Reader Case: Same Sex Couple Wants to Retire Early Overseas

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Guess what time it is? Reader case time!


Hi! We are a same sex married couple currently in the US (S is in her mid 40s working here on 10 yr employer sponsored visa and T is in her 50s). We stumbled onto FIRE concept and your great book / blog a few years ago so we are late to the game, but since then we’ve slowly but certainly changed our spending and savings habits.

Our current net worth (according to Empower) is around $1.1M, and our goal

·         Is to retire together in 5 years if possible (T has multiple health challenges, and I have complete and total corporate burnout, to a point that my therapist suggested I take short term disability). To make this happen we would like to eventually sell our home and move in to a 1 bedroom along with our 2 dogs (we don’t need our own home offices once we stop working).

·         I am also willing to work a few more years and let my wife retire first because you know, healthcare is so expensive here, or find a lower paying job just to be able to cover us ( I can switch jobs anytime).

·         Eventually move to a sleepy European town and just rent a small place for a few years until we decide where we would like to age in place (maybe Asia). I am not looking to change my citizenship status at all and we do not wish to remain in US full time once retired. 

I have run multiple scenarios and THINK we might be ok if we continue to max out our contributions and cut back on spending, but worry we won’t be?! Is it even realistic for us? Can you help math this shit up???

Note* We both are not eligible to contribute to ROTH IRA, is it worth considering a backdoor ROTH conversion now? We only have about 10k in there because I wasn’t sure what I’m doing. T takes financial directions from me.

Annual family income Gross$330k
Annual family income Net$254k
  
Our 401k, IRA, Employer ESP$550k, we are both maxing our 401k/ 403B and T is doing full catch up contributions.
Traditional Brokerage$80k
Liquid cash savings$30k
Annuities / Savings policies bought before S moved to US#1, expecting lump sum of $30k at maturity ie 55 years old. #2, expecting lump sum of $60k at 60 years old.
  
Debts 
Mortgage 1, bought this house 2 years ago in US as a forced way to build equity instead of renting. 3 beds, 3 baths$290, 000 @6.5%, house is worth $345,000. We pay about $2700 a month which include property taxes and home insurance. We also need a new roof soon, estimate $15k.
Mortgage 2 (overseas apt 3 bed, 2 baths in Singapore)S bought this apt years ago before moving to US, and its currently rented out at equivalent of USD 2k a month.
·         @3.5% with 100k remaining, monthly mortgage payment is $745.
·         The plan is to keep this apt as a cash flow in retirement. Rental more than covers mortgage and other expenses like taxes, wear and tear, insurance and low mgmt fee.
·         Part of rental also covers S’s multiple annuities and savings policies payments which was bought a long time ago (about $800 monthly) – maybe I should stop paying this?
·         Apt is worth $350, 000, expected to rise in both rental and future value.  
1st carNot worth a lot maybe $5k, fully paid off, but not quite reliable so we use it mainly for around the neighborhood errands
2nd carBought a used 2018 SUV with low mileage for roadtrips with our dogs. Owe $26k @6.25% or roughly $600 a month
  
Spending 
SMonthly take home about $6.1k
·         $1000 to joint account for bills, groceries, eating out, vet care,  etc
·         $1300 to joint account meant for mortgage
·         $300 to joint account for car #2
·         Variable $1000 for online music lessons, language lessons, books, hair, makeup etc. Some months I don’t spend this much and am able to save more from this bucket.
·         $2000, half to cash savings and half to investments mostly low cost index funds.
·         My siblings and I contribute to our aging parent’s allowance (they did not plan for retirement and have no assets) – I contribute my share of $350 each month from this rental. My parents and siblings live in Asia.  
·         $80 monthly donation to my fav charity.  
TMonthly take home of $5k
·         Subscriptions $200 eg Linked in, Netflix, Spotify
·         $1000 to joint account for bills, groceries, eating out etc
·         $1300 to joint account meant for mortgage
·         $300 to joint account for car #2
·         $500 to savings
·         Worth mentioning T values her independent spending and may not share everything with me which is what we agreed to, when we got married.

I know you guys receive a lot of emails, hopefully you pick ours! 🙂

Thanks

S


This reader case is timely because I’d just talked about Americans moving to Mexico for a better life and this couple wants to retire and move to Asia, where one of the partners has an apartment.

Let’s see if they can make this overseas early retirement a reality in the next 5 years.

As requested, let’s MATH THAT SHIT UP!

Summary

SummaryAmount
Income: $254,000/year (net)
Expenses:S: $1000 + $1300 + $300 + $1000 + $350 + $80 = $4030/month or $48,360/year
T: $200 + $1000 + $1300 + $300 = $2800 or $33,600/year
Combined: $4030 + $2800 = $6830/month or $81,960/year
Note that savings is not an expense, and should not be included here.
Debt: $100,000 + $290,000 + $26,000 = $416,000
Investible Assets: $550,000 + $80,000 + $30,000 = $660,000
Properties: ($350,000 + $345,000) x 95% (real estate agent fee) – $15,000 (roof) = $645,250
Rental income: $2000/month

I’m assuming this is net of expenses since according to Numbeo, you’re unlikely to rent a 3-bed apartment for less than $3700 USD/month in Singapore. If this is before expenses, I highly suggest you raise the rent to market value.
Annuities: $30,000 @ 55 years old, $60,000 @ 60 years old
Note: you should continue paying this until the maturity date and then stop

S mentions “T values her independent spending and may not share everything with me which is what we agreed to, when we got married.”

If this is the case, S needs to figure out what her FI number is and T needs to do her own analysis based on the real expenses, including any hidden expenses. You can’t retire early if you don’t have a complete picture of your real expenses. If you’re hiding expenses from your spouse, then you have to continue working since you may need more than you’re projecting in your expenses.

However, for the sake of this analysis, I will assume their expense are accurate and they can redo the calculation for any missing expenses using the same formulas on their own time.

To answer S’s question “We both are not eligible to contribute to ROTH IRA, is it worth considering a backdoor ROTH conversion now?”

Yes. (For those readers who don’t know what this tax optimization is, please see Chapter 12 in our book Quit Like a Millionaire.)

Now, on to the analysis!

How Much Do They Need to Retire?

Based on the expenses and net income they’ve given; they should be able to save $254,000 – $81,960 = $172,040/year

Their combined expenses give an FI number of $81,960 * 25 = $2,049,000. They have investible assets worth $660,000, car loan of $26,000 left over, and $15,000 they need to cough up for a new roof for their house, so $660,000 – $26,000 – $15,000 = $619,000 in portfolio size. Their $416,000 left over on the mortgages of their 2 properties are accounted for by the mortgages and ownership expenses included in their total monthly expenses.

They are also expected to get an infusion of $30,000 in 10 years and $60,000 in 15 years for S’s annuities.

Putting it all together we get:

YearBalanceContributionsROI (6%)Total
1$619,000.00$172,040.00$37,140.00$828,180.00
2$828,180.00$172,040.00$49,690.80$1,049,910.80
3$1,049,910.80$172,040.00$62,994.65$1,284,945.45
4$1,284,945.45$172,040.00$77,096.73$1,534,082.17
5$1,534,082.17$172,040.00$92,044.93$1,798,167.11
6$1,798,167.11$172,040.00$107,890.03$2,078,097.13

(Note to see how we account for inflation, refer to the Appendix section in our book, Quit Like a Millionaire)

They’ll become FI in around 6 years!

The infusion of cash from their annuity is irrelevant in this case because they will reach FI before that happens.

Due to health issues and work burnout, they want to retire in 5 years and assuming the expenses they’ve given me are correct, they are on track to retire in 6 years. Not bad at all! Well, done you two!

And this is not even factoring the rental income they’re getting from the Singapore apartment since it’s not clear whether the $2000 USD/month is after expenses or before. If it’s after expenses, this would increase their yearly contribution to  $172,040/year + $2000/month x 12 = $196,040/year and therefore shortening their time to FI by:

YearBalanceContributionsROI (6%)Total
1$619,000.00$196,040.00$37,140.00$852,180.00
2$852,180.00$196,040.00$51,130.80$1,099,350.80
3$1,099,350.80$196,040.00$65,961.05$1,361,351.85
4$1,361,351.85$196,040.00$81,681.11$1,639,072.96
5$1,639,072.96$196,040.00$98,344.38$1,933,457.34
6$1,933,457.34$196,040.00$116,007.44$2,245,504.78

Almost a year.

So either way, they are not far off from their dream of retiring in 5 years!

What If They Sold Their Property and Moved to Asia?

5-6 years is assuming that they’re planning to stay in the U.S. They mentioned they don’t want that and instead want to move to Asia and downsize to a one bedroom. Knowing that you can easily find something nice for $1000/month (since we’ve done it in multiple Southeast Asia countries), the FI number they should be working towards isn’t $2,049,000.  If they were to sell their primary residence and rent a one bedroom in Southeast Asia at retirement, their future expenses drop to:

$6830/month – $2700/month (mortgage) + $1000/month (rent) = $5130/month or $61,560/year.

This brings their new, lower FI number to $1,539,000, which they would reach in:

YearBalanceContributionsROI (6%)Total
1$619,000.00$196,040.00$37,140.00$852,180.00
2$852,180.00$196,040.00$51,130.80$1,099,350.80
3$1,099,350.80$196,040.00$65,961.05$1,361,351.85
4$1,361,351.85$196,040.00$81,681.11$1,639,072.96

Less than 4 years!

At this point, they would also have an additional $345,000 x 95% – $290,000 = $37,750 from the sale of their house and the $2000/month net (?) income from the Singapore property which can now be used to offset expense rather than build the portfolio after reaching FI will give them extra safety net for any future unforeseen medical expenses.

So, there you have it. S & T can stop working in 5-6 years if they choose to stay where they are and only 3 years if they choose to move to Southeast Asia. Their exceptional high salary makes retirement easily within reach even if they choose not to sell their properties.

My one word of caution is to choose the Southeast Asian country wisely. Singapore, for example, has only legalized same sex couples in 2022. Other countries may still be hostile. Taiwan and Thailand are LGBTQIA+ friendly. You can use the “LGBTQIA+ friendly” filter on NomadList to help you decide.

What do think? Should S & T retire in 3-6 years? What would you do if you were them?


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13 thoughts on “Reader Case: Same Sex Couple Wants to Retire Early Overseas”

  1. Congratulations. We are a gay couple who did the same three years ago and have never looked back – we sold our house and our possessions and live on the road. We bought at the dip and the first year was tense but we trusted the process and are now in a growth scenario with our funds. Every day is a gift and we love it. We spend most winters in Asia or South Asia, most summers in Europe. As these FI folks have well explained, you can use geo-arbitrage to your advantage and we spend way less than we used to when we had overhead. Living out of one bag is awesome for us, personally. We’ve never felt so free and happy. I also have health issues but we don’t let it stop us. There are many ways to ensure good health while travelling (happiness is a start) whether it’s long term travel insurance from home, in your adopted home, or one of the international nomad packages available. Have a wonderful retirement!

  2. I think moving abroad is only feasible if you properly factor in private health care and insurance costs. But then again, if they are not insured, US has one of the highest health care costs. I’m not sure about the US but in some countries you lose disability benefits once you become non-residents.

    1. They would definitely need to account for healthcare costs abroad. However, healthcare isn’t that expensive outside the US. Especially if they move to a place like Thailand (it has quality healthcare for a great price–which I’ve experienced from my pregnancy)

  3. Why are Readercase case studies always about high-salaried people? Please, I would like to read some articles on low-income earning cases too. (eg: family income of 100000 annually)

  4. If “S” is mid 40s, her two policies mature at 55 (so ~10 years) and 60 (~15 years) and she’s paying $800/month, wouldn’t it be better to stop & put that money into index funds? Assuming no growth whatsoever, 10 year of payments are $800x12x10 = $96,000 and the policies are only worth $90,000 combined. I think I’d stop paying those immediately…unless there’s some other benefit not mentioned here.

    1. Yup, the money would be better off invested rather than paying into an annuity. However, since they already bought into it, if they stop now, they will likely forfeit some contributions. So they’ll likely have to pay into it until maturity unfortunately. It depends on the terms of the annuity, so they would need to review it to see what the penalties are.

      1. But even if they forfeited the whole thing – per the math I mentioned above – they’d be better off starting at zero & investing their contributions going forward…unless I’m missing something.

  5. I’m confused about why they need to check with their employer if a backdoor Roth is available? We did one and just opened an account, moved money from our bank savings, and converted. Employer wasn’t involved at all.

    1. Hi Tom, you’re right they don’t need to check for Backdoor Roth, it’s Mega Backdoor Roth I was thinking of. Post has been updated.

  6. Your consideration of healthcare costs demonstrates basket random‘s pragmatic approach. It’s great that you’re willing to work a few more years or find a lower-paying job to ensure you have the coverage you need. Flexibility in your job choices can give you the financial stability you need while also allowing your wife to retire first.

  7. When I read the part about “complete and total corporate burn-out” to the point the therapist is suggesting disability leave, my first thought is what can this person do to improve the circumstances at work?

    With a salary that high, it seems it could be possible to delegate some tasks or otherwise ease the burden.

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