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A conservative "safe withdrawal rate" is about 3.5%, so you need around $1.1M invested in index funds in order to have $40k income per year. I'm living in Thai

A conservative "safe withdrawal rate" is about 3.5%, so you need around $1.1M invested in index funds in order to have $40k income per year. I'm living in Thailand, and $40k goes a long way. Many people would be happy with this lifestyle, but it's not quite enough for me, and I wouldn't want to spend the rest of my life here. I'd much rather have $80-100k and live somewhere like Toronto. But to each their own.

photoguy112 8y ago
I'm in Japan. Last year I remitted $16k. My residence is paid for and I spent an additional $12k cash. In total, I live on 28k / year. Add in a residence if I had to rent, down where I am it's $500/mo for a 3 br "home". It's really a shanty by western standards but enough for me. On 34k if you rented, one can live comfortably in Southern Japan. Of course, this is not possible without a valid visa. I have lived in Midwest, California, Washington and visited most of US. I would still choose to live here than anywhere else. I think most Americans who have not done enough travel do not seriously consider living outside of their country (if they had the chance) just due to a mindset that America is the best place to be (hint: it's not).
- rbatty 8y ago
  But you said it yourself: you need a visa. It's not simply a question of whether an American or anyone else finds it satisfying to live in another country. The government has to want/permit you to be there. And in the case of Japan in particular, that's a difficult situation to navigate, especially if you are looking for a place to live for your retirement years.
- PascLeRasc 8y ago
  Can I ask what city in Japan you're in? I wouldn't expect it to be that cheap.
koheripbal 8y ago
This completely ignores inflation. By spending that 3.5% on living, you are actually losing a portion of your wealth each year. In order to remain "flat", you need to be earning 7%, in order to spend 3.5%. ...but of course, this also completely ignores the risk. Assets don't give 7% for free. The investor is accepting the risk - that's the whole point. So in reality, you need to be earning closer to 10% in order to mitigate the risk of a default on those assets. Living off of investment income is almost never really winning battle.
- nathan_f77 8y ago
  No, the safe withdrawal rate of 3.5% does account for inflation. The idea is that the S&P 500 should return around 7-8% per year on average. Lots of information about this in the "r/financialindependence" FAQ [1], particularly the "What about inflation?" section [2]. These results are based on the Trinity Study [3], which is also known as "the 4 percent rule." 3.5% is a more realistic withdrawal rate for a very long retirement, and 3% would be very conservative. 2.5% would almost guarantee that you die with more assets than you started with. It's also very important to decrease your expenses during a market crash, and to never panic sell. You could also have some other income streams like rental properties, or software businesses. If you just want to hold cash and bonds, retire at 30, and expect to live until you're 100, then you need to save up 70 * 100000 = $7 million, and spend $100k per year until you die. (Although $100k in 2089 will be worth a lot less than 2019.) And who knows, maybe longevity treatments and gene therapies will become widely available in the next 70 years, and people might live until they are 200. Or even indefinitely. If you think that might be a possibility, then you should definitely invest in the stock market instead of keeping everything in cash. There is such a thing as "too little risk" when it comes to investing. [1] https://www.reddit.com/r/financialindependence/wiki/faq https://www.reddit.com/r/financialindependence/wiki/faq [2] https://www.reddit.com/r/financialindependence/wiki/faq#wiki_what_about_inflation.3F https://www.reddit.com/r/financialindependence/wiki/faq#wiki... [3] https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study
lukas099 8y ago
I live in the DC area on $20k a year, and I don't feel like I'm missing anything. It took me a while to build this frugal-yet-fulfilling lifestyle, but it was so worth it.

photoguy112 8y ago

I'm in Japan. Last year I remitted $16k. My residence is paid for and I spent an additional $12k cash. In total, I live on 28k / year. Add in a residence if I had to rent, down where I am it's $500/mo for a 3 br "home". It's really a shanty by western standards but enough for me. On 34k if you rented, one can live comfortably in Southern Japan. Of course, this is not possible without a valid visa. I have lived in Midwest, California, Washington and visited most of US. I would still choose to live here than anywhere else. I think most Americans who have not done enough travel do not seriously consider living outside of their country (if they had the chance) just due to a mindset that America is the best place to be (hint: it's not).

rbatty 8y ago
But you said it yourself: you need a visa. It's not simply a question of whether an American or anyone else finds it satisfying to live in another country. The government has to want/permit you to be there. And in the case of Japan in particular, that's a difficult situation to navigate, especially if you are looking for a place to live for your retirement years.
PascLeRasc 8y ago
Can I ask what city in Japan you're in? I wouldn't expect it to be that cheap.

koheripbal 8y ago

This completely ignores inflation. By spending that 3.5% on living, you are actually losing a portion of your wealth each year. In order to remain "flat", you need to be earning 7%, in order to spend 3.5%. ...but of course, this also completely ignores the risk. Assets don't give 7% for free. The investor is accepting the risk - that's the whole point. So in reality, you need to be earning closer to 10% in order to mitigate the risk of a default on those assets. Living off of investment income is almost never really winning battle.

nathan_f77 8y ago
No, the safe withdrawal rate of 3.5% does account for inflation. The idea is that the S&P 500 should return around 7-8% per year on average. Lots of information about this in the "r/financialindependence" FAQ [1], particularly the "What about inflation?" section [2]. These results are based on the Trinity Study [3], which is also known as "the 4 percent rule." 3.5% is a more realistic withdrawal rate for a very long retirement, and 3% would be very conservative. 2.5% would almost guarantee that you die with more assets than you started with. It's also very important to decrease your expenses during a market crash, and to never panic sell. You could also have some other income streams like rental properties, or software businesses. If you just want to hold cash and bonds, retire at 30, and expect to live until you're 100, then you need to save up 70 * 100000 = $7 million, and spend $100k per year until you die. (Although $100k in 2089 will be worth a lot less than 2019.) And who knows, maybe longevity treatments and gene therapies will become widely available in the next 70 years, and people might live until they are 200. Or even indefinitely. If you think that might be a possibility, then you should definitely invest in the stock market instead of keeping everything in cash. There is such a thing as "too little risk" when it comes to investing. [1] https://www.reddit.com/r/financialindependence/wiki/faq https://www.reddit.com/r/financialindependence/wiki/faq [2] https://www.reddit.com/r/financialindependence/wiki/faq#wiki_what_about_inflation.3F https://www.reddit.com/r/financialindependence/wiki/faq#wiki... [3] https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study

lukas099 8y ago

I live in the DC area on $20k a year, and I don't feel like I'm missing anything. It took me a while to build this frugal-yet-fulfilling lifestyle, but it was so worth it.