Retire To IndiaRetire To IndiaAn immigrant's thoughts on money, retirement and achieving financial independence. Articles
Net Worth update - December 2007: Up 1.3%
2008-01-06 19:46:00 Our household Net Worth at the end of fourth quarter, 2007, was $658,360.Our Net Worth increased by $8,160 (or 1.3%) in this quarter. This quarter has been a challenging one, due to the poor returns in the stock market, and some unexpected expenses we incurred. To summarize:We made $13,450 in new contributions to our savings and investment accounts. We had a net increase in our real estate assets of $11,577, partly due to mortgage payments we made and partly from increase in the value of property we own in India.We had a net unrealized loss of $16,867 in our investment accounts.Looking back at 2007, our Net Worth increased by $128,345 (or 24.2%) for the whole year.Related posts:Net Worth update - September 2007: Up 6.1%Net Worth update - June 2007: Up 7.4%Net Worth update - March 2007: Up 7.7%Our Net Worth over the yearsFinancial goals for retirementAsset Allocation update: 2007 DecemberOriginally published at Retire To India. More About: Update , Net worth
Asset Allocation update: 2007 December
2007-12-13 05:01:00 There are two common ways to re-balance an investment portfolio: either do it annually, or do it whenever the allocation of an asset type is off by more than a certain percentage.In my case, since I am very much in the accumulation phase of my investments, I don't strictly do either of the above. What I have been doing for the last few years is to determine my allocations at the beginning of December , and use a simple spreadsheet to calculate our planned contributions for the following year. This is also a good time to make any tweaks to the target asset allocation for the next year. I also sometimes fine-tune the contributions during the year, but generally try to stick to the plan through the year.I have given below my target allocations (as planned in December 2006) and my actual allocations, as of December 1, 2007. I include only our retirement and brokerage accounts in the allocation above. This is money that we don't expect to use within the next 10-15 years. I have exclud... More About: Investing , Update , Asset , Asset Allocation
Asset Allocation summary
2007-12-13 05:01:00 An asset allocation plan is an important part of every financial plan. I have changed my asset allocation several times in recent years, but seem to have settled on the following for now:70% stocks, 30% fixed incomeThe 70% in stocks breaks down to 30% in US Large Cap stocks, 10% in US Small and Mid Cap stocks, 25% in Non-US stocks, and 5% in REITsThe 30% in fixed income breaks down to 10% in Bond funds, 10% in Inflation-indexed bonds, and 10% in Stable value funds.I include only our investment accounts (retirement and brokerage accounts) in the allocation above.I am not exactly sure how we ended up with these target allocations. The 70-30 split between equities and fixed income is based on my risk tolerance and in line with Ben Graham's recommendation in The Intelligent Investor that no individual investor should have more than 75% in equities. I learned almost everything about asset allocation from the book The Intelligent Asset Allocator by William Bernstein. I have also listed s... More About: Asset Allocation
Outsourcing Retirement to India
2007-11-04 04:01:00 The idea of India as a low-cost retirement destination comes up every so often, usually in the context of medical or nursing home care in America and Europe. The notion is getting some attention in India as well. I found this article with the provocative subtitle Why not move the retirees to India? in the online version of Mint, an Indian business newspaper. Here is an excerpt:[European retirees in India] can enjoy the standard of living they have come to know, at price levels they can afford. For India, the retirees? spending offers another growth industry, potentially employing another several hundred thousand people working in the hospitality retirement business and all the ancillary services associated with it... If India can serve as back office to the world, why can?t we become its retirement home as well?An earlier editorial in the Times of India discussed the same topic:Given the high rates of rentals and medical services abroad, people are opting to move to India to l... More About: Retirement , Outsourcing
Outsourcing Retirement to India
2007-11-04 04:01:00 I found this article with the provocative subtitle Why not move the retirees to India ? in the online version of Mint, an Indian business newspaper. Here is an excerpt: [European retirees in India] can enjoy the standard of living they have come to know, at price levels they can afford. For India, the retirees? spending offers another growth industry, potentially employing another several hundred thousand people working in the hospitality retirement business and all the ancillary services associated with it... If India can serve as back office to the world, why can?t we become its retirement home as well? An earlier editorial in the Times of India discussed the same topic: Given the high rates of rentals and medical services abroad, people are opting to move to India to lead retired lives that are comfortable and affordable. India ought to pull out all stops to attract this kind of outsourcing as it has great potential.Unfortunately, there is currently no easy way for a non-Indi... More About: Retirement , Outsourcing , Tire
On Immigrants, Kids and Money
2007-10-24 05:09:00 The first generation of immigrants from India arrived in America in the 1950's, 60's and 70's. (Yes, there were earlier immigrants from India, but their numbers were very small until President Truman signed the Luce-Celler Act in 1946). They were mostly skilled professionals who established themselves in a variety of fields, especially science, engineering and health care. This generation has now reached or is about to reach retirement age. I have always been curious about how they are dealing with retirement.By most statistical measures, Indian immigrants have been one of the most affluent groups in America. According to the 2000 U.S. Census, Indian Americans had the highest median income of any ethnic group in the United States. Anecdotal evidence, however, tells me that many of the older Indian immigrants who are eligible for social security are still working, and usually out of necessity. In several cases that I know of, it is because they placed their children above their ow... More About: Kids , Money , Immigrant , Immigrants
On Immigrants, Kids and Money
2007-10-24 05:09:00 The first generation of immigrants from India arrived in America in the 1950's, 60's and 70's. (Yes, there were earlier immigrants from India, but their numbers were very small until President Truman signed the Luce-Celler Act in 1946). Most of them were skilled professionals who established themselves in a variety of fields, especially science, engineering and health care. This generation has now reached (or is about to reach) retirement age. I have always been curious about how they are dealing with retirement.By most statistical measures, Indian immigrants have been one of the most affluent groups in America. According to the 2000 U.S. Census, Indian Americans had the highest median income of any ethnic group in the United States. Anecdotal evidence, however, tells me that many of the older Indian immigrants who are eligible for social security are still working, and usually out of necessity. In several cases that I know of, this is because they financially supported their gro... More About: Kids , Money , Immigrants
Retirement account Contribution Limits for 2008
2007-10-20 05:30:00 As I detailed in earlier posts on our Net Worth, most of our retirement savings are in tax-deferred retirement accounts, mainly 401(k) and IRA accounts. We have been able to contribute the maximum allowed amounts to these accounts for the last six years, and it has served us well. One of our goals is to continue to "max out" contributions to these accounts. Now that we are well into the fourth quarter, it is time to look ahead to 2008 . IRS has just updated the contribution limits for retirement plans for 2008.The maximum pre-tax contribution allowed to 401(k) and 403(b) accounts for 2008 is $15,500, which is the same as for 2007. Those who are over 50 are allowed to contribute an additional $5,000 in "catch-up" contributions. This is again the same as in 2007.Note that this is the maximum allowed by IRS. Your individual plan may have additional restrictions that prevent you from contributing the full amount. It is important to check with your plan administrator.For IRAs (both Tradi... More About: Retirement , Limits , Contribution , Account
Retirement account Contribution Limits for 2008
2007-10-20 05:30:00 As I detailed in earlier posts on our Net Worth, most of our retirement savings are in tax-deferred retirement accounts, mainly 401(k) and IRA accounts. We have been able to contribute the maximum allowed amounts to these accounts for the last six years, and it has served us well. One of our goals is to continue to "max out" contributions to these accounts.Now that we are well into the fourth quarter, it is time to look ahead to 2008. IRS has just updated the contribution limits for retirement plans for 2008.The maximum pre-tax contribution allowed to 401(k) and 403(b) accounts for 2008 is $15,500, which is the same as for 2007. Those who are over 50 are allowed to contribute an additional $5,000 in "catch-up" contributions. This is again the same as in 2007.Note that this is the maximum allowed by IRS. Your individual plan may have additional restrictions that prevent you from contributing the full amount. It is important to check with your plan administrator.For IRAs (both Tradit... More About: Retirement , Limits , Contribution
Net Worth update: September 2007
2007-09-30 21:24:00 This is our balance sheet as of the end of third quarter, 2007.Our Net Worth increased by $37,597 (or 6.1%) in this quarter. This breaks down as follows: $21,279 is new contributions we made to our accounts. $1,701 is from increase in home equity due to mortgage payments we made.The rest ($14,617) is due to investment income and unrealized gains in our accounts, and employer match in 401(k) accounts.Our combined 401(k) balances exceeded the $300K mark for the first time this quarter. Related posts:Net Worth update: June 2007Net Worth update: March 2007Our Net Worth over the yearsOriginally posted at Retire To India. More About: Update , Net worth , September , September 2007
10 Best Places to Retire in India
2007-09-21 04:11:00 One question that I have received several times since I started this blog is about the best retirement destinations in India .For most Indian retirees, the notion of finding a place to retire is a strange one. Most of them want to live close to their children and other family, and will never consider moving elsewhere. However, with an increasingly mobile and affluent population in India, more people are taking an active role in planning their retirement. Many people are buying retirement homes in desirable locations, sometimes as investment property. There are also more older people from abroad, Indians and non-Indians alike, who are considering long-term stays in India. As a result, this question is likely to come up more often.To help answer this question, I have tried to list a number of good places for a retiree in India. Any such list sure to be very subjective for a country as vast as India. I used the following guidelines to select places for this list:Good location with inter... More About: Places , Retire , Tire
Medicare for overseas retirees
2007-08-29 05:16:00 As I mentioned in an earlier post about Social security for overseas retirees, US citizens who retire abroad are fully eligible for receiving Social security payments. The situation with Medicare , however, is quite different.Just as in the case of Social security, the rules regarding Medicare eligibility and benefits are subject to change in the coming years. It is important to understand the current regulations, however.First, some basics about Medicare: Medicare is a Federal health insurance program for those people who are 65+ years of age, or have certain disabilities. You qualify for Medicare if you are 65 years of age and if you are eligible for Social Security retirement benefits. Even if you opt for Social security payments later than age 65, you are still eligible for Medicare at 65. If you opt for early Social security benefits before the age of 65, you will not be eligible for Medicare benefits until you are 65. To be eligible for Medicare, you must be a legal US res... More About: Health Care , Seas , Overseas , Rees
Early retirement planning with FIRECalc
2007-08-23 05:49:00 For those thinking about retiring early, two of the most frequently asked questions are the following: If I retire today with my current savings, how much can I safely withdraw each year?When can I retire with $40,000 yearly income (or another desired amount) if I continue to save at the current rate?FIRECalc is a simple web calculator that can help you answer these questions. FIRECalc makes one key assumption to answer these questions, namely, that the future can't be all that different from the past.According to the Wall Street Journal: To gauge your strategy's likely success, [FIRECalc] looks at investment returns since 1871. But the calculator doesn't use average historical rates of return. Instead, it analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically.In other words, it uses historical data about the US stock and bond markets to calculate your odds of not running ... More About: Retirement , Planning , Early , Early retirement , Retirement planning
Book review: Cashing in on the American Dream - How to retire at 35
2007-08-12 14:46:00 Cashing in on the American Dream: How to Retire at 35 by Paul Terhorst is one of the most well-known books on early retirement. I have heard about this book many times, especially on the wonderful Early Retirement forums, but never had chance to read the book until now. This book was written in 1988 and is out-of-print, so the best way to get a copy is at the library.Terhorst is a former accountant who retired at 35 in 1985 with a modest amount in savings and still continues to stay retired. He and wife Vicki are probably the best-known early retirees, and maintain a website that they still keep up-to-date with their latest adventures.Terhorst's book is in many ways reminiscent of the book Your Money or Your Life, published later in 1992, which I have mentioned before. Both books emphasize frugal living, and have a healthy disregard for the traditional corporate work ethic.Of the two books, Cashing in on the American Dream is more readable and less preachy, and contains more prac... More About: Books , The American Dream , Book Review , Review , Book
Book review: Cashing in on the American Dream - How to retire at 35
2007-08-12 14:46:00 Cashing in on the American Dream: How to Retire at 35 by Paul Terhorst is one of the most well-known books on early retirement. I have heard about this book many times, especially on the wonderful Early Retirement forums, but never had chance to read the book until now. This book was written in 1988 and is out-of-print, so the best way to get a copy is at the library.Terhorst is a former accountant who retired at 35 in 1985 with a modest amount in savings and still continues to stay retired. He and wife Vicki are probably the best-known early retirees, and maintain a website that they still keep up-to-date with their latest adventures.Terhorst's book is in many ways reminiscent of the book Your Money or Your Life, published later in 1992, which I have mentioned before. Both books emphasize frugal living, and have a healthy disregard for the traditional corporate work ethic.Of the two books, Cashing in on the American Dream is more readable and less preachy, and contains more prac... More About: Books , The American Dream , Book Review , Review , Book
Outsourcing Long-term care
2007-07-30 02:01:00 When I listed my reasons for considering retirement to India , I mentioned the low cost of health care and long-term care in India. The situation with health care is well-known; India is one of the top destinations for health tourism where elective surgeries and other medical procedures are done at a fraction of the cost in the US or Europe. The low cost of prescription drugs is also another attraction.The case with long-term care (nursing home care) is not so well known. I came across this article titled Made in India: Low-cost care for ailing parents in the Chicago Tribune that describes the case of an elderly American couple receiving nursing home care in India. Their son took them there after he realized that even the cheapest nursing homes in the US would bankrupt his parents.The article describes the cost of care in India as follows: [The total cost is] less than $2,000 a month for food, rent, utilities, medications, phones and 24-hour staffing. The plentiful drugs the coupl... More About: Outsourcing , Health Care , Care , Long
Outsourcing Long-term care
2007-07-30 02:01:00 When I listed my reasons for considering retirement to India , I mentioned the low cost of health care and long-term care in India. The situation with health care is well-known; India is one of the top destinations for health tourism where elective surgeries and other medical procedures are done at a fraction of the cost in the US or Europe. The low cost of prescription drugs is also another attraction.The case with long-term care (nursing home care) is not so well known. I came across this article titled Made in India: Low-cost care for ailing parents in the Chicago Tribune that describes the case of an elderly American couple receiving nursing home care in India. Their son took them there after he realized that even the cheapest nursing homes in the US would bankrupt his parents.The article describes the cost of care in India as follows: [The total cost is] less than $2,000 a month for food, rent, utilities, medications, phones and 24-hour staffing. The plentiful drugs the coupl... More About: Outsourcing , Health Care , Care , Long
Income taxes in India: The basics
2007-07-24 04:20:00 One of the downsides of planning to retire to another country is that you need to be familiar with the tax systems of two different countries. This is especially challenging in the case of US and India , since tax regulations of the two countries are substantially different.Since I never worked in India, I have never paid income taxes there, so I have no first-hand experience in this. I am planning a series of posts based on information that I gathered from different sources. This post explains some of the basic details regarding taxation of Indian residents.A basic difference in the Indian tax system compared to the US system is that income taxes are filed on an individual basis. In other words, there is no filing status such as "married filing jointly" etc. As a result of this, one of the basic rules of tax planning in India is that you should spread your income among different members of your family.Income tax is assessed based on the Financial Year (FY) which starts on April 1 an... More About: Taxes , Basics , The Basics
Income taxes in India: The basics
2007-07-24 04:20:00 One of the downsides of planning to retire to another country is that you need to be familiar with the tax systems of two different countries. This is especially challenging in the case of US and India , since tax regulations of the two countries are substantially different.Since I never worked in India, I have never paid income taxes there, so I have no first-hand experience in this. I am planning a series of posts based on information that I gathered from different sources. This post explains some of the basic details regarding taxation of Indian residents.A basic difference in the Indian tax system compared to the US system is that income taxes are filed on an individual basis. In other words, there is no filing status such as "married filing jointly" etc. As a result of this, one of the basic rules of tax planning in India is that you should spread your income among different members of your family.Income tax is assessed based on the Financial Year (FY) which starts on April 1 an... More About: Taxes , Basics , The Basics
Growing your Net Worth
2007-07-19 05:10:00 I found two good articles on growing one's Net Worth the old-fashioned way: by saving steadily and allowing enough time for the power of compounding to work. When I first started working, a million dollars seemed like an unreachable goal. But now that it appears to be within reach, I found it interesting to read about how ordinary working people can accumulate significant wealth over the years.The first article, How to Save $1 Million for Retirement is from The Wall Street Journal Online and is written by Jonathan Clements. It says that the critical milestone is not reaching a million dollars or any other fixed amount, but is instead accumulating savings equal to two times your annual income. It has the following quote from a financial advisor: What many investors fail to understand is that, once they reach a certain level of assets, most of the savings should come from investment growth. The breakthrough occurs at around two times your income. [This is] the crossover point, where ... More About: Net worth , Growing , Rowing , Grow
Growing your Net Worth
2007-07-19 05:10:00 I found two interesting articles about growing one's Net Worth the old-fashioned way: by saving steadily and allowing enough time for the power of compounding to work. When I first started working, a million dollars seemed like an unreachable goal. But now that it appears to be within reach, I find it interesting to read about how ordinary working people can accumulate significant wealth over the years.The first article, How to Save $1 Million for Retirement is from The Wall Street Journal Online and is written by Jonathan Clements. It says that the critical milestone is accumulating savings equal to two times your annual income. It has the following quote from a financial adviser: What many investors fail to understand is that, once they reach a certain level of assets, most of the savings should come from investment growth. The breakthrough occurs at around two times your income. [This is] the crossover point, where the biggest driver of your portfolio's growth is now investment... More About: Net worth , Growing , Retirement planning , Grow
Book review: Retiring Abroad
2007-07-12 05:04:00 Retiring Abroadby Ben West is a book for British retirees considering retiring abroad. I also looked at a few similar books for American retirees but decided to review this one instead, because this is the only one with any mention of retiring to India .According to the book, about a million British retirees currently live abroad.This book gives a good insight into the motivations and preferences of Brits retiring abroad. The top 10 destinations that they are retiring to are, in order, Spain, Australia, France, USA, Canada, South Africa, Cyprus, New Zealand, Jamaica and Italy.An increase in affluence which enables a lot of retirees to travel and live abroad, and a desire for warmer weather appear to be the main motivations for leaving the UK. A lower cost of living is a motivation for only a fraction of the retirees. In fact, about half of the above retirement destinations are more expensive to live in than the UK.I learned several things about retirement for Britons from this book: ... More About: Books , Book Review , Review , Book
Book review: Retiring Abroad
2007-07-12 05:04:00 Retiring Abroadby Ben West is a book for British retirees considering retiring abroad. I also looked at a few similar books for American retirees but decided to review this one instead, because this is the only one with any mention of retiring to India .According to the book, about a million British retirees currently live abroad.This book gives a good insight into the motivations and preferences of Brits retiring abroad. The top 10 destinations that they are retiring to are, in order, Spain, Australia, France, USA, Canada, South Africa, Cyprus, New Zealand, Jamaica and Italy.An increase in affluence which enables a lot of retirees to travel and live abroad, and a desire for warmer weather appear to be the main motivations for leaving the UK. A lower cost of living is a motivation for only a fraction of the retirees. In fact, about half of the above retirement destinations are more expensive to live in than the UK.I learned several things about retirement for Britons from this book: ... More About: Books , Book Review , Review , Book
Net Worth update: June 2007
2007-07-03 04:30:00 This is our balance sheet as of the end of second quarter, 2007.This was a very good quarter for us. Our Net Worth increased by $41,952 (or 7.4%) in this quarter. Of this, $17,534 is new contributions we made to our accounts (including employer match in 401k accounts), $2,526 is from increase in home equity due to mortgage payments we made, and the rest ($21,892) is due to investment income and unrealized gains in our accounts.Our Net Worth exceeded the $600K mark for the first time this quarter. Related posts:Net Worth update: March 2007Our Net Worth over the yearsOriginally posted at Retire To India. More About: June , Update , Net worth , June 2007
Net Worth update: June 2007
2007-07-03 04:30:00 This is our balance sheet as of the end of second quarter, 2007. This was a very good quarter for us. Our Net Worth increased by $41,952 (or 7.4%) in this quarter.Our Net Worth exceeded the $600K mark for the first time this quarter. Most of the increase is due to steady contributions we have been making to our 401(k) and IRA accounts, as well as nice gains in some of our holdings.Related posts:Net Worth update: March 2007Our Net Worth over the yearsOriginally posted at Retire To India. More About: June , Update , Net worth , June 2007
Book Review: Retire Early? Make the Smart Choices
2007-07-02 01:00:00 I picked up a few books last week about early retirement and retiring abroad. In the next few weeks I will be posting a summary of each, with my notes on things I learned.The first book is Retire Early? Make the SMART Choices by Steven Silbiger. The first thing to note about this book is that "retiring early" here means electing to take social security benefits at 62 instead of waiting for full retirement benefits at the normal retirement age of 67 or later. I am always amused to see that retiring at 62 is considered "early" in most developed countries. (For comparison, retirement age in China is 50 for most women and 60 for most men. In India, 60 is the mandatory retirement age for most jobs; many state employees have to retire at 55 or 58.)As it turns out, more than half of this book is devoted to answering a single question: Is it better to opt for "early" social security benefits at 62, or to wait till the full retirement age of 67 (for those born after 1960)? The answer to thi... More About: Books , Social Security , Book Review , Review , Smart
Book Review: Retire Early? Make the Smart Choices
2007-07-02 01:00:00 I picked up a few books last week about early retirement and retiring abroad. In the next few weeks I will be posting a summary of each, with my notes on things I learned.The first book is Retire Early? Make the SMART Choices by Steven Silbiger. The first thing to note about this book is that "retiring early" here means electing to take social security benefits at 62 instead of waiting for full retirement benefits at the normal retirement age of 67 or later. I am always amused to see that retiring at 62 is considered "early" in most developed countries. (For comparison, retirement age in China is 50 for most women and 60 for most men. In India, 60 is the mandatory retirement age for most jobs; many state employees have to retire at 55 or 58.)As it turns out, more than half of this book is devoted to answering a single question: Is it better to opt for "early" social security benefits at 62, or to wait till the full retirement age of 67 (for those born after 1960)? The answer to thi... More About: Books , Social Security , Book Review , Review , Smart
Carnival of personal finance #106
2007-06-26 04:51:00 My article on living on interest payments in retirement is featured in the Carnival of Personal Finance #106, now up at Digerati Life, which by the way is an excellent blog about finance and technology run by an immigrant engineer based in Silicon valley.Here are some other articles from the carnival that interested me:KMC from Advanced Personal Finance writes about Inflation - Who Wins, Who LosesLazy Man and Money writes about retirement calculatorsHealthcare economist writes about the Ultimate Buy and Hold strategy using index fundsMatt from The Boulevard to Retirement writes about 6 Myths: Investing for Retirement.Originally posted at Retire To India. More About: Sona
Carnival of personal finance #106
2007-06-26 04:51:00 My article on living on interest payments in retirement is featured in the Carnival of Persona l Finance #106, now up at Digerati Life, which by the way is an excellent blog about finance and technology run by an immigrant engineer based in Silicon valley.Here are some other articles from the carnival that interested me:KMC from Advanced Personal Finance writes about Inflation - Who Wins, Who LosesLazy Man and Money writes about retirement calculatorsHealthcare economist writes about the Ultimate Buy and Hold strategy using index fundsMatt from The Boulevard to Retirement writes about 6 Myths: Investing for Retirement.Originally posted at Retire To India.
Early retirement planning: case study
More articles from this author:2007-06-23 14:56:00 Found this excellent thread at misc.invest.financial-plan about a 40-year old couple planning "semi-retirement" in 5-7 years and "full retirement" in 12 years. Their assets (net worth of about $1.5 M) and income ($240K-$260K) are well beyond ours, but I still found it very interesting.Some notes:They contribute an astounding 50% of their gross income to retirement and college saving accounts.Their current asset allocation is 70% US equities, 15% International, 10% Bonds, 5% Cash. The suggestion from the group is to increase bond holdings gradually, leading to a 60/40 split of stocks/bonds at final retirement.They use FIRECalc to do Monte Carlo simulations on their retirement withdrawals, I tool that I too have played with a bit.For the semi-retirement period, they plan to allocate $10K/year for health insurance premiums. The response from the group is that this is on the low side. Related links: Early retirement planning with FIRECalc Originally posted at Retire To India. More About: Retirement , Study , Planning , Case 1, 2, 3, 4 |
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