Enough to live on

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Wife and myself hoping to do MM2H  in 2011. I will be 52 and wife 51. No kids. We will not have a fortune to bring with us...RM$750,000 or thereabouts, to include RM$150,000 Fixed Deposit.

 Just wondering if that will be enough really... will get RM$ 6,000 pa small pension when i'm 60, she will get RM$9,000 pa at 62..then UK State pension when I reach 65.
Don't want any kind of lavish lifestyle really.

Can anyone say if we would be financially okay. 

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hi, kenny,

Yes.

Your RM750,000 will generate 3% tax-free interest on a 12 monthly basis. And interest rates are expected to climb back to "normal" over the next couple of years. Normal is about 3.75% from the banks.

This generates interest @ 3% of RM22,500 pa + your pension RM6,000 pa plus the wife's pension RM9,000 plus the UK pension for a couple (£156.15 per week @ exchange rate of 5.00)) of RM40,569 pa.

total = RM78,060 which is a lot more than I get and I'm doing Ok.

I came across some government survey that stated that for 2008 the average household income in Malaysia was RM3650 per month. That's RM43,800 pa.

So your RM78,060 pa puts you well above average and you'll not be paying any Malaysian tax on it. Looks like you're quids in.

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Thankyou very much Scott for your reply.

Sorry , my fault for not clarifying;we need to live on the RM750k..purchase property, car and live from day to day. I think will be okay really

Ken 

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Hi Guys,

These posts are really interesting to me because I have been wrestling with the 'will we, won't we' have enough to live in questions for weeks.

The posts put our situation into context and despite leaving  the 'security' of income from employment  I am pleased we made the choice to make the move sooner rather than later.

Jac

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hi,

The banks in Malaysia class any customer with at least RM200,000 as "affluent." With the need for RM150,000 in an FD for the first year at least then folks are pretty close to being affluent in the local context.

For me, a big part of the overall decision is "rent or buy."

With the example given by Kenny, the RM750,000 will give RM22,500 disposable income at 3%, a rate already available on 12 months FD.

I reckon the average rental for a bungalow in most places in Malaysia is about RM750 to RM800. I get this from just reading the classifieds, the newspapers, and the internet.

In the recent Galas, Terengannu by-election there was a newspaper comment that with all the media and party folks to accommodate, local rents for a bungalow had gone up from RM700 to RM2,000. They dropped back PDQ after the election.

So my rent of RM9,000 per annum seems pretty typical.

So, Option A, out of the RM22,500 from the example, rent covered and RM1,125 per month to add to other funds for all other expenses.

And Option B, spend e.g. RM450,000 on an apartment in Miami Green, save on rent and hope for some capital appreciation. At the expense of reduced available income (RM750,000 - RM450,000 = RM300,000 @ 3% = RM9,000).

The saved rent (RM9,000) plus the reduced available income (RM9,000) makes RM18,000 against the max available interest income of RM22,500. Not much difference. Just need the other sources of income to make up the shortfall from property purchase.

I could, of course, have all of this wrong given that I'm no genius at simple arithmetic. So opinions, or correction, very welcomed.

As you can see I'm thinking of changing from my usual preference to rent rather than purchase.

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I'd lean towards renting. You don't know if you really going to like the place you choose and most of you money is tied up. There is little margin of error with the little bit left.
If you want to buy wait until you get your state pensions (that still over 10 years away!) and then perhaps with the extra liquidity you can risk to buy.

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A small detail to add - you will have to wait to age 66 (both men and women) before you will qualify for state old age pension (and possibly longer if the rules change again in the future).

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Assuming the intent is to stay into retirement, buy a new small car, work out the costs for road tax (based on engine size) insurance fuel, then it should last & cover unknown costs, then rent a roof over your head, find out your living cost level here, maybe you both have hobbies ? it soon adds up. don't tie your cash up too quick.