Retire 2 India - is this no longer an option for you??

[nand]

Like many who came to the US, I too had dreams of an early retirement in India on the strength of 1$=50Rs. Now my net worth in Rupees has gone down 20% and at the same time India has become much more expensive (esp. housing). At one point in time this seemed like a possibility after a few years even on my software engineer's savings. Now unless I become a multi-millionaire somehow this option seems to have vanished in the thin air. Inviting observations from others who were thinking of a similar option and what they feel now. Of course, those who bought a couple of places in 2004 or earlier would be all set now.

[Going_nowhere]

If you think R2I is going to be increasingly expensive, I wonder what you feel about LIA.

With the depreciating dollar, inflation will be on the rise in the USA. Add to that double-digit increases in healthcare premium, and you'll be in for a rude shock in a few years from now.

[KRV]

If we want to guess how R2I will be like 5-10 years from now, I think South Korea offers a good example. Up until early 1980s, South Korea was a developing economy with very little first world comforts, except for the elite, kinda similar to India. In 20 years or so, they have catapulted themselves into industrialized first world status, but along came with it substantially high costs of living, expensive real estate and of course, fast rising salaries for professionals.

One of my friends from grad school was a South Korean, who returned back after 5+ years of working here because he found very little difference in his economic well-being between US and SK. He returned to a senior scientist position (at ~80% of U.S. salary) and tells me that most of the conveniences U.S. has is also available in SK, plus the added bonus of still resonably affordable maid service and that he can have great-tasting Kim Chi and Dim Sum all day long (sound familiar with R2I reasons?!) His lament: Unlike his uncle who returned from U.S. to South Korea in late 1970s to retire comfortably there based on his wealth accumulated in U.S., he finds he absolutely has to work till he retires because the dollars he has saved are nowhere near as valuable in modern SK. Moreover, the South Korean Won has appreciated against USD in recent times much like INR has, so he feels all his future wealth will be generated only in SK and his past US savings are a diminishing part of his growing net worth. He said his dollar savings - significant 10 years ago - could not get him even a decent 2 BR apartment in Seoul.

I suspect most R2Iers will face the same situation and as of today, at least most R2Iers are returing with enough USDs to buy their primary home outright in India, if nothing else. This may also become a dream in the future like my South Korean friend faced if this double whammy (USD decline and rising India cost of living) trend continued.

[Chicago Desi]

If you think R2I is going to be increasingly expensive, I wonder what you feel about LIA.
[/quote]

I agree. If you can afford to LIA on your savings, surely can afford to R2I. You may have to give up on some of the luxuries you planned, but that should not keep you from R2Iing if you really want to.

I know people make a big deal of the sliding dollar, but this is not a dotcom crash. Its an adjustment. And who knows, the dollar may roar back in a few months. The US economy fundamentals are still strong.

[Going_nowhere]

With the dollar depriciating I see the following

- US balance of payments will improve
- US luxury and semi-luxury goods will be more affordable in places like India
- spending will inrease in developing and other parts of the world
- US savings rate will increase

US economy currently needs this. There are checks and bounds in the system to keep this from rapidly falling.

Wait 6 months and buy your retirement real-estate in US. Wait 12 months and buy your retirement real-estate in India.[/quote]


If you think real estate downturn will be over in 6 months, you're grossly mistaken. the real downturn will start next year, when ARMs reset. Real estate moves in cycles of 7 years, and we are only in the beginning stage of this downturn.

[sunnysideup]

as you mentioned in your post already, it is indeed tough for people who don't have enough savings. You got to think about the future and invest wisely.
You can't wake up oneday and decide you now want to retire in India.
tough luck for people who haven't invested wisely !!

[nand]

interesting responses. MeraNaseeb - why do you say 6 months for US and 12 months for India, reg waiting for RE?? I think the US will bounce back and find a way out of the conundrum esp. if the war is over as the fundamentals are still good. health care of course is a big mess.

KRV - the south korea example is very apt. at one point getting out of the rat race, if not completely retiriing was a possibility. I was considering careers in teaching and the like which are less stressful. The income generated through savings would have supplemented the shortfall. Not so much anymore. As for me, I have banished the thought of retirement forever. My original plan was retirement at 40 with a sea facing apartment in chennai. Alas the dream evaporated with the sky rocketing RE in chennai. Right now a sea facing condo in SFO and chennai are almost comparable:eek::eek:

[nextgen]

Since you missed that boat, maybe now its time to make sure next one is not missed. Imagine discussion in 2010 or later - it will probably be those were lucky who bought in 2007.

[RRK]

#1,
One mistake won't correct another mistake.
What would you say if INR depreciate another 10% over next 18 months ?
You may regret that you should have decided better late than never and took the plunge then.

Like some one said, what are your choices ? staying back in US$ ?
Does your r2i plans depend on economic crisis like sub-prime and oil prices ? Do you think India has no problems now or in future ?

Time to think..

[cyberabadi]

OP,

This is just a beginning of the growth of India. Retiring to India is viable and is not necessarily dependend on the US$/Rs ratio. There are still deals everywhere, only u need to be more deligent in your search to find an appropriate deal/RE/Apt, etc. Never make a decision depending on $/Rs ratio or external sources on which we have no control off. Even if only 2% of Indian population saves money and buy-up RE.. That would bump-up the prices big-time. All of India doesn't have infrastructure.. So, the bigger cities and towns will keep growing..

W.r.t. - LIA, Have you considered the education costs of 2 kids if you are making an IT salary. I estimate it would be atleast 500K+ for undergrduate education in the US from top-notch schools when my 2 kids get there. (this would be considering that we fully fund them and it would be more if they are non-residents of that state the school is in). There will have to go to the best schools whether I LII or LIA.