Retire To IndiaRetire To IndiaAn immigrant's thoughts on money, retirement and achieving financial independence. Articles
Retiring to India at 37
2008-06-05 04:24:00 I found an interesting post recently on the Early Retirement forum by an India n immigrant who is considering retiring in India at age 37. The poster asked several interesting questions, so I thought I would reproduce the post here (edited for clarity), and attempt to answer some of his questions.I am a 37 year old immigrant and naturalized US citizen. I am married, and have a 2-year old child. We have about $600,000 saved for retirement, with two-thirds of it in taxable accounts (tax-efficient index funds and low turnover funds), with roughly 75% equities and the rest in bonds/cash. About 34% of my investment portfolio is international. In addition, we have about $100K for our child?s college education, all in index stock funds, 65% US, 35% international. We hope to retire to India by end of this year. We don?t own a home anywhere in the world. However, we have investment real estate in India, which serves as a hedge against our purchase cost of a future home there. My first rea... More About: Early retirement , Retirement planning
Carnival of personal finance #154
2008-05-28 05:46:00 My article on Generating income in early retirement is featured in the Carnival of personal finance #154, now up at Canadian dream: Free at 45.Here are some other articles from the carnival that interested me:How to Turn $5000 into $22 million? Lessons From One Successful Individual Investor by FIRE Finance . (Early) Retirement - The Final Frontier by My Wealth BuilderFive Perfect Jobs for Retirees by Smart Money Daily Shocking News About Social Security Solvency! by The Platinum Years Network, which is similar to my earlier post Social security/Medicare watch: 2008. Originally published at Retire To India. More About: Personal , Personal Finance
Generating income in early retirement
2008-05-18 05:08:00 One of the two major concerns for early retirees is how to generate enough income to live on until you are eligible to receive retirement income such as social security, pension or 401(k)/IRA distributions (The other major concern is health insurance, which I will cover in a separate post).As I show in my earlier posts on our Net worth, most of our savings are in tax-deferred retirement accounts. This is intentional, since we want to contribute as much as we can to tax-deferred accounts, to take advantage of the tax deferred growth and the tax deductions where possible. But this causes a problem: if we want to retire early, say at age 50, we have to have enough money in taxable accounts to live for at least 9.5 years, until we become eligible to take distributions from 401(k) and IRA accounts at age 59 1/2.As I mentioned in an earlier post, it is possible to make early withdrawals from retirement accounts without penalty. But clearly this is something you want to avoid, unless you r... More About: Retirement , Income , Early , Early retirement , Retirement planning
Net Worth update - 2008 First quarter: Up 1.4%
2008-04-11 04:03:00 Here is our balance sheet for the first quarter of the year: Our Net worth increased by $9288 (or 1.4%) this quarter. The return on our overall portfolio for the quarter was a negative 1.9%, however.I calculated our portfolio return using a neat formula that I first came across in the book The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William Bernstein. It goes like this:First find the portfolio value at the start and at the end of the period. Next, calculate the Net inflow for the period which is total amount of money you added to the portfolio during the period minus any money you took out. The Net inflow may be positive or negative. Then,Portfolio return = (Ending value-Net inflow/2)/(Starting value+Net inflow/2) - 1.Related posts:Net Worth update - December 2007: Up 1.3% 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 retirementAs... More About: Update , Quarter , 2008
Social security/Medicare Watch: 2008
2008-03-30 19:52:00 Social Security and Medicare trustees' 2008 annual report was released recently.There are no big surprises in the report, but I find it fascinating to read about the projections for Social security and Medicare for the future. It is true that both programs are in financial trouble, but the situation is not anywhere as bad as some people think. Especially among 20 and 30 somethings, it has become fashionable to dismiss these "government programs".First, about the state of Social security: For years, the Social Security program has been taking in more in payroll taxes from existing workers than it needed to fund benefits. The government borrowed that surplus and promised to pay it back with interest by issuing special issue bonds to the program.The federal government will have to start paying back what it owes the Social Security trust fund in 2017 so the program can continue paying 100% of benefits. The trust fund will run dry by 2041. Without that cushion, Social Security wou... More About: Social , Watch
Retiring in Malaysia
2008-03-26 03:32:00 As I mentioned in an earlier post on outsourcing retirement, India does not allow or encourage foreign citizens to retire there. On the other hand, several other Asian countries are actively trying to attract foreign retirees. Thailand is probably the best known among these, but of late, Malaysia has been getting some attention too.Here are some interesting details about Malaysia's Malaysia My Second Home program for foreign retirees:The program is open to all foreign citizens wishing to retire or reside in Malaysia on a long term basis, and their spouses and children under 18 years. You will get a 10-year visitor pass and a multiple entry visa which is renewable every ten years.You can invest and own businesses in Malaysia. You are, however, not allowed to work there. Unlike Thailand and Singapore, Malaysia allows foreign retirees to own property and to apply for domestic loans to buy property.There is no minimum requirement to stay or visit Malaysia per year. You may come an...
Retirement homes in India
2008-03-12 03:15:00 There has been a growing market for retirement homes in India in recent years. With an increasing number of older adults living independently, this trend is likely to continue.According to a recent Associated Press story, these new retirement communities are so far available only for the affluent. The buy-in prices of $75,000 to $125,000 rule out the vast majority of the population, although with the economy growing every year, developers are betting the market will increase.A PBS Nightly Business Report story from 2006 described the expenses for people renting at these facilities. Living in retirement homes doesn't come cheap. Each resident pays a fee of up to $450 U.S. per month, a princely sum in a country where the average worker earns $120 U.S. a month. But there is no denying the demand. The Indian government has yet to work out a plan to deal with the country`s aging citizens, but the private sector has recognized the growing demand for retirement homes.An article fro... More About: Retirement , Homes
Retirement visa to India for non-Indians
2008-02-22 15:00:00 I received a number of questions from non-India n readers who wanted to know if there is any special visa or residency status that can be held by a non-Indian who wishes to retire in India.As I mentioned in an earlier post about outsourcing retirement to India, the answer to this question is not very promising. There is no such thing as a "Retirement visa" to India. Still, I want to summarize the available options in this post.First, those who have some Indian ancestry may be eligible to apply for the Overseas Citizenship of India (OCI) status that I mentioned in an earlier post on India and dual citizenship. This is available to you if you, one of your parents, or one of your grandparents, were previously a citizen of India. You must also be a citizen of a country that allows dual citizenship. If you qualify, this is the best option, since it allows unlimited stay in India with few restrictions.Next, there is a special status called Person of Indian Origin (PIO) available if you are... More About: Indians , Visa
Early withdrawals from Retirement accounts without penalty
2008-01-13 04:30:00 As I detailed in my previous post on our Net Worth, most of our investments are in retirement accounts, such as 401(k) and IRA accounts. We do this to take advantage of the considerable tax-deferral advantage provided by these accounts.I am often asked if it bothers me to "lock in" our money in such accounts where we won't be able to withdraw the money for many years. Normally money in 401(k) and IRA accounts can be withdrawn only if you are 59½ or more years of age. Any earlier than that, and you have to pay a 10% penalty. I want to explain in this post why this is not a big concern for me, since I am convinced that there are ways to access money early from these accounts penalty-free if it ever becomes necessary.First, some special cases: Most 401(k) providers allow for penalty-free hardship withdrawals in cases of genuine need, such as a medical emergency or disability. This is clearly not a good situation to be in, and shows the importance of having an emergency account and m... More About: Retirement , Taxes , Early , Early retirement , Penalty
Net Worth update - December 2007: Up 1.3%
2008-01-06 19:46:00 Here is the report card for our household for fourth quarter, 2007. 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. For 2007, our Net Worth increased by $128,345 (or 24.2%) 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 December Originally published at at Retire To India. More About: Update , Net worth , December 2007
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
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
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
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 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
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
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
More articles from this author: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 1, 2, 3 |
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