Creveling & Creveling protects its clients’ privacy. The following is a fictitious example designed to demonstrate the type of financial decision-making required to achieve financial security and does not refer to any specific case.
Many working expatriates dream of the day when they can throw in the towel and retire on their savings, beginning to enjoy the benefits that an international lifestyle can bring without the added hassle of having to work. But how do you know if you have enough to retire? How long would your money last if you retired today? Is there anything you can do to help stretch your savings over the course of your retirement? To help answer these questions, consider the following case study.
Case Study: How Long Will This Expat Couple’s Savings Last in Retirement?
Situation: Jim is an expat considering early retirement. He is 52 years old, married and lives in Southeast Asia. He and his wife Beth, also 52, have two grown children. They have saved over the years and have an estimated net worth of US$2.0M, and no debt. Their financial assets include the following:
- A new investment condo with a market value of THB15M (US$500K), rented out with a gross yield of 5% and producing net annual cash flow after all expenses of THB600K ($20K).
- An investment portfolio worth US$1.5M consisting of US$1.3M in U.S. taxable assets and US$200K in a traditional U.S. Individual Retirement Account (IRA). Overall, the portfolio is invested 55% in stocks, 30% in cash and fixed income, and 15% in gold. Total portfolio expenses average 1.5% per year.
- U.S. Social Security benefits (Jim and Beth together) worth about $6,000 per year in current dollars when they are 67 years old.
Jim and Beth estimate that their lifestyle costs approximately US$80K per year, including living expenses, housing, medical costs, gifts and charitable donations, and travel. They plan to keep the investment condo for about 10 years for its cash flow, and then hope to sell it at an expected small profit.
Analysis: Although US$2.0M is not an insignificant amount of savings, unfortunately it may not be enough to support Jim and Beth in their expected lifestyle for the rest of their lives…
