Retiring to Thailand-Cost of Living

Posted on October 1, 2010 by Mike

Home in thailand

People considering retiring to Thailand will sometimes ask me about the cost of living here. I often find that what they really want to know is how much does it cost to set up home in Thailand and how much will it cost to live there each month.

I can of course answer these questions based on my own experiences since I retired here in January 2008 and live in the country full time. However I also point out that there are lots of other options and personal circumstances different to my own. So when it comes to costs you can have some huge differences.

How much did it cost me to set up home in Thailand?

When I first came to Thailand I had around £20,000(1,260,000 Baht at the time) disposable savings to set myself up in the country and a pension income of about £1000 a month to live on. My research before arriving suggested this was more than adequate for my needs.  This has in fact proved correct and although I certainly do not live a luxury lifestyle I am by no means on the breadline.

I had in fact planned to rent property in Thailand on my arrival,  but when I got here and looked around I decided that whilst rents in the area were extremely low, 3000-5000 Baht a month for a quality property, the deals to be had on a new home were even better despite the restrictions placed on foreigners buying land.

I also wanted somewhere that myself and my Thai partner could actually call our own.

So we set about buying a home here that was within my budget, the budget also had to furnish our home and buy a vehicle. We soon found a three bedroomed bungalow we liked that was nearly complete and on the market for 650,000 Baht (£10,000 at the time). Since this was fairly basic,  I then spent another 150,000 Baht on things like air conditioning, security doors and windows, upgraded electrics and a hot water system.

So for a total cost of 800,000 Baht we bought a brand new bungalow, kitted out with all mod cons just a couple of miles from the Gulf of Thailand.

We then spent around 100,000 Baht of my initial budget to furnish our home and get the relevant services connected. This we achieved comfortably by avoiding overly expensive foreign imported goods, well apart from the TV!

Given our semi-rural location it was also imperative to buy transport. I do not like motorcycles and would never ride one here anyway given the appalling road deaths each year. So instead we bought a five year old diesel pick-up truck, second hand, it set me back another 280,000 Baht, plus 15,000 for the initial class one insurance and road tax.

Now with everything in place we still had a few thousand Baht left in the bank from my original budget.

Our only other consideration at set-up was health insurance, Duen had this anyway from the Thai Government,  so rather than pay extra each year (quite a high figure for me) I opted out and instead  moved another £5000 into a Thai bank account to cover emergency medical expenses.

What does it cost to live in Thailand each month?

We set our monthly budget,  for the three of us  (Doy came to live with us in 2009) at 40,000 Baht.  This pays for everything including the following fixed expenses:

Electricity-2500-3000 Baht

Water-200-300 Baht

True Vision TV-1400 Baht

TOT Phone and Internet-700 Baht

Truck Insurance-1000 Baht

Truck Diesel-3000 Baht

The rest we spend on clothes, food and other household essentials, entertainment and Doy’s school fees. Usually we save around 6000 Baht a month which pays for holidays within Thailand and any emergency repairs that we need to make to the house or truck.

When I set myself up in Thailand the £1 bought 63 Baht on average, today it is nearer 48 so  initial start up costs in real terms would be higher although you can still buy a bungalow where I live for the same price I paid in Thai Baht and other costs incurred in Thailand are very similar to those stated above.

So if like me, you are from the UK and are thinking of retiring to Thailand then although the cost of living is higher now, you can complete the same exercise today for around £26,500. Which in my opinion still remains very affordable and you can still live comfortably on £1000 a month.

Related posts:

  1. Cost of Living Thailand
  2. Thailand Cost of Running a Car
  3. Living in Thailand-Expatrate Retirement Experience
  4. Ten Top Tips for Living in Thailand
  5. Dual Pricing in Thailand
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  • Phil B

    Thanks Mike. Very useful information for those of us looking at retiring to Thailand in the near future.
    Phil B

    • http://www.thailand-blogs.com Mike

      Phil, not sure where you live, but I do think Thailand provides a viable option for middle income folk like myself. Although initial start up costs have increased this is purely down to the poor exchange rate. Local costs in baht remain very inflation free.

      • Phil B

        Mike, I live in Australia which is good for travel at the moment with value of Aussie $ strong. After retirement in a couple of years my wife and I want to spend part of each year in Thailand (seeing her family etc) and part in Oz with our children and my family. And seeing the footy (Aussie rules) ! We plan to have a property in each country but we will need to purchase sensibly to do so, which is why your information on local costs of housing and living was reassuring. We will actually by in Thailand in a few weeks and part of our time over there will be looking around for possible locations where we might live in future. We want to be within a couple of hours travel from Bkk so not too far from family.
        Have enjoyed and found your blogs very informative. Keep them coming
        Phil

        • http://www.thailand-blogs.com Mike

          Phil, two hours from BKK gives you quite a few options.

          I personally like the Kanchanaburi area and although Hua Hin is a bit touristy it is also nice.

          Both these areas are within two hours of BKK.

          Of course it really depends on what you both fancy but I think you are wise to visit a few times to check out the options.

          • Phil B

            Mike, agree on Kanchanaburi – it get ticks in quite a few boxes. We are hoping to catch up with Malcolm and Ciejay to learn a bit more about that area. We will also look around Ratchaburi and a bit further south.
            One area that doesn’t get covered much is East of Bkk – the area roughly from Khao Yai NP to Rayong. We will have a look around there as well. We would appreciate any information you have or contact living in that area.
            We presently live in a somewhat remote country town and would look to have a similarly quiet place in Thailand.
            Will make a new post on some potential cost issues of concern and a couple of questions.
            Cheers

          • http://www.thailand-blogs.com Mike

            Phil I certainly wouldn’t argue with your choices. Unfortunately I don’t know the area East of BKK, although I would like to visit Khao Yai NP for some birding, maybe one of the commenter’s does? I like Ratchaburi and South West from there towards the National Park at Kaeng Krachan though.I’m a country boy at heart myself so where I live near PKK satisfies my needs nicely. Can’t do with too many non-Thais either!Feel free to mail me or use the contact form if I can help any more. I would also recommend you check out some other Thailand blogs.

          • Phil B

            Thanks also for this.

  • Lloyd

    Always interesting to see honest costs of settlement and living.

    Just to be the devil’s advocate, as I so much enjoy…

    Had you chosen to rent the same property at a fixed rate of say 6,000 Baht per month and invested 800,000 baht of the money you had saved (required amount for retirement visa), allowing some money for upgrades to the property.

    Rent paid to date: 24 months @ 6000 Baht – 144,000 Baht.
    Investment yeild: 24 months @ 3.78% (average fixed rate for 500,000-1,000,000 Baht investments in 2008) – 60,480 Baht

    Using an everage exchange rate of 56.72 GBP/BHT for the past 24 months (value derived from mean rate at LIBOR COB across same period): 24 payments of 1000 GBP – 1,361,280 Baht

    Cost of living: As you have said it has been fairly consistent I will leave that figure at 40,000 Baht – 960,000 Baht

    Now to put it all together…

    Rent: -144,000
    COL: -960,000
    ROI: 60,480 (Return on Investment)
    Pension: 1,361,280

    Balance: 317,760

    Heres where it gets interesting, you still have the original 800,000 plus 317,760 from ROI and the balance of your pension (not including your 6000 Baht per month savings): 1,117,760 Baht. Thailands property prices have actually fallen, in some places as much as 24% (in real terms), but with an average of about 8.9%. I doubt you would be able to buy your house for 10% less now but its highly likely you could get a much better property of 1.2 Million baht than you could have for 800,000 Baht in 2008.

    The 800,000 baht you have invested is now worth 39.64% more compared to the GBP giving you more choices of what to do with your money given the current markets.

    FWIW I am not a fan of buying or investing in property, it is no different from any other form of investment except it is harder to get access to your money when you need it and if you are like most “middle class” people have used mortgage leverage to borrow then you are more at risk, renting smart is an art form just like buying smart!

    Sources:
    http://www.globalpropertyguide.com/Asia/Thailand/Price-History
    http://www.x-rates.com/d/THB/table.html

    • http://www.thailand-blogs.com Mike

      Lloyd thanks again for some useful input(I’m sure other people will enjoy the insight too). I did actually consider the course you describe but if I am honest I wanted to make sure Duen(and now Doy as well) at least had a roof over their heads when I head for the temple.

      Hindsight is a strength of mine and if I was presented with the choices again I would certainly give your option a go.

    • http://www.thailand-blogs.com Mike

      Lloyd I know you said you were playing devils advocate but I forgot to pick up on this point in my original reply.

      “FWIW I am not a fan of buying or investing in property, it is no different from any other form of investment except it is harder to get access to your money when you need it….”

      Now I am sure you will correct me but aren’t you the guy that recently bought a property in PKK?

  • Lloyd

    I’ll add one more thing about purchasing or renting property for a second home abroad.

    People get caught up in the belief that owning a home is more “theirs” than a rented home, this is pretty much an “old wives tale” and a feeling or “self belief”. If you have a secured lease on a property, or land holding, you can still treat it as your own for the period of the lease, within the agreed terms of the contract. People who trash their own homes will suffer when they come to sell it just as you would loose your deposit if you trashed a rented home, property etc, its no different.

    • http://www.thailand-blogs.com Mike

      I can’t argue with that. In my own case I do not have a property at home but would certainly rent if I went back.

  • http://thaiconnoisseur.blogspot.com Peter_M

    Interesting article Mike. As you say, posts like this are very subjective, as people have many varied lifestyle choices or expectations. I think for those of us who plan to retire slightly outside the main expat centers in the smaller cities, or rural/semi-rural areas, with modest incomes, this article is reassuring. It is great to hear someone can support a family of three quite comfortably on 40,000 bht. The medical insurance is something I will investigate carefully before making the final move. To be honest I am not sure I would be entirely comfortable with just £5,000 set aside for medical emergencies. That may be sound judgment on your part based on your knowledge of local medical costs and the premiums you would otherwise have to pay, but I (perhaps a bit more nervous than you on such matters) would want to set aside more. Btw, £10,000, plus 25% in upgrades for a house in a tropical paradise? Thumbs up, you got a good deal!
    Peter

    • http://www.thailand-blogs.com Mike

      Peter, the premiums for medical insurance for me(63) are very high(100,000 Baht per year) with decent insurers and many are reluctant to take you on board after 59/60. I should have added that I also have a credit card which I do not use but simply retain for medical emergencies too, so I could get considerably more than the £5000 I mentioned if I needed it.To be honest I might also head home and take my chances on the NHS if things were really bad, despite the fact that they say they will not treat expats who have left permanently. I am for example still registered with a doctor in the UK who seems happy to see me when I go home for a holiday.

      • http://thaiconnoisseur.blogspot.com Peter_M

        Whoa, 100,000 baht a year is high. That would add another 8,333 a month to your budget. I can understand why you choose not to take that option and I would probably come to the same decision. It is better to invest, each month, an amount of your choice into your emergency medical fund, build it up, hope you don’t need it, and after x amount of years have a nice little amount stashed away. I think, if it became a necessity, the NHS would meet your needs…….but, just one thing come to mind here…Thai nurses! ;-)

        • http://www.thailand-blogs.com Mike

          Peter, the only time I want to see Thai nurses at the moment is when I drive by the local hospital as I head into town ;-)

          I think the whole medical insurance thing is very personal, I would not discourage it, but suggest that individuals make their own enquires and subsequent decisions.

  • Phil B

    Lloyd, appreciate your input and certainly, in relation to finances, there are always options to consider. The property v. equity discussions are endless. Both have upsides and downsides and we see ‘experts’ win and lose in both on a regular basis. No-one knows for certain what new taxes and laws will be introduced or what will happen in the world in 5, 10 or 20 years time that will impact on us and our investments. So most people have a ‘bet’ each way – own some property and equities. I have read that PKK is a nice area and, if so, perhaps it will become another Phuket in 20 years and owning a house may prove the best option financially. Who knows?
    Most of us, especially when getting older, want the security of owning a home. Unlike you I see owned property as more ‘mine’ than rented/leased property. Owning a house gives me a feeling of permanence, of belonging somewhere, of having a home rather than simply having a house. It is an emotional thing I suppose but emotional decisions are as important and valid as financial ones, perhaps more so once we have enough funds to live on. Importantly also for me, if I own it I can modify it – paint it any colour I want, knock out a wall or add a room or a pool.

    It would be interesting Lloyd to look at Mike’s figures for ownership v. rental over, say, 20 years. We would need to allow for rental increases in a place like PKK that might substantially develop over this time and any taxes on income from investments. Then we can guess at what capital gain might accrue on a house in PKK less any capital gains tax if applicable. And we can worry about whether our pensions or superannuation and/or investments will be keep up with cost increases and maintain our lifestyles as we live to 90 !!

    Apologies for waffling on here a bit folks.

    Health insurance for older non-Thai residents, vehicle ownership and electricity are significant costs. For those who have lived for a while in Thailand, are these costs going up substantially (as they are in Australia for example) or is the government keeping a cap on things?

    And, finally, are the new houses being these days well built and have insulated walls and ceilings?

    • http://www.thailand-blogs.com Mike

      Phil just to address a couple of points in your reply to Lloyd:PKK is an excellent area to live and given the introduction of a high speed ferry link from Khlong Wan to Pattaya along with a proposed new road from Myanmar(a link between Indian Ocean and Gulf of Thailand) that will come through the Dan Singkhon Pass it might well suddenly increase in popularity.Not sure I would welcome this but it would certainly affect land and property prices which away from the sea still are some of the lowest south of Bangkok.The costs you mention certainly don’t seem to have substantially increased in my three years here(FX rates have though heading South), petrol/diesel for example is pretty much the same as are things like vehicle tax and the cost of water and electricity.With buildings you certainly get what you pay for. My modest home is not insulated although I may add this to the roof space. To ensure adequate wall and roof insulation it seems to me you have to build your own place or at least supervise its construction. Thai builders seem to prefer single skinned buildings(cost?) but there are some excellent thermal blocks available, special roofing tiles and other things that improve insulation.

      • Phil B

        thanks Mike for the feedback. Costs of electricity and water in particular are increasing increasing very substantially in many areas of Oz (along with increasing standards for buildings in relation to water and energy efficiency) hence my interest.
        Your comments below on medical insurance costs are also notable. I will probably keep out private medical insurance going in Oz although it is presently costing us around A$4000/yr as that does provide a security blanket – duck home for any significant medical problems, provided of course we are capable of taking a plane ride !
        Cheers

        • http://www.thailand-blogs.com Mike

          Phil, you can definitely build an energy efficient house here, finding the right builder is the trick. Water conservation seems low on the agenda here, if its there we have water if not we get rationed or have none.

          Water tanks and even well are a useful addition in some areas.

          If there are no restrictions regarding living overseas I would keep my Oz insurance. Thai doctors and local hospitals are OK and relatively cheap. Its the private ones that hit the pocket.

  • http://www.jonathan-russell.com/ Jon

    Great post Mike, informative and honest as ever.

    You definitely got a good deal – despite the hindsight analysis – and given it was what you are after that is even better.

    For my tupence, investing in property here in Thailand is certainly a controversial one. I’m not planning on doing so anytime soon but it is always good to hear anecdotes, and particularly these comments, on the subject.

    For me it boils down to the fact that I’ve no idea whether we’ll be in Thailand in 5 years or beyond — if I was retired (a long way off) or laying down permanent roots that might be a different scenario. Though buying in Bangkok is hugely different to rural/semi-rural.

    • http://www.thailand-blogs.com Mike

      Jon, I think you younger guys are wise to keep your options flexible. My investment here is one to provide a retirement home for however long I have got and two to give Duen and Doy something after I am gone.

      To me £20,000 is good value even if I go to the temple ten years down the line. Imagine trying to do the same in the UK .