Another Sad Cautionary Tale for Retired Expats

[PeterRS]

I thought I had written about these two English men who found themselves on really hard times in an earlier thread a few months ago. But I cannot find it. So apologies if I repeat myself. I just find this sad tale one that more than a few considering retirement in Thailand might also find themselves eventually facing. I had virtually forgotten about them until a friend sent me a Thai Visa thread at the weekend. 

The background. Two Englishmen I'll call D and D moved to Thailand to retire in Thailand around 2003. Both gay but I was never sure if they were a gay couple. I expected not. Just two good friends saving money by retiring together. They purchased the large double flat next to mine and spent quite a bit renovating it. Over the years I rarely saw them other than in the lift, waiting for a taxi or when we would occasionally invite ourselves to the others apartments for a glass of wine. They were polite - almost reserved.  They hardly ever ventured out except to meet other expat friends for a coffee or a drink. Apart from one trip to England, I do not think they ever left Thailand. Both had medical insurance policies from English companies and one certainly had a pension being remitted. But I know that they used the 800,000 baht cash route when it came time to renew their retirement visas. As neighbours, I could not have asked for any pair more considerate and quiet.

About 5 years ago they sold their flat. It had taken them a long time to sell and I know they got considerably less than they hoped for. Still, they will have at least doubled their purchase price. I assume it was probably in the region of 10-12 million. They moved into a rented apartment about 1.5 km away. From what I have now learned, the rental was probably in the region of 50K - 60K for a flat in the 140 - 200 square meter range. With hindsight that clearly was a massive mistake. Committing to such a large rental near the city centre with virtually a fixed amount of cash to live on for life was stupid.

The recent past. In May last year, both extended their retirement visas still using the 800,000 baht route. Since this requires keeping that amount unspent for three months, they presented evidence via the bankbook in August. Something very serious then happened, but we do not know what. From at least 1.6 million in the bank plus other savings from the sale of their flat etc., in the space of little over 2 months they had virtually nothing. They stopped paying their rent. By December their landlord had cut the electricity and water to the apartment. They started calling friends asking for small loans. The landlord took them to court. The judge gave them a month to vacate the apartment. They did not leave. Soon even friends ceased to provide cash they knew would never returned.

They started making plans to return to England, even though one had no living relatives there and the other only an older sister. Then those pans fell through, perhaps because of covid regulations but more likely they had no money to purchase tickets. They continued living without air conditioning, a fan or even water.

The present. Having failed to renew their retirement visas towards the end of May, the matter moved from the police to the immigration authorities. Last week, in their mid-80s they were arrested and placed in a detention centre. Having overstayed their visas they will be deported and blacklisted. Who pays for their tickets is uncertain. One Thai Visa respondent states that the UK Embassy does not pay for such tickets. Then what happens is also uncertain since it seems at least one has nowhere to live on return.

From the photo on the Thai Visa thread showing them in custody they appear desperately thin suggesting they had little money for food. What the future holds for them must be grim. But there remains the unanswered question: what happened to the cash they had in the middle of last year which then vanished within months? I suppose, perhaps like others we have heard about, they borrowed from money lenders at a very high interest rate and that cleaned them out. Who knows? Sad nonetheless.

[10tazione]

 

[Gaybutton]

Obviously it is pointless to try to guess what may have happened.  Unless they tell their story, we'll probably never know what happened.  I hope they do tell their story, not because I think it's any of my business, but because if whatever happened to them is something that can happen to others, it is important to know so that we can all take whatever precautions are necessary to try to make sure nothing similar happens to anyone else.

[zombie]

I may sound very uncaring but I can find very little sad about this story. If there is more info i may withdraw my lack of sympathy.

However:

If anyone come to live long time in Thailand , need to have sufficient resources.,insurance and sense.If a person comes with that but runs out of money then simply return to yoyr home country.

 

[PeterRS]

3 hours ago, zombie said:

If anyone come to live long time in Thailand , need to have sufficient resources.,insurance and sense.If a person comes with that but runs out of money then simply return to yoyr home country.

Basically I agree with you. But I think you have to remember that regulations do change from time to time and there was a major change in the retirement visa extension requirements early last year. From 800,000 baht in the bank for 3 months prior to renewal which could thereafter be spent over the next 9 months, Immigration decided (for reasons I still do not understand) that the 800,000 had to be in the bank for 5 months during which it could not be touched and thereafter 400,000 must remain untouched for 7 months. In other words, at least 400,000 has to be locked up for life, as far as I can see. That is a pretty radical change considering many older people never had the level of pensions most younger people nowadays save or are forced to save towards. Anyone in their mid-80s who contributed to the UK National Insurance scheme for the required 40 years and started taking the pension at the age of 65 has it frozen at that level. My guess is that for those two guys that probably amounted to less than £75 (3,290 baht) per week each.

Also, there may come a time, especially when you are in your 80s or older, when you cannot return home because there is simply no home to go to. Remember the case of the 92 year old who was put on a flight to Switzerland not so long ago? He could not meet the new retirement visa requirements and was deported. He had absolutely no relatives and no place to stay in Switzerland. Yet he was Swiss and so that is where he was sent. What he did once he got there, I hate to think.

I have no home in Britain. No house, no apartment, no income apart from a basic British pension which would certainly not enable me to rent even a small apartment or get me into a care home. My brother and sister are about my age and may die before me. I don't have an extended family like many others, although i am certain my niece would look after me. At least i have an apartment here and savings in the bank.

But as gaybutton writes, it would be useful to know what financial disaster befell these two guys so quickly. When people run out of cash, it is usually the case that they can predict that probably years ahead. So they can plan accordingly. From what we know, it seems these guys were caught almost completely unawares.

On a separate matter, thanks to 10tazione for finding my earlier post. Renewed apologies for repeating most of the tale.

[Guest]

Learning from these examples is important, so we know what can go wrong.

The moment people move abroad, having a basic understanding of financial planning has to be more important, as there are more risks to contend with.  Considering the scope for rule changes, inflation, large movements in exchange rates, unexpected medical costs and goodness knows what else, I reckon it would be crazy to try retiring abroad without a large safety margin.    Even then, you are unlikely to totally eliminate the risk.

I think your previous post referred to a lot of spending habits which would be considered as extravagant for people who are running out of money, so budgeting was weak.  

I also guess they did not familiarize themselves with basics of retirement planning such as "safe withdrawal rates".   [4% is often quoted, assuming prudent investment.  However 4% is not safe for all conditions & I use a lower limit, with additional checks].  

Having scope to leave a country also seems wise, as regimes change.  Just look at Cambodia in 1975.

 

 

[reader]

Good points to ponder.

I toyed with the idea of retiring to bkk several times but it was always the growing uncertainties that dissuaded me. In the end, after I weighing all the factors, I decided that three long trips per year suited me better. That practice served me well until the pandemic and I realize how much I miss that routine.

I'm ready to resume that schedule as soon as conditions permit. I remain confident that opportunity will arrive by October. Like most of us on this board, I've come to really like the guys I meet and the laid back lifestyle of Southeast Asia.

So I hope the powers that be adopt a reopening that is free as possible of limitations on my choices of where and when I want to go. Other countries in the region are eager to attract tourists and I'm counting on that competition to enable my plans.

[orson]

3 hours ago, z909 said:

 

I also guess they did not familiarize themselves with basics of retirement planning such as "safe withdrawal rates".   [4% is often quoted, assuming prudent investment.  However 4% is not safe for all conditions & I use a lower limit, with additional checks].  

Sorry, what is that 4% withdrawal rate? Is that the amount you can withdraw yearly from your savings?

[Guest]

1 hour ago, orson said:

Sorry, what is that 4% withdrawal rate? Is that the amount you can withdraw yearly from your savings?

That's the concept.

According to the theory, you withdraw 4% of your initial pension pot & index that sum for inflation each year & it should last for a very long retirement.  That's if invested properly, not stuck in the bank earning 0.1%.

In practice, 4% has not worked for all starting points in the last century.    I also would think it is an extremely risky withdrawal rate if based on a portfolio of stocks with a rather frothy starting valuation.  For example, as we see in the US at present.       If your money is mainly invested in one continent and you spend it in another, that's another layer of risk.

I'm thinking more in terms of 2.5~3%, plus additional checks. 

 

Anyone who will have to live off a pot of money and manage it themselves should probably read up on the subject.   The opening post shows what can happen if there is inadequate financial planning. 

 

 

[spoon]

1 hour ago, orson said:

Sorry, what is that 4% withdrawal rate? Is that the amount you can withdraw yearly from your savings?

Yes, its a rule of thumb of annual withdrawal to ensure your nesting eggs will not deplete before its time. But as pointed out above, it still depends on inflation, how much dividen your investment is making. And it is still inst foolproof as curveballs like covid, change of rules that impacted your access to your money, forex, or huge unexpected expenditures could derails your plan too. 

There are two clues that these two had curveballs in their lives. The first are probably why the had to sell their place. If they own it outright, only reason to sell is because their savings have been hit hard already. The second curveball is probably the new rules by thai gov on visa requirement. This one definitely hit hardest, enough for them to plan to return to their country. Pity they didnt decide early on to do this, during their first curveball. Regardless what really happen, i think we all can guess it has something to do with money. It can be they were a victim of scam, investment performed poorly, health expenditure that is not covered by their insurance, or etc. 

I recall in OP's first thread, he mentioned he observed some behaviorial issues as well such as not being frugal when they dont have as much money as before, and not using the money they got from friends for the purpose of getting back home. I do hope they at least will have enough food and taken care of in the detention center, though i dont have high hopes on thailand detention center and their jail system in entirety, i still think they will treat elderly relatively better. Hopefully their embassy will be helping them to get back home.

[vinapu]

11 hours ago, PeterRS said:

e. I assume it was probably in the region of 10-12 million. They moved into a rented apartment about 1.5 km away. From what I have now learned, the rental was probably in the region of 50K - 60K for a flat in the 140 - 200 square meter range. With hindsight that clearly was a massive mistake. Committing to such a large rental near the city centre with virtually a fixed amount of cash to live on for life was stupid.

 

Certainly , along with common sense, a concept of downsizing was very foreign to those two unfortunates.

I'm with zombie in this case

[vinapu]

51 minutes ago, z909 said:

 The opening post shows what can happen if there is inadequate financial planning. 

 

 

not quite as it seems that very  sizable amount evaporated from their account in very short period. Perhaps they  were swindled ?

[Guest]

25 minutes ago, vinapu said:

not quite as it seems that very  sizable amount evaporated from their account in very short period. Perhaps they  were swindled ?

Let's assume the flat was sold for 10 million baht, as stated, 5 years ago.   So to go to zero, they need to spend 5479 baht per day.     Peter suggested their large flat might have cost 60,000 to rent,  so 2000 per day.     So they only have to spend 3479 baht per day to blow through the lot.     That seems quite likely the way these two were described.

Given their circumstances, they should have probably looked at a rental costing under 10,000 per month, then lived off 40 baht meals and use bus or walking for transport.    Not exactly luxury but I imagine a couple of billion other people on the planet are doing worse and never had the years of good lifestyle, living like there is no tomorrow.

Better still, start the budgeting a few decades earlier.     I suspect they swindled themselves. 

Even with careful planning, we merely improve our odds, but external events like wars, revolution or hyperinflation mean nothing is guaranteed.   As with most of us, this pair lived through a fairly benign period so far & have had it quite lucky.       

[faranglaw]

This is a good story and thank you for sharing it.

One factor to consider is that one or both of these men may have been suffering from dementia, undiagnosed as they seem to have been rather socially isolated. Or perhaps one of them had undiagnosed mental illness such as bipolar disease, one of the symptoms of which is recklessness with money. Perhaps the other man didn’t know how, or didn’t have the strength, to handle his friend’s increasingly poor decisions. I wonder about this especially because of the sudden loss of income, which suggests they may have fallen for scammers who prey on vulnerable older people. Likely we will never know, but before judging too harshly, we might want to consider these or other possibilities. 

All of which suggests that the best investment we can make in old age is not financial; it is social. I think of my miracle 98 year old mother still living independently in Massachusetts, USA. Her sons are loving and supportive but not nearby. She couldn’t manage without the support of neighbors and friends she cultivated over the years. Not to mention her cat and her garden. So everyone make sure you have people around who care about you and keep an active mind.  You will need them both when the inevitable decline comes.

[fedssocr]

I think I probably said something similar in the earlier thread. As we age we lose some cognitive abilities - typically. And there are plenty of scammers out there looking to separate elderly people from their money. I see my 82 year old mother going downhill. Her memory is very poor. Luckily my brother lives with her and can help deal with some things around the household and with bookkeeping, but he's got his own issues. Unfortunately I am 800 miles away and couldn't travel for the last 15 months. But did see them recently. She has an elderly brother nearby and my cousin is there as well. But they're not especially close. She is fairly socially isolated. 

So I think faranglaw is on the right track.

[Boy69]

3 hours ago, fedssocr said:

I think I probably said something similar in the earlier thread. As we age we lose some cognitive abilities - typically. And there are plenty of scammers out there looking to separate elderly people from their money

Yes that's what probably happened to these two poor guys I doubt they blown away such a big amount from the selling of their apartment on such short period. Something very terrible happened to them.

[vinapu]

hearing stories as above and while not typical,  they are far from unique  I look approvingly at concept of buying annuities with any kind of windfall when approaching twilight years. That way  elderly is at least guaranteed certain sum of money every month to cover basic expenses like rent even when we lost our mental abilities to manage finances. And if we are swindled it will be only last month pension , not the whole windfall invested.

[Guest]

26 minutes ago, vinapu said:

hearing stories as above and while not typical,  they are far from unique  I look approvingly at concept of buying annuities with any kind of windfall when approaching twilight years. That way  elderly is at least guaranteed certain sum of money every month to cover basic expenses like rent even when we lost our mental abilities to manage finances. And if we are swindled it will be only last month pension , not the whole windfall invested.

I take it you mean buy an annuity later on in retirement, perhaps past 80 ?      That's the only time I'd entertain it & it could make sense in such situations.   Ideally just before I lose my marbles.

To buy one at 60 years old (for example) would suffer from the following problems:

1  Poor value for money where I am in the UK.    A 60 year old buying an annuity with 3% annual increases would start off with just 2.664% of the pot per year.

2 Inflation indexing is normally capped, so a few years of 1970s inflation would destroy purchasing power.

3 As far as I know, most annuities are fixed in one currency.   If one was to retire to Thailand like the pair covered in the opening post, we either have the choice of a Thai annuity or one in our home currency, which means a lot of exchange rate risk.    I wouldn't be that keen on a Thai annuity either, since a lot can happen in 20 years.   However, a portfolio of investments in various countries ought to reduce exchange rate risks.

[sydneyboy1]

One issue I have about retiring to a country like Thailand and that is health insurance. A few people I have met in Pattaya from the US or UK could not get health insurance because of pre existing conditions and were relying on savings or luck if faced with a medical emergency. What is the experience of other retirees regarding insurance?

[spoon]

Another one that im wondering is, if this similar thing happened in your own country, what does one do? Over here, we do have goverment care facilities that is free for the poor, older people who have no support system or relatives to take care of them. But i do believe it is only for citizen. However, there are also care facilities that is NGO supported through donations and this should allow non citizens as well. How about in thailand?

It seems like retiring overseas without the option to come back to your own country is very risky indeed. Luckily for me, im just 2 hours away from bangkok by flight. Retiring with a plutonic friend sounds like a great plan actually, although as always, there is always pro and cons of having a roommate.

[Ruthrieston]

Having retired (not voluntary - another story) in 2011, forced to sell my flat in London because I could no longer pay the mortgage, I made the decision to move to Thailand. The day after the UK voted to leave the European Union the exchange rate dropped from 56 Baht to the pound to 36 Baht!!! Currently it has crawled back up to 44, but that drop in value really hurt me, and is still bad. In addition the UK delayed the age when you can receive the State Pension and I must wait until I am 66. 

As to the issue of Health Insurance, I was fortunate to get that but the cost increases sharply as I age, and last year I chose to reduce the level of cover as I could not afford the increase. Threats by Immigration to demand outpatient cover as part of the required package would cripple me, but so far doesn't apply to my Non-Imm O visa, but who knows what they will hit us with next. 

Now I would fly back to the UK just to get access to the vaccine against Covid if I could afford to.  

[vinapu]

5 hours ago, z909 said:

I take it you mean buy an annuity later on in retirement, perhaps past 80 ?      That's the only time I'd entertain it & it could make sense in such situations.   Ideally just before I lose my marbles.

 

yes, I wouldn't put any age stamp on it as people start aging at different points of calendar but as soon as we notice that those financial matters start overwhelming us I'd say  grab money and run to buy an annuity so we will not survive our money

[PeterRS]

I had not realised this topic would result in such a variety of interesting posts and suggestions. Having chatted yesterday with another guy here who knows the unfortunate pair, we have tried to put together a timeline of what happened up to the point where their cash seems to have disappeared.

They both retired around 1998. We expect they must then have been 65. One had received a large amount from the sale of his recently deceased mother's house. No idea of the amount, but clearly several thousand pounds. They had decided that rather than spend their retirement in the UK, they would move to Singapore. Both knew the city state and so must either have worked there or visited more than once.

Singapore must have seemed an ideal place. It was still suffering the effects of the 1997 Asian Economic crisis, property prices had fallen and like all Asian currencies, apart from the Chinese RMB and the Hong Kong $, the Singapore $ had dropped close to 25%. We expect they arrived there around late 1999. They spent a year in a serviced apartment and then planned to buy somewhere. But in late 2000 the financial world went into a tailspin with the bursting of the dot.com bubble. Many portfolios took quite a hit. As a result, the pair decided their cash pile might not last in Singapore and they needed to find somewhere less expensive. They did not know Bangkok and so moved into a serviced apartment on Saladaeng (not the one above Zanotti restaurant - a cheaper one between there and Silom near Senso massage) for year while they checked locations to purchase.

They purchased a large flat (too large which was a major mistake) in a residential district about 2 kms from Silom. I now realise they moved in at the start of 2002. But property in that area was not expensive, especially for larger apartments. So they must have assumed they got a good deal. But the next curveball as Spoon so accurately describes it occurred just a year later. SARS in early 2003 hit Asian stock markets hard - far more so than the rest of the world. Although they had recovered by around the end of the year, had anyone sold assets during that downturn, their cash pile would have been effectively reduced. Fast forward to the worldwide depression of 2008 when just about everyone suffered financially - many badly.

The future outlook for those living off savings inevitably was bad, the more so with interest rates falling close to zero and remaining there for many years. We suspect they must at that time have seen the writing on the wall as far as their long term future in Thailand was concerned. But they could not sell their property as values had crashed. So they hung on presumably for as long as they could. At that stage we guess they could have just upped sticks, taken the financial hit and returned to the UK. But if you are getting close to 80 and know that the world has recovered from similar crises in the past, perhaps they reckoned waiting it out would be the best thing.

Clearly it was not. Yet they waited till around 2013 before putting the condo on the market. We have no idea who they entrusted the sale to but it took three years before they found a buyer. By then the asking price had dropped by more than 25%. Their next mistake was moving into another large apartment so close to the city centre at a rent that they perhaps thought they could afford. Even with some savings and with somewhere around 10 million baht from the sale in their accounts, not moving into a much smaller and cheaper apartment further from the centre was some kind of madness. Within 5 years their cash had all but run out. And yet, how did they run through such an amount of cash so quickly? As I mentioned earlier, something must have happened between renewal of their visas in May last year and having to start borrowing from friends just to stay alive only a few months later. We still do not know how a seeming 1.6 million baht to renew visas disappeared.

In the thread title, I used the word "sad". I believe that is because I knew the pair and I knew them to be good, decent people who lived quite frugally and were good neighbours. Perhaps I should have left that word out. I feel very badly for them now and their future must seem bleak. But it is certainly a cautionary tale. All the advice offered above about the amount of cash anyone requires for retiring in Thailand is so apt. It is likely to be a lot more than at first thought, the more so if you live into your late 80s or 90s. Placing all ones financial eggs in one uncertain basket is not at all a good idea. Some back-up is vital.

[PeterRS]

57 minutes ago, Ruthrieston said:

As to the issue of Health Insurance, I was fortunate to get that but the cost increases sharply as I age, and last year I chose to reduce the level of cover as I could not afford the increase. Threats by Immigration to demand outpatient cover as part of the required package would cripple me, but so far doesn't apply to my Non-Imm O visa, but who knows what they will hit us with next.

The health issue is so vital for retirees and so relatively uncertain. From my 40s I had a wonderful health plan paid for by my employer. Everything was paid for and it was worldwide. But even before I left, I knew I could not take it with me, as it were. And even had that been possible, there was no way I could have afforded the premiums. So before I had to give up that policy, I very stupidly took advice from someone in one of the chat rooms by going to an acknowledged "expert" in medical insurance. And I assure you, everyone said he was "THE expert". End result. I got a plan that was much more suited to a future in Thailand. So for a couple of years I had two policies as I knew that after 65 I would have difficulty finding any cover.

I was extremely stupid. i did no research on the insurance company. It was large and based in the USA. I had checked on likely future premiums for ten years and was satisfied. But I did not check the company. t was then fighting several law suits and had a reputation for pulling in clients close to retirement and then raising rates very quickly. For three years all went well even after I hit one of the 5 year milestones when premiums usually increase more significantly than usual. But over the next two years the premium went up first by 25% and the next year by 50%! I was near incandescent with rage. I spoke to the company and especially to the broker who had sold me the policy. All put their hands up and said "not our fault". So after age 65 I had to try and find another insurer, move back to the UK or self insure. Thankfully I found another company here in Thailand and have what I consider a very good plan at decent rates.

But the reason I quoted from @Ruthrieston's post concerns the possible introduction of the 40,000 baht outpatient requirement. This to me seems the height of utter nonsense. I dropped outpatient treatment from my policy and will save around 37,000 baht annually. It made no sense since my policy has a 40,000 baht excess. Why pay 40,000 that just to claim 3,000? So I have a separate bank account with plenty of funds to cover outpatient treatment and any other additional medical costs. But will the Immigration Department and its medical advisers see the sense in this? Of course not! TIT.

[PeterRS]

In my post two above, I mentioned the sale of the mother's house as "clearly several thousand pounds." Apologies - it should have read "several hundred thousand pounds."