You’ve worked hard, saved a great deal of money, reached the peak of your career, and decided it’s time to change things and settle down. It’s a situation that all of us reach at some point, and it’s one that an increasing number of people are reaching early in their lives. We all desire to retire at some point, and when you feel you are ready to do it tends to be the best time.
Over the last decade, an increasing number of former professionals have made vocal their desire to pack it all in and quit the rat race. From the stresses of a high-value career and the long working hours it can entail to the annoyances of keeping up with bills, staying ahead of your peers, and all the other trappings of professional life, the desire to ‘give it all up’ and retire has grown ever more vocal recently.
Well, it’s not just empty rhetoric – along with the thousands of people proclaiming their interest in leaving the rat race, many people really are. With retirement in a foreign country an inexpensive and culturally rich experience, more people than ever before are choosing to retire early to an Asian country.
The hotspots for this early retirement trend are inexpensive, typically tropical Asian countries, often in Southeast Asia. The winners, at least in terms of popularity, are the tourist hotspots of Thailand, Vietnam, and the emerging powerhouse of China. A unique opportunity rests in these countries – the opportunity to retire with a far smaller ‘nest egg’ than is required in the West, all while maintaining a high quality lifestyle.
It’s easy to see why so many people are choosing this path. Countries such as China, Thailand, and Vietnam – as well as emerging locations like India’s southern regions, offer a unique lifestyle that simply isn’t available elsewhere in the world. Not only are they inexpensive and geared towards lower budgets, but they offer many of the luxuries and convenience that can’t be found in other developing countries.
Thailand, for example, has a significantly lower average income than the South American powerhouse of Brazil, yet it offers a relatively higher level of modern conveniences than many of Brazil’s large cities. Subway trains, superhighways, and other major development projects are a frequent sight in many Asian countries.
As a result, someone on a modest retirement budget of $2,000 per month can live a very comfortable life in a country like Thailand, Malaysia, or China, even when they are far from the typical ‘retirement age.’ Given the low cost of living and availability of high-end living options, it seems like a perfect solution to the problem of delayed, and ultimately less rewarding, late-life retirement.
However, there are some downsides to choosing to retire early to Asia. Many of the Asian countries known for their generous and flexible retirement visa programs do not offer them to retirees below a certain age. In Thailand, for example, the lower age limit for a retirement visa is fifty years. Anyone below this age will be unable to apply for the visa and the many benefits it offers.
As a result, many early retirees in countries like Thailand and Malaysia gain their residence status by operating companies in the region. In Thailand, for example, investing several thousand dollars in the country along with a local partner allows one to open a domestic company. As a result, residency – or at least a long-term visa – can be acquired through investment and local business operation.
Another issue for early retirees can be a lack of access to local products, services, and important rights. Foreign residents in Malaysia and Thailand, for example, are unable to purchase land unless through a special company arrangement. This can be an issue for high net worth individuals looking to build property in these countries.
Finally, many countries known for foreign retirement – particularly in East Asia – are home to somewhat insular expatriate communities. As a younger person in an area known for retirement, it’s possible that you may feel isolated from the public, particularly if you’re unable to learn the local language and social customs.
Despite these downsides, there are some clear benefits to retiring to Asia early in your life. If you plan to work – even if part time – while retired, most Asian countries offer a variety of tax benefits over staying in your home country. Hong Kong, one of the most popular off-shore retirement financial centers, for example, levies no tax on earnings derived from outside of its borders.
This means that an expatriate or early retiree living in Malaysia or Vietnam, for example, is free to carry out their business from outside their own country, in some cases avoiding domestic income tax. It’s worth noting that United States citizens, for example, will still need to pay tax on some earnings even when living outside their own country.
Another key benefit of retiring early to Asia is the low cost of living. Asian countries, particularly those in South and Southeast Asia, are significantly less expensive than their counterparts in the West. As a result, early retirees can enjoy a significantly higher standard of living than they could at home through a process known as ‘geo-arbitrage.’
Despite the visa issues that are associated with retiring early, and the often-present social pressure to retire domestically, an early retirement in Asia offers a lot of key benefits for those that are interested in it. From tax to temperature, environment to local friends, retiring early in Asia is a unique experience that – while not for every person – can be a rewarding and fun experience.
As with any type of retirement, retiring early to Asia requires a great deal of planning and careful thought. If you think this type of lifestyle is right for you, and you have the required amount of assets for a stable life and residency in an Asian country, then by all means, consider retiring early in Asia.