving for actively. I have gotten it down to 20% of my allocation and I continue to sell as tax efficiently as possible. My goal is to not own any individual stocks by 2019.

On the taxation question - being a US citizen working in India, I do end up filing taxes in both countries and end up claiming a foreign tax credit in the US. Taxes currently are fairly complicated but it will become a lot simpler once my India income is minimal after I quit my job. I am sorted on how taxes etc. would work as it's a situation I have dealt with for years now. I will be able to hold my investments while living in India.

College costs - higher education is relatively inexpensive in India at the moment. In 17 years, things can change drastically so we will cross that bridge when we get there.

On estate/inheritance/retirement accounts, I am a US citizen so things are a little simpler for me as long as I maintain the citizenship (which I plan to). Our son is also a US citizen so that helps when it comes to estate planning/inheritance. The only pending item we need to work through is how to go about giving up my wife's green card - serious tax consequences as mentioned above.

randomguy
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Re: Early Retirement Math - What I am not thinking of?

Post by randomguy » Tue Jan 09, 2018 1:10 am

OnTrack2020 wrote:
Mon Jan 08, 2018 9:45 am
I'm assuming funds for your child's education have been factored into this; I have no idea how much costs for education are in your home country.
At 5.4 million,<100k/year spending, things like education and health care tend to be in the noise level. You can blow 2 million dollars on them (and I would assume some level of health insurance is part of the 1.5% SWR) and still be fine. Unless the OP has septuplets, they will be fine.

Obviously bad things can always happen and estimating expenses is a best a guess (i.e. after 5 years you decide to start spending 30k/year traveling) but there is a lot of wiggle room here.


Living off dividends is a whole other discussion. People like to think of dividends as steady payments like bonds. They aren't. the idea of living off dividends brings all sorts of questions (i.e. are you rebalancing? If your 2 funds both return 6% but one pays a 2% dividend and the other a 4%, they aren't going to stay equal for long) that you can avoid by stop believing living off dividends does anything. If dividends went back up to 7%+, I am not sure I would be recommending a 7% SWR:)

OldSport
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Re: Early Retirement Math - What I am not thinking of?

Post by OldSport » Tue Jan 09, 2018 1:31 am

wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".
- SWR is well below 4% that's commonly accepted in early retirement, and 3% to 3.5% that conservative estimates recommend.
- I have run several scenarios in both FIRECalc and Vanguard's Nest Egg calculator to ensure the success rate is close to 100% at above mentioned SWR.

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Not sure what I will do after quitting my current job. Priority is spend time with wife, kids, and parents. I have worked in tech throughout my 15 year career and have expertise in intersection of public policy + tech so will likely explore assignments once I get bored of "retired" life style.

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
Congrats on your situation. You will be more than fine. May I ask what it took to end up in such a fantastic financial situation?

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birdog
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Re: Early Retirement Math - What I am not thinking of?

Post by birdog » Tue Jan 09, 2018 7:32 am

https://www.madfientist.com/first-year-of-freedom/

Congratulations on your financial independence! At the same time, I understand your hesitation/thoughtfulness surrounding extreme early retirement. You might check out the above link from the Mad Fientist detailing his first year of extreme early retirement. My opinion is that you will be more than fine and I’d be very interested in updates from you at 1, 3, and 5 years into retiring from the grind. My suspicion is that you just might fall into doing something that you enjoy and that provides income (though not needed) while still allowing for tons of time with family. Stranger things have happened...

Topic Author
wantrepreneur
Posts: 30
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Re: Early Retirement Math - What I am not thinking of?

Post by wantrepreneur » Tue Jan 09, 2018 11:27 am

birdog wrote:
Tue Jan 09, 2018 7:32 am
https://www.madfientist.com/first-year-of-freedom/

Congratulations on your financial independence! At the same time, I understand your hesitation/thoughtfulness surrounding extreme early retirement. You might check out the above link from the Mad Fientist detailing his first year of extreme early retirement. My opinion is that you will be more than fine and I’d be very interested in updates from you at 1, 3, and 5 years into retiring from the grind. My suspicion is that you just might fall into doing something that you enjoy and that provides income (though not needed) while still allowing for tons of time with family. Stranger things have happened...
Thanks birdog! Read that over the New Year break, great read for sure. If I end up writing about my experiences, i will be sure to pass along the link.
OldSport wrote:
Tue Jan 09, 2018 1:31 am
Congrats on your situation. You will be more than fine. May I ask what it took to end up in such a fantastic financial situation?
Thanks OldSport. It took luck + discipline to be in this position so early in life. I was lucky to score an entry level job in tech in California back in 2004. That led to a career of 14 years during tech's boom years, including an IPO at one of the two companies I have worked for. Wealth from IPO, tech salary, lengthy stock market rally, and a like minded wife (most important factor if you ask me) are the reasons why I say I got lucky. We had two incomes until we moved to India in 2015, and our middle class lifestyle ensured we saved a significant amount even while starting out - that's the discipline part. Since discovering the Boglehead way a few years ago, I have stayed the course and that has been really beneficial.

wfrobinette
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Re: Early Retirement Math - What I am not thinking of?

Post by wfrobinette » Tue Jan 09, 2018 12:34 pm

MikeG62 wrote:
Mon Jan 08, 2018 8:14 am
wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
A withdrawal rate that low is typically considered to result in the portfolio lasting indefinitely. Put another way, if you run out of money with a 1.25% to 1.5% withdrawal rate (because future returns are so low and/or inflation so high), so will everyone else.
The only issue is that inflation has averaged 7.6% over the last 30 years in India. Will it continue at this average for the next 60 years or slow down?

Here's what I got using firecalc.

Using a 1.5%(81k with constant purchase power) withdrawal, 7.6% inflation, 75% us Stocks and 25 Bonds and a 60 Year time frame.

For our purposes, failure means the portfolio was depleted before the end of the 60 years. FIRECalc found that 47 cycles failed, for a success rate of 46.0%.

No if slows down his spending as he ages success jumps to 97%

If I had that coin, I'd be off to retirement and finding a hobby

marcopolo
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Re: Early Retirement Math - What I am not thinking of?

Post by marcopolo » Tue Jan 09, 2018 12:47 pm

wfrobinette wrote:
Tue Jan 09, 2018 12:34 pm
MikeG62 wrote:
Mon Jan 08, 2018 8:14 am
wantrepreneur wrote:
Mon Jan 08, 2018 3:11 am
Financial Situation:
- Family: Me - 37, Wife - 36, Kid - 14 months
- Net Worth: $5.4M
- Allocation: 85% Stocks, 10% Bonds, 5% - cash + real estate
- Portfolio: VFWAX, VBTLX, VTSAX, VGWAX as per the allocation above. 6% of net worth invested in Indian mutual funds because that's where we live now, and plan to retire. IPS has a goal of 10% of total NW invested in India.
- Planning to Retire: June 2018

In Retirement:
- Withdrawal Rate: We live in a LCOL country (India), so we will maintain our current lifestyle on 1.25% if we rent, and 1.5% if we decide to build a house and put down "roots".

Withdrawal Plan:
Instead of withdrawing, I plan to use the dividends to cover living costs instead of reinvesting dividends. What am I not thinking through?

Anything else that I have missed out on that I should be thinking through, specially # of years I expect my savings to last?
A withdrawal rate that low is typically considered to result in the portfolio lasting indefinitely. Put another way, if you run out of money with a 1.25% to 1.5% withdrawal rate (because future returns are so low and/or inflation so high), so will everyone else.
The only issue is that inflation has averaged 7.6% over the last 30 years in India. Will it continue at this average for the next 60 years or slow down?

Here's what I got using firecalc.

Using a 1.5%(81k with constant purchase power) withdrawal, 7.6% inflation, 75% us Stocks and 25 Bonds and a 60 Year time frame.

For our purposes, failure means the portfolio was depleted before the end of the 60 years. FIRECalc found that 47 cycles failed, for a success rate of 46.0%.

No if slows down his spending as he ages success jumps to 97%

If I had that coin, I'd be off to retirement and finding a hobby
I assume his investments are denominated in USD. If so, i think you are missing currency rate changes in your analysis. While India has had much higher inflation, their currency has also devalued relative to USD. So, the net effect is a USD denominated inflation rate that is not too much different than US inflation rates.

Congratulations to OP. I think you are in great shape. Enjoy your retirement.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Thesaints
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Re: Early Retirement Math - What I am not thinking of?

Post by Thesaints » Tue Jan 09, 2018 1:01 pm

A 4% SWR is not “commonly accepted for early retirement”. In fact, it is not by any stretch of imagination for someone planning to retire in their thirties, unless they also plan to die a lot earlier than expected.
Life expectancy for a 38 yo man is almost 42 years and more than 10% of people will actually reach at least age 93. The figures are even “grimmer” for women.
If you take into account combined survival (i.e. at least one spouse being alive), you probably have to plan for funds to last more than 60 years at least. With that in mind, even a 3% withdrawal rate doesn’t sound so safe.

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bligh
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Re: Early Retirement Math - What I am not thinking of?

Post by bligh » Tue Jan 09, 2018 1:48 pm

Haha! With that kind of coin, and that low a withdrawal rate, we should be the ones asking YOU what we're not thinking of.

Enjoy the time with your family and your super early retirement! :sharebeer

malbecman
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Re: Early Retirement Math - What I am not thinking of?

Post by malbecman » Tue Jan 09, 2018 2:00 pm

randomguy wrote:
Tue Jan 09, 2018 1:10 am
OnTrack2020 wrote:
Mon Jan 08, 2018 9:45 am
I'm assuming funds for your child's education have been factored into this; I have no idea how much costs for education are in your home country.
Living off dividends is a whole other discussion. People like to think of dividends as steady payments like bonds. They aren't. the idea of living off dividends brings all sorts of questions (i.e. are you rebalancing? If your 2 funds both return 6% but one pays a 2% dividend and the other a 4%, they aren't going to stay equal for long) that you can avoid by stop believing living off dividends does anything. If dividends went back up to 7%+, I am not sure I would be recommending a 7% SWR:)

A good example of this is PG&E (Pacific Gas & Electric) recently cutting their dividend to zero (to cover possible liabilities from the CA wildfires). This is a utility stock, mind you, which has traditionally been considered safe and stable. It certainly makes the argument to me that one needs a well-diversified portfolio to cover hiccups like this.

YetAnotherUser
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Re: Early Retirement Math - What I am not thinking of?

Post by YetAnotherUser » Tue Jan 09, 2018 2:04 pm

Thesaints wrote:
Tue Jan 09, 2018 1:01 pm
A 4% SWR is not “commonly accepted for early retirement”. In fact, it is not by any stretch of imagination for someone planning to retire in their thirties, unless they also plan to die a lot earlier than expected.
Life expectancy for a 38 yo man is almost 42 years and more than 10% of people will actually reach at least age 93. The figures are even “grimmer” for women.
If you take into account combined survival (i.e. at least one spouse being alive), you probably have to plan for funds to last more than 60 years at least. With that in mind, even a 3% withdrawal rate doesn’t sound so safe.
Didn't Bengen say in a recent Reddit AMA that extending the duration of retirement doesn't have as significant of an impact on SWR as you might think? I believe his numbers were something like .1% reduction for every additional 5 years of retirement, give or take.

https://www.reddit.com/r/financialindep ... he_4_safe/
In my opinion, inflation is the retiree's worst enemy. As your "time horizon" increases beyond 30 years, as you might expect, the safe withdrawal rate decreases. For example for 35 years, I calculated 4.3%; for 40 years, 4.2%; and for 45 years, 4.1%. I have a chart listing all these in a book I wrote in 2006, but I know Reddit frowns on self-promotion, so that is the last I will have to say about that. If you plan to live forever, 4% should do it.
If you're not fine with the basis of Bengen's research at all then that's a different story obviously.

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Nate79
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Re: Early Retirement Math - What I am not thinking of?

Post by Nate79 » Tue Jan 09, 2018 2:29 pm

As was already pointed out I would be worried about future local inflation and currency exchange rate changes. Any simulations that didn't take this into account would be almost meaningless. To me this would be complicated and you would need to account for what you think will happen in the next 60 years between India and the US for exchange rates and inflation in India. Another thing to think about would be potential tax law change since two countries are involved. 60 years is a long long time.........

richyg12
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Re: Early Retirement Math - What I am not thinking of?

Post by richyg12 » Tue Jan 09, 2018 2:40 pm

Jeez,

OP - If you can't get by on making $5.4m in the USA and taking it back to India to live out you life then something is wrong.

Unless your surname is TATA.

I think you won, enjoy it and you can always go back to to work if things go completely bad.

However I am sure you wont resist a few side hustles <-- be careful as this may be your highest risk :o


R

timemoveson
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Re: Early Retirement Math - What I am not thinking of?

Post by timemoveson » Tue Jan 09, 2018 2:53 pm

OP, congratulations, that is a fantastic accomplishment. Well done.

You are not missing anything in my opinion. I can't see anything short of a complete disaster standing in your way.

I would spend absolutely nothing beyond the dividends/fixed income returns your assets will produce. I will doing the same in full-price/MCOL Western country (Canada).

I have the equivalent of about 50% more in US$ assets than you have. But, like you, I live where I live and have a well understood personal economy to prudently manage, just like you will. You understand what it costs to eat, to drive, to educate, to get health care and insurance, to be housed, to travel, etc., in India. As such, you can manage it and vary what is needed as events unfold for your family and cut or expand as you need to.

My cost of living will probably be triple yours and I feel very comfortable with the horizon ahead.

kenoryan
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Re: Early Retirement Math - What I am not thinking of?

Post by kenoryan » Tue Jan 09, 2018 3:19 pm

That's a lot of money by any standards. It should go a long way in India. I know you're only thinking about the math and investment aspects, but here are some thoughts.

1. If you are a US citizen, you might have to file taxes every year in the US. You also have to report to your local police station every 6 months to get your stay extended. You can't get Indian dual citizenship.
2. If your kid wants to come back to the US for undergrad education, you will need his college fund to keep up with inflation of US private school tuition.
3. Inflation is high in India. But, as someone else mentioned, if majority of your investments are in US funds, US currency will also appreciate against the Indian currency. You should be OK there.
4. Real estate is a good investment in India. The population is exploding and there's not much room for the millions thronging to the big cities. That will be a good hedge against inflation of prices and the currency.
5. Keep your options open. If you suddenly find yourself unhappy in India, you might want to come back and live in the US. It's going to be hard to get used to the lack of power, water and sanitation, corruption, nepotism and pollution. A lot can change in 5-10 years.
6. Medical care is questionable in smaller cities. A friend of mine died in a 5 star hotel lobby while his angina progressed to a full-blown heart attack. The ambulance didn't get there till 45 minutes after he was already dead. The family had to get help from the US embassy and their Congressman to have his body released by the Indian government to be shipped back home to Minnesota.
7. Traffic is bad in big cities. Smog is so bad in New Delhi that it is considered the worst city for pulmonary health.
8. Tapeworm and Roundworm are common in uncooked or poorly cooked food in restaurants. Especially meat. A friend of mine came home after a visit to Bangalore and 6 months later a "brain tumor" turned out to be echinococcus or cysticercosis causing seizures. Malaria and Chikunguniya are also becoming common. And dengue fever.

Good luck!

Thesaints
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Re: Early Retirement Math - What I am not thinking of?

Post by Thesaints » Tue Jan 09, 2018 5:56 pm

YetAnotherUser wrote:
Tue Jan 09, 2018 2:04 pm
If you're not fine with the basis of Bengen's research at all then that's a different story obviously.
All the "research" he has done basically amounts to backtesting. It is probably good to estimate market volatility, but certainly not to estimate the particular realization that we are going to experience.
When you see percentages being quoted after the decimal point, you can be almost sure something is iffy.

Topic Author
wantrepreneur
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Re: Early Retirement Math - What I am not thinking of?

Post by wantrepreneur » Wed Jan 10, 2018 4:36 am

Inflation is a point I have thought about. It's an element I cannot control so I cannot worry about it and don't worry about it. 90% of my assets will continue to be in the US and will provide some protection against inflation. I also cannot control USD : INR exchanges rates, so don't worry about it. If India becomes more expensive to live than US, we will just move back to the US :)
kenoryan wrote:
Tue Jan 09, 2018 3:19 pm
That's a lot of money by any standards. It should go a long way in India. I know you're only thinking about the math and investment aspects, but here are some thoughts.

1. If you are a US citizen, you might have to file taxes every year in the US. You also have to report to your local police station every 6 months to get your stay extended. You can't get Indian dual citizenship.
2. If your kid wants to come back to the US for undergrad education, you will need his college fund to keep up with inflation of US private school tuition.
3. Inflation is high in India. But, as someone else mentioned, if majority of your investments are in US funds, US currency will also appreciate against the Indian currency. You should be OK there.
4. Real estate is a good investment in India. The population is exploding and there's not much room for the millions thronging to the big cities. That will be a good hedge against inflation of prices and the currency.
5. Keep your options open. If you suddenly find yourself unhappy in India, you might want to come back and live in the US. It's going to be hard to get used to the lack of power, water and sanitation, corruption, nepotism and pollution. A lot can change in 5-10 years.
6. Medical care is questionable in smaller cities. A friend of mine died in a 5 star hotel lobby while his angina progressed to a full-blown heart attack. The ambulance didn't get there till 45 minutes after he was already dead. The family had to get help from the US embassy and their Congressman to have his body released by the Indian government to be shipped back home to Minnesota.
7. Traffic is bad in big cities. Smog is so bad in New Delhi that it is considered the worst city for pulmonary health.
8. Tapeworm and Roundworm are common in uncooked or poorly cooked food in restaurants. Especially meat. A friend of mine came home after a visit to Bangalore and 6 months later a "brain tumor" turned out to be echinococcus or cysticercosis causing seizures. Malaria and Chikunguniya are also becoming common. And dengue fever.

Good luck!
Thanks a lot for your concerns. I was born in India and lived in India until I was 20. We moved back to India 2.5 years ago so we are well adjusted into the growing India that's getting better on multiple fronts everyday. I have seen all possible complexities with taxes across the two countries - it will get simpler for me once I don't have a salary. While India is not at par with its infrastructure with the developed countries and a lot of other developing countries, it is more evolved and developed than what you would hear from visitors or what you see when you visit. Life is good here, there are trade offs to be made everywhere - we have picked ours!

Lynette
Posts: 1889
Joined: Sun Jul 27, 2014 9:47 am

Re: Early Retirement Math - What I am not thinking of?

Post by Lynette » Wed Jan 10, 2018 6:44 am

Good Morning,

Best wishes in general and especially on the tax front. Hire a good tax accountant who can help you navigate through the mire of having to fill in two sets of tax returns for countries who have different laws regulations on matters such as capital gains. I was born in South Africa and came to the US many years ago. I bought some apartments in South Africa for rental purposes and then the tax nightmare began. In the end I sold the apartments. In addition, South Africa has exchange control so one cannot move money out of South Africa very easily without the central (Reserve Bank) getting involved. Keep all documentation even if it is for 30+ years.
You are planning a very long time in a different country. Political alignments, tensions, laws etc. etc are very likely to change.

I retired from IT in a megacorp a year ago. One of my Indian colleagues considered returning to India so that she could hire a cook!

Good luck!

Lynette

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Watty
Posts: 17623
Joined: Wed Oct 10, 2007 3:55 pm

Re: Early Retirement Math - What I am not thinking of?

Post by Watty » Wed Jan 10, 2018 8:02 am

wantrepreneur wrote:
Tue Jan 09, 2018 12:10 am
On estate/inheritance/retirement accounts, I am a US citizen so things are a little simpler for me as long as I maintain the citizenship (which I plan to). Our son is also a US citizen so that helps when it comes to estate planning/inheritance. The only pending item we need to work through is how to go about giving up my wife's green card - serious tax consequences as mentioned above.
Don't forget to look at the estate planning implications if you have any more children that are not born in the US, or for future grandkids.

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