Could I retire in China?

[genesiser]

Hello everyone, I am 33 years old and have saved up ~$600,000. I was thinking about retiring but that wouldn't be possible in the US.

Anyways, I have been talking to people that live in China via a website and have found the people to be quite friendly. I did a bit of research on China and have found it to supposedly be fairly cheap to live there. So one of the places I would maybe try to live would be a place called Guang Dong Province, or one of the adjacent areas because some of the people I've met also live there. I'm not someone that requires fancy living and would be fine with just an average house and your average entertainment sources. Also I am not married yet, so I would probably try to find a wife over there.

So what I would like to know is, with that amount of money would I be able to retire there by living a modest life and not have to worry about making money? I would really like to know because I have put in some serious thought into actually doing it. If that amount of money wouldn't be enough, could you give me and idea how much I would need? Or if it is too much, what would be the minimum amount?

These are the questions I would love to have answered and I look forward to your replies.

Thank You for Reading.

[skylee]

Interesting question. I would like to know about it too. US$0.6M is not much. And that would probably have to last the OP for about 40 years. I would be very happy to learn that it is enough.

[Erbse]

If the thread starter knows how to make 600k until the age of 33, he shouldn't have any problem to make more money within China.

[Jim]

Just wire USD200,000 to my account here and I'll set it all up for you. Honest.

[roddy]

Not really enough, I'd say, assume you want a fairly comfortable urban life in a decent sized city. I can't see you're going to make enough to live off annually from that amount of capital without risking the capital itself, which is obviously a dubious long term plan. You're then also vulnerable to inflation and exchange rate changes (and both of those are only going the wrong way for you in China over the next few decades).

I'd say either look at working here - even just a 16 hour a week university teaching job - to preserve capital so you can then invest and grow it, waiting till you've saved more, or blowing it all on one great big party.

What do you reckon that capital would turn into in terms of annual income, and what kind of lifestyle would you want?

[smalldog]

Gosh, I'm the same age as you and I couldn't imagine retiring! My life's taken so many unpredictable turns just in the last ten years that I couldn't possibly plan out what may be another 40-50 years.

To answer your question, the cost of living in China is rising so rapidly that I doubt you could retire on it unless you have a very simple lifestyle. If you want to spend the rest of your days in a relaxed and unproductive way then go to Thailand. :-P If I were you though, I'd enrol in a Chinese language course at a Chinese university for a year or two and just see where life goes.

[roddy]

Actually I got my maths wrong, I think if you can get 5% interest you can live off it comfortably now. But in 10, 20, 60 years with the cost of living having increased and the exchange rate plummeted? You need to future-proof the plan somehow.

[Sarpedon]

Go to Cambodia, not China. With $600k you could retire easily.

[gato]

You can easily live on 5% of US$500K or $30,000 a year in China. You could even live on that in the US in many less expensive cities if you are frugal.

[roddy]

But if we're doing long-term planning for someone who doesn't plan to work again and wants to live in China, you've got to look at inflation and exchange rate changes. You could do it now and probably for some years, but at some point I reckon you'll need to start eating capital or come out of retirement.

You could avoid exchange rate issues by moving the money into China, but interest rates here are comically low (not that they're much better anywhere else at the moment).

If you're looking for somewhere cheap and pleasant to live, SEA's the way to go I reckon.

[SiMaKe]

@genesiser

Using roddy's estimate of 5% of $600K ($30K) as a starting point for needed annual income, assuming you live to age 85, inflation is 3% and return on your capital is 5%, you would need about $1M today. If the inflation rate is 5%, you'll need about $1.5M.

If your rate of return is 1%, you'll need a little over $5M.

3% inflation is the typical long term average assumption used in the US. If China continues to grow at anything near it's current rate, the inflation rate could become considerably higher, at least medium term.

This is just a simple calculation of the present value of a stream of income growing annually at the rate of inflation and discounted at 5% (the expected rate of return on your funds) and is meant only as a "ballpark" estimate of what you would need in hand today.

[Addendum]

Given the amount of money you have, some of your options are

1. plan to die earlier (this is only half kidding; if you have health conditions indicating a shorter than normal life, this can be factored in)

2. live on less - either cut back further on your intended life style or move to a place where the cost of living is compatible with your funds. Your $600K will last a "lifetime" (under the above assumptions) if you can live on $5-15K per year.

3. supplement your income through either i) increasing your rate of return or ii) an appropriate level of income producing activity

4. continue your remarkable accumulation of funds for several more years until you have an amount that will last your then remaining lifetime.

[xianhua]

Have a read of this opinion from a well-respected British finanical adviser.

That certainly is an impressive figure to have accumulated by your age, but as to retirement, I'd have some doubts. Inflationary pressure will chip away at the original captial even if you can live off the interest. There is the option of property, but then again, there are restrictions placed on foreigners buying property in China - for this very reason. If you plan to get married in mainland China, then you'll probably find yourself with children in the not too distant future. Have you considered the cost of education in China? Flights home to visit relatives and friends? These are big expenses.

[parasite]

I envy you, and it sounds like a cool plan.

I think a lot of people writing here are being a bit unrealistic in the sense that they are writing as if once you 'decide', you will somehow be physically prevented from every working again and forever locked into one plan and cannot adjust your plan according to changing circumstances. Obviously not the case folks, he is living and breathing as capable of adapting as the rest of us humans. He'll probably get bored in 3-5 years and realize it's not for him anyway. None of us can predict our future emotional states with certainty!

You should take a trip and live a few months first to see what your minimum comfort lifestyle costs. Then see if it is below the reasonable amount of interest you can expect to earn on your savings. Then factor in the best estimate available today of what inflation will be like -- and see if the interest on your money can also cover that. Obviously over the years you watch the inflation, and cut living costs further if necessary to keep the spending schedule on track.

I lived VERY comfortable at a medium standard of living in Shanghai from 2006-2009 on $1,000 US per month. I lived in a comfortable high-rise (I could have cut my rent in half and lived in an old place if money became tight.) I went out with friends, took taxi's occasionally on weekends, and was thrifty without denying myself (eating out many times a week and trying to drink in bars charging 10 RMB a beer instead of 50 RMB, but not always). I didn't really buy clothes during the whole time as Chinese clothes don't fit North American chests and they are way more expensive for way lower quality (IMHO), so that is the only expense I can think of not included. I didn't have a car. I did have high speed internet, air-conditioning blasting in summer, and cable TV (costs like $10 a year).

BUYING a home (actually just an apartment -- but foreigners call them "houses" for some reason) in places like Guangzhou or Shanghai will run you $200,000 or more for something as tiny as 1,000 sq. feet. If you marry a girl from the countryside, though, and don't mind living out in the middle of no-man's land, I'm told you can build an awesome house for like $50,000.

[Meng Lelan]

And then what about health insurance in retirement, if you retire in China?

[Jane_PA]

?? Are you an American? How could you stay in China by doing nothing? You live in China by a tourist visa?

Also, what is the health insurance as Lelan said? The medical cost is very high in China, I mean if you want to get a good treatment...

Depend how do you want to live... Food, housing, culture etc...

Many things like Chinese food in China is cheap... but many westeners cannot stand a life without cheese, even the vegetarians. Do you like Toufu everyday? Usually western food in China is more expensive than in the U.S. because supply is small.

Why do you want to retire so early? If you want to have an easy life, teaching some English in China is a not bad job, at least pay you housing and health insruance and some salary...

[Meng Lelan]

but many westeners cannot stand a life without cheese, even the vegetarians.

I'm a Westerner and I hate cheese. I would like a cheese-free retirement.

[parasite]

Lol.

Lowest on my list of cheeses would have to be toe cheese and crack cheese...

Why on earth would someone with 600k worth of security want to toil away their retirement doing something as braindead as teaching English? For the sum of ... what about 4000 kuai/month in most areas? That is going to help oh-so-much with what bill that he couldn't already cover? I don't mean to be rude, but I honestly wonder at times if these kinds of suggestions are just from trolls intending to insult/attack people.

Visas -- is it hard now to just get business visas like before? Circa-2007 you just paid the fee and could easily procure a 6 month business visa, even with no official business. Once he's married I can't imagine he has no legal right to live together with his wife in the same country, regardless of working status.

[gougou]

I can't imagine

I understand you're trying to help, but I don't think imagining stuff helps much more than troll posts (which by the way I don't think the above posts were). We have several long threads running on visas, so obviously it's not a simple issue and deserving of some though.

[genesiser]

Thanks for the responses, you guys have been helpful. But judging from the replies the two options I have is a) teach english classes. or B) work a few more years just to be safe.

I wouldn't mind teaching english, it wouldn't be that big of a deal. However I don't really see how teaching could be that profitable, unless over there english teachers are in high demand. I think perhaps the best route would be to probably work an extra year or two.

Anyways, to answer the question of why do I want to retire so early... Well when I turned 18 I became a pipe welder and after the 6 month program I got into working industrial shutdowns (shut down power plants, paper mills, etc for repairs) where you work 7 days a week, 14 to 16 hours a day. As soon as one job was done, just moved on to the next one. The only time off during the year was when I would just drive to the next shutdown... And I basically did that up until now... So in other words, I'm tired of working, lol.

Now technically I could probably easily find a job in china using my profession, but it would be a huge pay drop and i'd probably we working in worse conditions than I work in here. So I figure it would be better for me to make my money now before I move over there.

So in the end, I guess I'll just rough it out for another year or two just to be safe.

[roddy]

The conditions for welders aren't too bad - they often have sunglasses to protect their eyes now. But you'd be better off putting in another couple of years and saving up some more.