My plan is to consider retirement in two phases.
- In our early fifties, we hope to have enough savings/investments to allow us to retire to India. For this early retirement phase, we intend to live off our taxable savings, without dipping into our retirement accounts, at a fraction of the cost of a normal retirement in the US.
- For the regular retirement phase, in our mid-sixties, we will start withdrawals from our tax-deferred accounts. We should also qualify for Social security and Medicare at this age, assuming current rules. We should then really have the option of continuing to live in India, or returning to the US.
Under current conditions, it seems reasonable for us to expect to live on about $1000/month in India during the early retirement phase, not including initial moving and setup expenses. This would require about $300K in taxable accounts (assuming a withdrawal rate of 4%). All figures are in 2007 dollars.
Besides the usual uncertainties of inflation and cost-of-living increases (in both US and India) and investment returns, the other big risk in the above plan is the currency exchange rate. A weak US dollar (or a strong Indian rupee) will be a challenge for this plan, since most of my holdings are currently in US dollars.
I am sure that this plan will require some careful monitoring and tweaking as times goes by. But as they say, having any plan is better than having none at all.