physdude

I and my wife am looking into the possibility of retiring relatively early to Malaysia for personal reasons becoming quite familiar with the country when I lived in Singapore for ten years in the 1990s. I have always loved the place and like the relaxed environment and relatively low cost of living. I and my wife have already obtained the MM2H visa for this purpose.

I am a bit surprised that there seems to be little discussion about the cost of living and budgets which is the polar opposite of retire to india forums where these discussions are, to put not too fine a point on it, very extensive indeed.

So I would love to get any advice on my budgeted amount below (or anything else for that matter).

Since I am looking for rather early retirement, a reasonable budget is essential and I am looking to spend no more than RM 8k/month initially (apart from overseas travel for which I have budgeted separately) - given the weak ringgit, I can probably spend more but want to be prepared if it strengthens . From my visits to Malaysia, that seems like plenty for my lifestyle but visiting is rather different from expat living and so it would be good to know if that is a reasonable amount to live on for a couple even in the expensive parts of Malaysia like KL or Penang. I am looking to rent a reasonable 3 br apartment, drive an average car like a Camry or Honda City and eat mostly south Indian food (this is one of the really big attractions of Malaysia for me - my friends are always surprised at how much I can pig out on banana leaf meals while I am there as I can't get south Indian food of reasonable quality at any price where I live). I would also probably travel around a bit domestically and do a little bit of diving etc once or twice a month apart from the usual eating out and basic entertainment.

Epicurious

Welcome physdude. I'd say you're in the right ballpark at 8kRM/month for the lifestyle you describe. A major variable will be the size and quality of accommodation that you're looking for and in what location. My one bedroom apt. in a very nice area of KL not far from downtown costs me 2.5k/month. I think the three bedroom units go for more like 4k. That would be a big chunk of your budget. Much cheaper units are available in less desirable locations, of course. Utilities are cheap, food is fairly cheap, internet is expensive but hardly a budget breaker. Booze is quite expensive.

I think you'll like it here.

SushiFan

"given the weak ringgit, I can probably spend more but want to be prepared if it strengthens . "
I find this a rather tricky statement. The Ringgit fluctuates a lot compared to e.g. Euro and USD. Basing your budget on one exchange rate (which happens to be favourable) can create financial havoc in the future.

Your main expense categories will most likely be rent, food etc., holiday spendings, car, medical insurance.
To get an impression of rental prices go to one of the real estate websites and take a look around (e.g. propertyguru, iproperty).
Running a car is not that expensive, but buying a car can be rather expensive, depending on the brand and model. That is something which you should take into account.
For holiday spendings you could take an estimate of what you are currently spending per year and base a forecast on that. It makes sense to not translate this to MYR as e.g. most plane ticket prices are based on Euro/USD anyway. Meaning that pricing in MYR will be adapted if the exchange rate changes.
Electricity only gets expensive if you live in a place where the air conditioning units are old and consume a lot of power.

bakedbean

I would agree with SushiFan on the post above.

Rental is going to be the biggest cost. I wouldn't worry too much about the rest. Maybe check out car rental prices too.

It probably doesn't get discussed so much as, by virtue of you being a MM2Her, you will have already had to prove a 10,000 ringgit a month income and, as we all know, that should be plenty to live on.

It's only if you have some expensive habits like....heavy boozing, or a predilection for icy cold airconditioning.

Yeh the banana leaf places are as cheap as chips. In fact, probably cheaper than chips

owned

I think the question is not whether you can live on a budget in Asia, but if you should.

If I was going to limit the amount I spend per month to not a lot, then I would stay in Europe or even better the USA, as I think I could do better on a budget there. To have the same lifestyle and buy the same things that I did when I lived in the UK costs me a hell of a lot more here in Penang. Everything nice is an import with the added tariffs that go with it.

I also don't think its nice to have substandard food or not go out as you can't afford it. Cheap vegetables in the UK still look great and are fresh, the same budget for vegetables here gets you something that looks like you don't want to go near it. You can see this with the clearance lines section in supermarkets. In Penang, clearance lines are not really edible for fresh produce, you might find some near out of date can's that can be used. In the UK clearance sections looks great, even the vegetables will look good and can be kept for a couple of days before you use them.

My other problem with living poor in a poor country is that you lower the standards of the country even more. You make its economy even worse as you bring nothing. Some locals many even think worse of foreigners as we have lots to spend right.

I know its tempting to retire early and be on a budget to do it, but just like eating bread that's not quite cooked enough or fruit that has not ripened yet, it usually leaves a bad taste in your mouth. Everything has its time and pushing it forwards to somewhere else is a brave thing to do in my books. That's not to say it can't be done, as I do know a few younger artists that live in Penang that do it on virtually no budget. But then these are people who understand the Bohemian lifestyle and except they have to life without to be inspired. Its not for me as I like nice things.

Sorry to be gloomy, but Penang is not like India where you can live on a little and get community support. If you don't do it yourself here, it won't ever happen. There is a reason many of the foreigners own large yachts that are moored up at Straits Quay. And I haven't even started on the support you can get from close friends and family back in your own country. You have to pay for that here.

physdude

Thanks for the info and the welcome!

I was looking at KL Sentral as an option as it seems like a great transportation hub for not just KL but also the whole of Malaysia and also because it has excellent Indian food right there (I tend to stay in this area when I am in KL due to convenience so I am probably biased toward it). The property websites seem to quote very cheap rents of around 2k/month for 3 br condos there - are these realistic or are they just posted there to lure you in?

I also probably also need to look into safety as that is something I have not really researched. I don't know if KL Sentral is really safe though it seemed perfectly all right whenever I was there.

physdude

Thanks for your response and info!

Your concern about the exchange rate comment I made is quite right. I should have probably expressed myself better. My investments are in USD and I have calculated safe withdrawal rates in that currency. Since my actual expenses will be in ringgit over a long time frame, I needed a long term average exchange rate to convert the USD safe withdrawal rate to ringitt terms. I used a long term conservative exchange rate of 3 ringitt to the USD to come up with the inflation adjusted RM 8k/month (so the actual planned expense is about 2.5 to 3k USD/month). I am taking advantage of the current beneficial rate to purchase a few hundred k ringgit cheaply but, since the overall plan is multi-decade, that extra benefit is quite small in the long run unless I convert most of the investments and I am not comfortable with that.

Logic tells me that a long term average rate of 3.5 is probably more accurate so that I can bump up the 8k but I prefer to be conservative. However, as you pointed out, the exchange rate is an important factor which needs to be modeled carefully.

I have budgeted separately for my first car and overseas travel so that should be okay. (I have never actually driven on a regular basis my whole life since I prefer a bicycle but I have to probably compromise on that since I haven't seen any bike infrastructure so far in Malaysia. Look forward to the new experience though I will try to palm off most of the actual driving to my wife ).

Are the rents quoted on the property sites realistic or under the actual market rate? They seem to be surprisingly cheap for where I am looking at currently (KL Sentral). If the 2k/month I find is about right, 8k/month overall should be straightforward especially since my favorite food is dirt cheap.

physdude

Thanks for your response!

I actually prefer living in Asia and have compromised before to make that happen so I suppose it is different strokes for different folks.

Conversely, I found that trying to replicate a Singapore lifestyle in the US when I moved there became prohibitively expensive rather quickly due to the cost of eating out (not to mention that I didn't like the food very much either) and part time domestic help. Trying to get good Asian food without traveling all the way to the ethnic neighborhoods was difficult to say the least and completely impractical on a regular basis. Again, the same is probably true of British/American food in Penang but, fortunately for someone who is looking at Malaysia, I prefer Asian food.

I always thought that the right place to buy groceries in Asia are the wet markets rather than the supermarkets (and farmers markets in the west) and the few I have seen in Malaysia seem pretty okay. In any case, I plan to eat out most of the time which is what I currently do anyway. For this, both my wife and I found the good kopitiams much more attractive than a lot of the mall restaurants -independent of the budget- since the latter seem to mostly serve western or westernized Asian food which is not really to our taste. The fact that they also happen to be cheaper and highly affordable is just icing on the cake.

I am not sure Malaysia is a poor country - middle level is more like it. I also do not see how I can make the economy worse by spending money from outside, not breaking any laws and not using any subsidized facilities. This would be true even if I somehow spent only 1k/month. I really cannot see how it could be otherwise.

In recent years, the only times I have been to India have been on work with fairly generous expense accounts so I am really not aware of the ground situation. The hotels there are much more expensive than in the US and this is reflected in the much higher maximum that I was allowed to spend for Indian cities relative to US cities or Singapore - only Zurich seemed to be anywhere close but the allowance for Mumbai was even higher than for there. Overall, India seems to have gotten really expensive in recent years. Also, I don't have family or close contacts in India in any case. Malaysia is actually closer for me in that respect since I at least have some old classmates there and many contacts close by in Singapore.

physdude

Thanks for your response!

Rent looks reasonable on the property websites. If those are realistic, it looks like I should be doing fine.

I do indulge in the occasional tipple and have a weakness for good cognac but that should be covered by the duty free allowances from travel. I also have a health condition which is worsened by cold weather so it seems like I was designed for Malaysia.

Fenella

Hi Physdude,

Sounds like you're going to love your life in KL. I completely agree with eating out all the time. Great food, great variety and so cheap.
Really does sound like you're "designed for Malaysia".

All the best for your future move !

bakedbean

It sounds like you've already got a good working knowledge of KL and the area that you want to be.

I think there is an assumption that central KL and some outer parts have crime problems. I am not there so cannot say for sure but maybe keep your ear to the ground and ask around.

owned

+1

Its nice to see you thought about it. My reply was aimed at the many who have dreams of moving to Asia on a whim without knowing anything about it or even thinking about the consequences.

Have a great time.

InVinoVeritas

I don't want to use a dirty word on an open forum so don't click below of you are of a sensitive dispostion:-


The retiree's worst enemy and nothing one can do about it. There are plenty of websites which help you look back at past prices and you could use these to build a view of what your future may look like in a decade or three's time.

It is probably why a good many Brits find themselves unable to return home - the UK is out of many a retiree's financial reach now.

I do agree with owned's view that retiring too early can leave an unexpectedly bitter taste in the mouth.

SushiFan

Your financial approximation seems prudent to me. My advice would be to keep your investments where they are (and in USD) and only transfer once or twice per year the amount of money to cover your expenses into Malaysia.
I'm not sure what inflation percentage you have used in your calculations. The longer term history has an average inflation of 3.5% per year, although this year the inflation seems to be somewhat less, at 2.5%.

I don't know about the rental prices in KL, but the prices on those websites for Penang seem pretty realistic to me.

SushiFan

My wife and I found the quality of fresh produce at the wet markets in Penang disappointing. Also the price levels were not that much different from what is on offer at the super markets. So we stopped going to wet markets. We do eat out but certainly not every day. The local restaurants use way too much oil in all their dishes. And they don't replace the frying oil soon enough, leaving a less-pleasant taste to many of the dishes.