Last time I discussed planning for retirement. Once you’ve planned your retirement, the next step is actually managing your retirement. While it’s not a full-time job, there are certain things you need to manage to keep your retirement running smoothly.
First, you want to address the age old question of rent versus buy. Many of my clients and fellow expats contemplate what to do in terms of housing. First, it comes down to if they still own a home back in the US or Europe. Some expats have decided to rent out their homes and use the rental income as part of their retirement income. Others are unable to part with their home because of sentimental value or they still use it when they go back to their home country. However, if there is a mortgage on the property, my advice will always be to sell. There’s no room for a mortgage or debt in managing your retirement. Debt is a sure way to manage your retirement into the ground.
Here in Phuket, my recommendation is to rent. For one, renting gives you the ability to determine if a unit or building is right for you. You would not believe all the horror stories I’ve heard over the years of bars opening near a condo and the noise making for many unpleasant nights. Second, I have yet to find a management company that manages a property as well as those back in the states. I’ve seen many buildings deteriorate over the years. The construction quality here is just not as good as what I’m used to in America.
Renting provides the option of walking away from just a security deposit and one month’s rent if it’s a one year contract. If you look to rent a property in the low season, deals are plentiful and you can get your choice of units and buildings. Or if you want a house, renting is the way to go because foreigners cannot own land. I know many unscrupulous agents will tell you Thai company is the way to go. Tell that to some expats where the lawyer kept the 51% when he was supposed to be just the nominee. As retirees, we cannot afford to put ourselves in any bad situation. If you do buy make sure you consult with a reputable law firm that has experience working with foreigners and contracts and make sure if the investment goes wrong it won’t derail your retirement plan. Always have a backup plan.
Lastly, it’s pretty obvious there is no shortage of available units here in Thailand. Whether we’re in Bangkok, Phuket, Pattaya or Chiang Mai, there is no shortage of condos. Matter of fact, it looks like they’ve overbuilt. Everywhere I look, there’s a condo building going up or ads for buildings yet to be built. All I can say is buyer beware!
The second thing you want to address in managing your retirement is your life insurance. Now I do not sell life insurance and I am not a fan of insurance products. Life insurance is actually something you probably don’t need once you retire. Actually the only reason to keep your current life insurance policy is if you have large debts. Most retirees are better off cashing in their life insurance policy and investing it elsewhere.
Third, you want to have your affairs in order. Make sure all accounts have designated beneficiaries. This goes along with your will and ensures who gets what. Make sure all your important documents are easy for your family to locate. This should include your will; trust documents; insurance policies; a detailed listing of your assets, including account numbers and dollar amounts; and a durable power of attorney.
And finally, the fourth and final part of managing your retirement is managing your portfolio. The two critical pieces to managing your portfolio are yearly portfolio adjustment and actually building your portfolio. Even though you’re retired, with the right Exchange-traded funds (ETFs) and stocks, you can actually grow your retirement portfolio if you properly planned your retirement. Many retirees have been misguided and misinformed that stocks are too risky for retirees and that bonds are the best investment for retirees because they produce income. The reality is that a balance, diversified portfolio is what’s important.
Managing your portfolio also involves managing your withdrawals and then rebalancing your portfolio after the withdrawals are made. A common question that I get from my clients is where should they take the money from? That’s why each retirement portfolio is unique and why a custom plan is what’s needed. Feel free to give me a call, email or Skype and we can discuss that custom plan for you.
Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand. He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers.
Call 089-970-5795 or email: email@example.com.