Early retirement overseas?

[sharke]

I've noticed that there are a few members here who seem to be happily retired overseas, sometimes early. The idea certainly has appeal to me, both due to the promise of new cultural experiences and the potential for reduced cost of living. I am also pessimistic enough about the rising cost of health care in the US that I am willing to consider living somewhere where out of pocket medical costs would be competitive with the cost of co-pays here.

I'm in my mid forties and I'm contemplating retiring early overseas in my fifties if things go well. I've started doing research, but so far much of what I've found has focused on selecting the best country to which to retire. I will be interested in that as I get further along in the process, but I'm having a harder time finding general information on financial aspects such as tax strategies, or e.g. the legal aspects of running a web based business part time.

Does anyone have suggestions for resources on the financial aspects of retiring (early?) overseas? Those of you who made the jump - how long did it take you to figure out the logistics and what was helpful to you in planning it? Thanks in advance for any insights!

[kramer]

Hi Sharke, you might try the Early Retirement forum: http://www.early-retirement.org/forums/

I have lived in four countries besides the USA since I early retired at age 41. It seems like I ended up spending about the same amount of money everywhere. But I do live a much better lifestyle overseas.

I had no idea if I would like it before I retired or even if I would do more than just travel a lot, but it turned out to fit me well.

Yes, I would say the main savings over USA living is health insurance, although rent and transportation costs can be less and you will probably want to visit your home country once in a while so include all those costs. But you need a lot of assets to account for unexpected health expenses -- I would not feel comfortable without health insurance if a $100,000 out-of-pocket health cost would damage my retirement, for instance, and you will need to buy travel health insurance for any trips back to the USA. Also, if you choose to buy health insurance abroad, you often don't have the same protections as in the USA (e.g., they can often raise rates on just you and not the whole pool if you get sick and they can drop you).

If you are serious about living somewhere, you want to research the visa alternatives carefully. For instance, I really enjoyed living in Colombia but I could not stay there full-time due to visa issues as I have no pension yet (my alternatives were to get married to a local or swearing you are living together as a couple for the long term, spend $200,000 on real estate, or become a permanent student). Some countries are modernizing their laws -- for instance, Mexico just instituted new rules that allow you to apply for permanent residency if you have a net worth of $120,000 or more, and you don't have to move the money to Mexico. I can buy permanent residency (and the right to work) in the Philippines by depositing $20,000 in a special account (I retain ownership and get the interest) and by paying about $1500 in one-time fees and $360 per year thereafter. Anyway, you get the idea.

Some countries don't like you to run a web-based business and others don't care. As for tax strategies, you will owe your taxes on passive income to Uncle Sam. Some countries want you to pay taxes on worldwide income after 5 years of permanent residency although that is difficult to enforce. So far in retirement I only have passive income and so I pay all taxes to Uncle Sam. I pay no state taxes. I have other friends that run a web based business and they use the Foreign Earned Income Exemption to avoid paying federal taxes and they base the business in a low or no tax country. But I don't know any more than that.

Also, once you have accounts abroad totaling $10,000 or more (pretty much necessary for any type of permanent residency) then you are subject to the USA FBAR regime and you better not screw that up or you are in big trouble. I would say most of my peers here are in violation of the FBAR regime just through pure ignorance, they just don't know the rules and they are not trying to avoid taxes. But now they are afraid to declare due to the incredibly high penalties involved.

[SarahShaw]

Been there, done that, and many of my current friends have done the same. I retired early in Singapore, moved to Thailand, went back to work part time as a consultant, and now am retired again in Thailand. In considering retiring overseas one needs to recognize that finances are only one aspect of retirement. Speaking very generally, the people who it works out best for are people who had previously worked overseas or have some other social or family reasons for wanting to living overseas. Generally it works out least well for people that move offshore just to save money -- those people often get very homesick and wind up getting stressed out over all the things that are different than at home.

[VictoriaF]

For instance, I really enjoyed living in Colombia but I could not stay there full-time due to visa issues as I have no pension yet.

Hi Kramer,

Does this mean that someone with a U.S.-based pension can stay in Colombia for extended periods of time or even indefinitely? Is there a low limit on the pension amount?

Some countries are modernizing their laws -- for instance, Mexico just instituted new rules that allow you to apply for permanent residency if you have a net worth of $120,000 or more, and you don't have to move the money to Mexico.

How does one demonstrate having sufficient assets? Is it necessary to show, for example, the entire Vanguard statement, which may include far more than what's necessary to satisfy the residency requirements?

Thanks,

Victoria

[SarahShaw]

For instance, I really enjoyed living in Colombia but I could not stay there full-time due to visa issues as I have no pension yet.

Hi Kramer,

Does this mean that someone with a U.S.-based pension can stay in Colombia for extended periods of time or even indefinitely? Is there a low limit on the pension amount?

Some countries are modernizing their laws -- for instance, Mexico just instituted new rules that allow you to apply for permanent residency if you have a net worth of $120,000 or more, and you don't have to move the money to Mexico.

How does one demonstrate having sufficient assets? Is it necessary to show, for example, the entire Vanguard statement, which may include far more than what's necessary to satisfy the residency requirements?

Thanks,

Victoria

If you have a good pension there are a number of countries in which you can get a "retirement" visa indefinitely. For example, Thailand will let you stay indefinitely if you either have a $27K per year pension or else park $27K in a Thai bank indefinitely. And then you'll find that if you actually spend $27K per year in a <highly desirable> city such as Chiang Mai that people will consider you to be a high roller.

[VictoriaF]

If you have a good pension there are a number of countries in which you can get a "retirement" visa indefinitely. For example, Thailand will let you stay indefinitely if you either have a $27K per year pension or else park $27K in a Thai bank indefinitely. And then you'll find that if you actually spend $27K per year in a <highly desirable> city such as Chiang Mai that people will consider you to be a high roller.

Thank you, Sarah!

I have not been in Thailand but would like to visit it (I don't count the night I spent at the Suvarnabhumi airport hotel). I have read about Westerners retiring there, but I need to see it for myself.

Are you happy in Thailand? Do you consider it your permanent place or you are contemplating moving elsewhere?

Victoria

[gd]

I have no financial advice to offer. However, one of the most notable aspects of a multi-year professional stint in a european country years ago was how miserable several Americans I worked with were. They had sought out the job, had far more personal support (families in comfortable circumstances, I was alone living in someone's converted basement), and bitched and moaned about cultural and societal differences the entire time. I think the first question to ask is "will I be happy living in country x long-term". If the answer is not an unqualified yes backed up by evidence, don't bother with the other questions. Financial issues can always be sorted out if the motivation is enough. I realize you've stated other motives, but have specifically named health care costs. I suggest you consider whether you're overreacting to current events.

[SarahShaw]

If you have a good pension there are a number of countries in which you can get a "retirement" visa indefinitely. For example, Thailand will let you stay indefinitely if you either have a $27K per year pension or else park $27K in a Thai bank indefinitely. And then you'll find that if you actually spend $27K per year in a <highly desirable> city such as Chiang Mai that people will consider you to be a high roller.

Thank you, Sarah!

I have not been in Thailand but would like to visit it (I don't count the night I spent at the Suvarnabhumi airport hotel). I have read about Westerners retiring there, but I need to see it for myself.

Are you happy in Thailand? Do you consider it your permanent place or you are contemplating moving elsewhere?

Victoria

Yes, I'm happy here and at the moment this feels like a "permanent place". But I know full well that nothing is permanent -- the whole world can, and does, sometimes change in just a few years. In 2000, when I first took a job in Singapore, I probably would have told you that I would live there permanently.

[SarahShaw]

I've noticed that there are a few members here who seem to be happily retired overseas, sometimes early. The idea certainly has appeal to me, both due to the promise of new cultural experiences and the potential for reduced cost of living. I am also pessimistic enough about the rising cost of health care in the US that I am willing to consider living somewhere where out of pocket medical costs would be competitive with the cost of co-pays here.

I'm in my mid forties and I'm contemplating retiring early overseas in my fifties if things go well. I've started doing research, but so far much of what I've found has focused on selecting the best country to which to retire. I will be interested in that as I get further along in the process, but I'm having a harder time finding general information on financial aspects such as tax strategies, or e.g. the legal aspects of running a web based business part time.

Does anyone have suggestions for resources on the financial aspects of retiring (early?) overseas? Those of you who made the jump - how long did it take you to figure out the logistics and what was helpful to you in planning it? Thanks in advance for any insights!

I'm not sure how much you're prioritizing the "rising cost of health care in the US" but I think that's a bit of a red herring. Yes, medical care is cheaper or even free in some other countries, but if you're thinking in terms of early retirement then most likely you are in an age bracket where privately purchased medical insurance would cost <at most> between $5K and $10K per year for you and your spouse. And that would be a top quality policy with worldwide coverage from a major US insurer. IMHO, if that amount of money is enough to drive you offshore then you probably aren't financially well off enough to be doing an early retirement. Also, once you hit Medicare age your medical costs will go way down from that figure if you remain in the States, but if you live offshore you will not be eligible for Medicare.

[VictoriaF]

I have no financial advice to offer. However, one of the most notable aspects of a multi-year professional stint in a european country years ago was how miserable several Americans I worked with were.

Perhaps, assimilated Americans were not as visible, because they did not complain?

I think the first question to ask is "will I be happy living in country x long-term".

But this is a very difficult question. How much time should one spend in a country--in a specific place in that country--to decide that this is the one?

Victoria

[SarahShaw]

I have no financial advice to offer. However, one of the most notable aspects of a multi-year professional stint in a european country years ago was how miserable several Americans I worked with were.

Perhaps, assimilated Americans were not as visible, because they did not complain?

That's a hard nut to crack. When I was working as an expat in Asia for a large American company I also knew some fellow expats who were miserable. For some it would be a true "hardship" assignment, for others a coveted opportunity. The trick is to figure out which group you're going to be in should you move abroad. The only way that you'll definitively find out which group that you're in is to just do it, but one red flag would be if your primary incentive is money. I've known Americans abroad whose expat packages were yielding them effectively a 2X pay raise vs their last US job and yet they were miserable. And I've also known some others who have moved abroad virtually penniless and have been as happy as the proverbial clam. It's a very individual thing.

[VictoriaF]

That's a hard nut to crack. When I was working as an expat in Asia for a large American company I also knew some fellow expats who were miserable. For some it would be a true "hardship" assignment, for others a coveted opportunity. The trick is to figure out which group you're going to be in should you move abroad. The only way that you'll definitively find out which group that you're in is to just do it, but one red flag would be if your primary incentive is money. I've known Americans abroad whose expat packages were yielding them effectively a 2X pay raise vs their last US job and yet they were miserable. And I've also known some others who have moved abroad virtually penniless and have been as happy as the proverbial clam. It's a very individual thing.

I consider a possibility of living abroad an insurance from losing my U.S. health insurance, which is highly unlikely barring genuine Black Swans. I may also decide to live abroad for non-financial reasons.

While my circumstances and proclivities are not typical, I am always curious what works and does not work for others in hope that I may miraculously benefit from someone else's experience.

Thank you for your insights,

Victoria

[reggiesimpson]

Start testing the waters by vacationing in those places that interest you. Asia is the cheapest. "Bungraham" Hospital in Thailand is a U.S. accredited hospital and is not only excellent but very reasonable also. Good luck.

[sharke]

I have no financial advice to offer. However, one of the most notable aspects of a multi-year professional stint in a european country years ago was how miserable several Americans I worked with were. They had sought out the job, had far more personal support (families in comfortable circumstances, I was alone living in someone's converted basement), and bitched and moaned about cultural and societal differences the entire time. I think the first question to ask is "will I be happy living in country x long-term". If the answer is not an unqualified yes backed up by evidence, don't bother with the other questions. Financial issues can always be sorted out if the motivation is enough. I realize you've stated other motives, but have specifically named health care costs. I suggest you consider whether you're overreacting to current events.

Thanks gd, those are wise words of caution. In my case, I have some experience with cutting ties via moving cross country in the US, and I rather enjoyed the change. I also have also travelled to SE Asia, including muti-week stints in Thailand staying with local friends.

I recently read "How to Retire Overseas" and found it a decent high level primer but lacking in the detail that I need to create a comprehensive (hypothetical) plan. To your point, I was bemused when the author mentioned she goes out of her way to buy American staple items such as Aunt Jemima syrup while living overseas. To me that misses the point. I have no interest in recreating a typical American lifestyle overseas. My interests are regional travel, learning about other cultures, great food, outdoor recreation opportunities, etc. I do recognize that I'm also interested in some cultural and social opportunities that exist primarily in large western cities. Ideally I would meet those needs as well, perhaps via extended visits back home.

Right now however I'm just at a very preliminary crunching the numbers stage, and trying to pull together info needed for that.

[sharke]

Hi Sharke, you might try the Early Retirement forum: http://www.early-retirement.org/forums/

I have lived in four countries besides the USA since I early retired at age 41. It seems like I ended up spending about the same amount of money everywhere. But I do live a much better lifestyle overseas.
[...]
Some countries don't like you to run a web-based business and others don't care. As for tax strategies, you will owe your taxes on passive income to Uncle Sam. Some countries want you to pay taxes on worldwide income after 5 years of permanent residency although that is difficult to enforce. So far in retirement I only have passive income and so I pay all taxes to Uncle Sam. I pay no state taxes. I have other friends that run a web based business and they use the Foreign Earned Income Exemption to avoid paying federal taxes and they base the business in a low or no tax country. But I don't know any more than that.

Also, once you have accounts abroad totaling $10,000 or more (pretty much necessary for any type of permanent residency) then you are subject to the USA FBAR regime and you better not screw that up or you are in big trouble. I would say most of my peers here are in violation of the FBAR regime just through pure ignorance, they just don't know the rules and they are not trying to avoid taxes. But now they are afraid to declare due to the incredibly high penalties involved.

Hi Kramer, thanks very much for the tips! Your older posts here have been an inspiration to me as I think about my own plan. I will definitely check out the early retirement forum. So I guess there is no single definitive source of information that focuses on the financial logistics including those you mention? Does your chosen lifestyle afford you the time to crank out a quick book?

[sharke]

I'm not sure how much you're prioritizing the "rising cost of health care in the US" but I think that's a bit of a red herring. Yes, medical care is cheaper or even free in some other countries, but if you're thinking in terms of early retirement then most likely you are in an age bracket where privately purchased medical insurance would cost <at most> between $5K and $10K per year for you and your spouse. And that would be a top quality policy with worldwide coverage from a major US insurer. IMHO, if that amount of money is enough to drive you offshore then you probably aren't financially well off enough to be doing an early retirement. Also, once you hit Medicare age your medical costs will go way down from that figure if you remain in the States, but if you live offshore you will not be eligible for Medicare.

Thanks for the perspective Sarah. Perhaps your red herring characterization is correct. It's certainly not my primary reason for considering a move overseas but it's something I want to run the numbers on. My concern is that US health care costs are hard to plan for because they consistently exceed the rate of inflation. If I retire early I won't be eligible for Medicare for a while but I'm also curious if even Medicare would be a better deal than e.g. Bangkok health care.

PS In addition to Thailand I have travelled to Singapore and I liked it very much.

[kramer]

For instance, I really enjoyed living in Colombia but I could not stay there full-time due to visa issues as I have no pension yet.

Hi Kramer,

Does this mean that someone with a U.S.-based pension can stay in Colombia for extended periods of time or even indefinitely? Is there a low limit on the pension amount?

Yes, you can get a pensionado visa based on a government or pension income. I can't remember the details, but you may have had to "re-prove" the pension amount yearly for awhile until you were accepted for permanent residence. In Thailand, for instance, you have to re-prove the details each year for your retirement visa. The American embassy (or consulate) provides letters certifying a pension. In fact, the American embassy had a specific policy of not verifying the details, and would write whatever you asked, as of a few years ago.

Some countries are modernizing their laws -- for instance, Mexico just instituted new rules that allow you to apply for permanent residency if you have a net worth of $120,000 or more, and you don't have to move the money to Mexico.

How does one demonstrate having sufficient assets? Is it necessary to show, for example, the entire Vanguard statement, which may include far more than what's necessary to satisfy the residency requirements?

Thanks,

Victoria

I think this used be quite informal (printouts). But I am assuming it is possible that the new rules might be more formalized and require appostilasation (spelling?) of all documents, which is typical in the Latin American world. That means you need to go through a formal process within your state (can be done by mail). If I recall, it was something like get the document notarized. Then you go to another government office to certify that that was a real notary and you get a document showing that. Then you go to another government office to certify that everything you have done is certified and they stamp it as appostiled, or something like that . . . I once did this for my college degrees and transcripts when I was thinking of teaching English in Colombia.

Yes, I think you would pretty much have to choose a brokerage account with at least the stated amount of assets, and those assets might be much more than the minimum requirement.

[kramer]

Hi Sharke, you might try the Early Retirement forum: http://www.early-retirement.org/forums/

I have lived in four countries besides the USA since I early retired at age 41. It seems like I ended up spending about the same amount of money everywhere. But I do live a much better lifestyle overseas.
[...]
Some countries don't like you to run a web-based business and others don't care. As for tax strategies, you will owe your taxes on passive income to Uncle Sam. Some countries want you to pay taxes on worldwide income after 5 years of permanent residency although that is difficult to enforce. So far in retirement I only have passive income and so I pay all taxes to Uncle Sam. I pay no state taxes. I have other friends that run a web based business and they use the Foreign Earned Income Exemption to avoid paying federal taxes and they base the business in a low or no tax country. But I don't know any more than that.

Also, once you have accounts abroad totaling $10,000 or more (pretty much necessary for any type of permanent residency) then you are subject to the USA FBAR regime and you better not screw that up or you are in big trouble. I would say most of my peers here are in violation of the FBAR regime just through pure ignorance, they just don't know the rules and they are not trying to avoid taxes. But now they are afraid to declare due to the incredibly high penalties involved.

Hi Kramer, thanks very much for the tips! Your older posts here have been an inspiration to me as I think about my own plan. I will definitely check out the early retirement forum. So I guess there is no single definitive source of information that focuses on the financial logistics including those you mention? Does your chosen lifestyle afford you the time to crank out a quick book?

Thanks, Sharke. I really didn't research running a business overseas and how it would be taxed because this is never a problem I had. Another source for early retirement info is http://retireearlylifestyle.com run by Billy and Akaisha Kaderli. I have met up with them in both Mexico and Thailand and they are genuine people living this lifestyle although I don't think that web site covers tax aspects.

On the FBAR regime stuff, according to what I understand, it is not that complicated. The key is to be aware of it and to understand how to electronically file. You must make separate declarations to two government agencies, one at tax time and FBAR at their due date. This must be done annually. Do not mess that up or your early retirement could be in jeopardy. I have not moved any significant assets overseas up to this point, so have never run into this problem. But I will need to do it at some point to acquire a visa.

[hicabob]

A fellow I know who lives in Mexico much of the year was telling me he's very careful about letting who know how much money he has available .... He loves Mexico but said statistically it is "the kidnap/ransom capital of the world" and that the bank employees are in cahoots with the police who are in cahoots with the kidnappers - best to appear to be a poor man. I don't know how much of that is paranoia vs fact though? It seems to be working since he has not been kidnapped yet!

[Watty]

Over the years I have seen posts about retiring overseas and another issue that has come up is that if you or a spouse dies while overseas that there can be all sorts of inheritance issues that may be determined by that countries laws. This is can apparently especially be a problem with divorces, remarriages, cohabitating, jointly owned real estate, and step kids.

There is also a question if your US wills is valid and where your estate will go through probate and what estate taxes will apply. This is likely not a show stopper but it would be a good thing to have on your list of things to research.

[jidina80]

It would be wrong to base a decision on where to retire primarily on financial criteria. Consider how much of an expat community you need to be happy; this includes access to comfort foods, intellectual stimulation, hobbies, etc. Also consider reliable electricity, a good legal system, crime, internet access, proximity to the U.S. and the rural/urban environment.

A low cost of living is generally found in developing and undeveloped nations, and that's not for everyone. There are several organizations that publish cost of living data for countries (Google 'countries cost of living').

Regarding taxes and starting a business: Most countries' immigration department websites describe their tax and residency requirements for foreigners. A web-based business could easily fly under the radar in most countries if you want.

Plan a visit for at least a couple of weeks to a country before moving there.

I early-retired in Fiji in 2008 and am loving it. I lived here a few years a long time ago, so I mostly knew what it would be like. It's not for everyone, though. As earlier replies mentioned, some people do not adapt well to cultures outside of their own.

[locke1141]

I'm late to the party here, but thought I'd pitch in some on basic expat issues and healthcare. I'm a China expat - 2 years in remote China working and another 3 to go.

You scoff at the Aunt Jemima thing because you haven't done a long stint overseas . You've never been through serious sustained culture shock. Two weeks vacation does not count. Do a year overseas in your prospective location as a trial and see what happens. You're retiring, you have all the time in the world. Maybe do two trials - one in a culture & city not far removed from US standards, and then a second one further removed and less developed. Ease yourself into culture shock. Typically people go through three stages:

- thinking the new culture is wonderful and perfect
- thinking the new culture is awful
- appreciating the good in the new culture, holding onto good aspects of your native culture, and ignoring the bad parts of the new culture

Lots of expats here came over here boasting about how they were going to make all these Chinese friends, become professional badminton players, and go native in general. Most of them now spend their night at our one bar bitching and moaning about China's bad aspects and how hard the language is. All cultures have bad aspects - the Chinese lie and falsify work, drive like crazy, smoke like chimneys and spit everywhere. You have to focus on the good - they are ambitious and can be warm, generous people. I also enjoy the food and the travel opportunities. I don't hang out with the negative expats, they're like a poison, but it's tough to make Chinese friends too with the language and cultural barriers. From the comfort and security of the States, it's easy to underestimate how hard it can be to be a happy stranger in a strange land. Even when you reach equilibrium, sometimes you will want a break from the foreign culture & things like a good pancake breakfast with Aunt Jemima syrup will make you feel loads better.

For healthcare, be careful. Rural China is cheap. You can live in a Chinese style apartment with squat toilet, shop at the local market for meat that sits on the table in the heat for hours, buzz around in the crazy traffic on a scooter, and use Chinese hospitals. It will be cheap, but you've sold your standard of living and health care to get the savings. Chinese hospitals are...not good. It will also require good command of the language. You will pay more to have English spoken by your landlord or your doctor for example, or you will need a translator. You will need to live in the big expensive city if you want to be within reasonable distance of a "good" hospital. and your costs will go up accordingly. The two international accredited hospitals in Shanghai are Parkway Health and United Family. I know that Parkway has a price list on their website you can look at if interested. They aren't any cheaper than the States. I believe seeing the doctor alone is about 150 USD. My understanding is that because expat medical coverage will pay big prices, the expats hospitals charge the big prices. For routine uncomplicated things, Shanghai can handle it. For complex things like surgery, I would go to hospitals in Hong Kong. HK is a very expensive place as I recall. We had an expat injured in a bike crash - he had to be air evac'd to HK for neurological treatment and then repatriated to get ongoing Physical Therapy. Another woman had a broken wrist set wrongly in Shanghai and had to repatriate to get care.

Last notes - looking at healthcare in isolation as a money saving measure may cost you. Lots of talk about Singapore in this thread. Singapore COL is one of the highest in the world. Maybe you can save on healthcare, but it looks like rent is insane & may negate savings. Shanghai is also considered expensive overall. Use Google for "highest cost of living cities" and check out some of the lists. If you're returning to the States once or twice a year for visits, that's several thousand dollars in additional airfare right there. Going overseas isn't a slam dunk, even in Asia. I do believe Thailand is still a good value, but do your homework carefully and look at the big picture.

Overall I'm very happy overseas. It's a tough but rewarding experience. I don't miss anything about the States - not food, not my washer/dryer, not my car, not football or reality TV- and I'd just as soon not go back. There's too much else to see and do. I do get irritated with the lower standard of ethics and morals here in Asia and their attitude toward women. But, the more developed the country and location you choose, the less cultural gap there will be - modern cities seem by and large identical to me at this point. I would have a much easier time of things in Shanghai than I do here in the sticks.

[FireProof]

I'm retired at 25 and wrote a (pseudonymous) article that partially discusses my thinking: http://voices.yahoo.com/why-retire-lima ... 18472.html

You can tell the article is for a 25-year old's concerns because it doesn't even mention heath care

You can definitely hugely reduce costs - you just can't live like a gringo who's trying to transplant America. I guess I have a Bay Area perspective though. You can also reduce non-healthcare costs by moving to the Rust Belt, but that seemed less appealing.

Personally I wouldn't recommend moving to Asian countries (unless you have that ancestry), because the languages are so hard, and you're so different that it will be hard to ever really assimilate. But then again, some want to retire to live as expats, rather than to really integrate with the local culture.

My girlfriend is not yet retired (and she's already 26!) and is working over the internet earning a salary in dollars from the US company where she already worked, which obviously goes a long way in a 3rd world country.

[ladders11]

You can definitely hugely reduce costs - you just can't live like a gringo who's trying to transplant America.

I agree. Basic TINSTAAFL. If you want to speak English and live American, there can't be so much savings as to cover the extra airfare, general risks, and quality issues.

If you want to move certain places and live like a local, then you can reduce your expenses. But some extra skills, dexterity, and general labor would be required. For example, locals may eat cheaply, but only because they de-feather their own chickens. And less wealthy countries are probably more likely to have non-television, non-consumer recreation - here we all go home and watch expensive tv at the end of the day, but if we couldn't afford tv we'd spend our time with extended family and friends. This sort of social life may or may not be possible for a gringo.

[VictoriaF]

I'm late to the party here, but thought I'd pitch in some on basic expat issues and healthcare. I'm a China expat - 2 years in remote China working and another 3 to go.

Thank you, it is very interesting. You are an expatriate, and you describe attitudes and habits of some other expats. I am curious if you have encountered retirees in rural China. I think many retirees prefer Thailand to China, because they can speak English in the former, not just because it is more cost effective.

Victoria

[locke1141]

Victoria F

I have not encountered non-Chinese retirees in rural China yet. I think to do that or be willing to do that, the retiree would have to be married to a Chinese local from that community honestly. There are additional language & social problems in small towns here because the people have their own dialect, may not speak Mandarin and aren't used to foreigners. Of the 3-4 expats here with local Chinese wives, all of them would live in a larger city and visit the countryside if they were here on a voluntary long term basis. Personally, they all look like they might be at risk for a major medical event before too long, so this may be a limiting factor.

I do know of 3 people here that have or are going to retire to Thailand. Two are married to Thai ladies. They seem very happy - happy wife happy life?

[sharke]

I'm late to the party here, but thought I'd pitch in some on basic expat issues and healthcare. I'm a China expat - 2 years in remote China working and another 3 to go.

You scoff at the Aunt Jemima thing because you haven't done a long stint overseas . You've never been through serious sustained culture shock. Two weeks vacation does not count. Do a year overseas in your prospective location as a trial and see what happens. You're retiring, you have all the time in the world. Maybe do two trials - one in a culture & city not far removed from US standards, and then a second one further removed and less developed. Ease yourself into culture shock. Typically people go through three stages:

- thinking the new culture is wonderful and perfect
- thinking the new culture is awful
- appreciating the good in the new culture, holding onto good aspects of your native culture, and ignoring the bad parts of the new culture

Great input, thanks locke. I guess these discussions invariably tilt towards "are you sure you really want to be an expat?", and that is certainly an important consideration.

It's also a good point that working overseas is different from choosing to retire overseas. If a retiree doesn't like the new culture after 6 months or a year, he or she can simply move somewhere else (as long as funds allow for it). What the cautionary tales here do underscore to me is that if retirement planning is about managing risks, one risk that should be managed if you plan to retire overseas is to budget for the case where you subsequently want to move somewhere else, perhaps back to the US.

Recognizing that it's not wise to retire overseas for purely financial reasons, I'm still very interested in understanding the financial issues well enough to form a comprehensive methodology for evaluating the cost of living, tax issues, currency risk strategies, and any other financial concerns for living in a given country outside of the United States, from a retire perspective.

If I have such a methodology, it should give me more options for retirement planning, whether my ultimate plan ends up being moving to a specific country, traveling from place to place, or splitting time between overseas and the US.

To that last point - does anyone here who's retired split time each year between the US and overseas?

[dandan14]

I'm retired at 25 and wrote a (pseudonymous) article that partially discusses my thinking: http://voices.yahoo.com/why-retire-lima ... 18472.html

You can tell the article is for a 25-year old's concerns because it doesn't even mention heath care

You can definitely hugely reduce costs - you just can't live like a gringo who's trying to transplant America. I guess I have a Bay Area perspective though. You can also reduce non-healthcare costs by moving to the Rust Belt, but that seemed less appealing.

Personally I wouldn't recommend moving to Asian countries (unless you have that ancestry), because the languages are so hard, and you're so different that it will be hard to ever really assimilate. But then again, some want to retire to live as expats, rather than to really integrate with the local culture.

My girlfriend is not yet retired (and she's already 26!) and is working over the internet earning a salary in dollars from the US company where she already worked, which obviously goes a long way in a 3rd world country.

Very interesting article over on yahoo. My wife has lived in spanish speaking countries for 3 years total, but the longest I've stayed is a month. Our hope is to give our kids an international living experience at some point in their childhood. Peru may be a good choice. (We've also talked about Ecuador, Panama, DR, and Costa Rica).

[sharke]

I'm retired at 25 and wrote a (pseudonymous) article that partially discusses my thinking: http://voices.yahoo.com/why-retire-lima ... 18472.html

You can tell the article is for a 25-year old's concerns because it doesn't even mention heath care

You can definitely hugely reduce costs - you just can't live like a gringo who's trying to transplant America. I guess I have a Bay Area perspective though. You can also reduce non-healthcare costs by moving to the Rust Belt, but that seemed less appealing.

Personally I wouldn't recommend moving to Asian countries (unless you have that ancestry), because the languages are so hard, and you're so different that it will be hard to ever really assimilate. But then again, some want to retire to live as expats, rather than to really integrate with the local culture.

My girlfriend is not yet retired (and she's already 26!) and is working over the internet earning a salary in dollars from the US company where she already worked, which obviously goes a long way in a 3rd world country.

Very interesting article over on yahoo. My wife has lived in spanish speaking countries for 3 years total, but the longest I've stayed is a month. Our hope is to give our kids an international living experience at some point in their childhood. Peru may be a good choice. (We've also talked about Ecuador, Panama, DR, and Costa Rica).

Indeed, thanks for the link, FireProof! I currently live in the Bay Area as well and living next to the water certainly ranks high on my list of amenities. I'm also interested in the potential to work overseas, though to consider myself retired I think I'd want to work for myself, e.g. writing and selling my own software in my spare time, at my own pace.

[globalexpat]

I've lived extensively abroad over the past 10 years, and locke1141 sums it up very nicely. Ignore the advice of people who talk in terms of their experience overseas in weeks or months. You can't truly appreciate the challenges and rewards from living overseas without going through the various cycles of culture shock. IMHO, one needs at least a year to fully appreciate the "total package" of living abroad.

Good luck!

[cbeck]

Sharke,

I retired to Thailand about 18 months ago and am enjoying life here. Lower cost of health care was not a motivating factor, but, now that I am here, access to low-cost, high-quality healthcare is a big plus. In the US even after you hit 65 and gain access to Medicare your lifelong out-of-pocket medical costs are still estimated to be $250k per couple. So, not having to worry about the cost of healthcare here is a very big relief. I would be very reluctant to fall back into the clutches of the US healthcare system.

Retiring abroad complicates retirement finances substantially. In addition to all the other investment risks, you now face currency risk, unless you transfer your assets to your host country. I would never consider moving my assets into the Thai baht, for many reasons. That means that if the US dollar declines in value in the coming years, as many economists envision, my cost of living will rise. There are few books and few investment products targeted to those of us in this situation. The dollar question is more important that taxes or inflation.

Resources I used in my planning: esplanner financial planning software, books by economist Barry Eichengreen on the dollar, as well as retirement books like James Otar's.

My cost of living here currently is much lower than in the US, but I am comparing Manhattan with Bangkok. Missouri would certainly have been cheaper than that. But less interesting.

[Pacific]

I don't have any actual figures, but I have noticed over the last 25 years that the US$ seems to have lost much of its value in asia -- specifically, in Australia, New Zealand, Indonesia, Malaysia, and the Philippines. I just know that my money went a long way in the past, and not so long at present. Maybe somebody can disprove this. It is very disappointing, but I guess the great deals had to end at some point.

[sharke]

Retiring abroad complicates retirement finances substantially. In addition to all the other investment risks, you now face currency risk, unless you transfer your assets to your host country. I would never consider moving my assets into the Thai baht, for many reasons. That means that if the US dollar declines in value in the coming years, as many economists envision, my cost of living will rise. There are few books and few investment products targeted to those of us in this situation. The dollar question is more important that taxes or inflation.

Resources I used in my planning: esplanner financial planning software, books by economist Barry Eichengreen on the dollar, as well as retirement books like James Otar's

This is very helpful cbeck, and I will check out those resources, thanks!

So, looking at retiring overseas from a planning perspective: on the risk side, in addition to risk of simply not liking a new overseas home for cultural reasons, there is currency risk to be accounted for. On the reward side, if the lifestyle suits you, there are some places where the quality of life is good and cost of living (including health care) is significantly lower that in the US.

Based on this, I've come to the conclusion that a prudent approach for someone considering early retirement overseas is to plan so as to have enough assets to support an acceptable lifestyle in his or her home country. Then, once retired, experiment with living overseas in a place with a lower cost of living for extended periods of time.

If a chosen country proves suitable, that opens up the possibility of spending the difference between the two costs of livings on additional travel or other lifestyle enhancements, and perhaps some hedges against currency risk. If the country is not suitable, either try another country or move back home . It sounds simple, but it was not obvious to me before I posted here. Thanks for your input everyone!

[mike143]

I'm retired at 25 and wrote a (pseudonymous) article that partially discusses my thinking: http://voices.yahoo.com/why-retire-lima ... 18472.html

I was giving my wife a synopsis of your article and she said afterward, when are we leaving. Currently in Central Florida, me 30, she 35. What are the limitations of earning an income there? I guess its ideal to already be retired or running a US based Internet business.

and perhaps some hedges against currency risk.

I think this is where investments in physical precious metals comes into play.

[hicabob]

I don't have any actual figures, but I have noticed over the last 25 years that the US$ seems to have lost much of its value in asia -- specifically, in Australia, New Zealand, Indonesia, Malaysia, and the Philippines. I just know that my money went a long way in the past, and not so long at present. Maybe somebody can disprove this. It is very disappointing, but I guess the great deals had to end at some point.

Australia is certainly not a cheap destination anymore - with the US dollar deflating so much and their currency doing so well it makes an American feel like the poor cousin compared to 14 years ago when I started doing a little work there. My Ozzie friends are all very happy with the performance of their super-annuities(forced retirement savings that is) and real-estate though!

[mike143]

I wonder how many people are having this discussion of retiring to the United States.

[paulsiu]

Before you retire overseas, do you have children? Do you want them to visit you? Flights to most oversea places then to be expensive. My friend is unable to make a family trip to see her parents because it would cost too much to fly out the family of 6. You can also visit them, but this may not be possible in your later years.

Paul

[kramer]

Before you retire overseas, do you have children? Do you want them to visit you? Flights to most oversea places then to be expensive. My friend is unable to make a family trip to see her parents because it would cost too much to fly out the family of 6. You can also visit them, but this may not be possible in your later years.

Paul

This is certainly one reason why a closer location is advantageous (for reasons of time, money, and wear and tear on the body for long trips). For instance, where I was living in Mexico before was closer to my US relatives in California than half the possible US destinations. It was not expensive to fly, either. If your family is on the East Coast, then Colombia is just as close as California.

Also, if you live somewhere exotic and tourist-friendly, your relatives may visit more often. I was so surprised at just how much my mom loved Thailand when she visited me there. She briefly considered moving there part-time herself. She got back from a Europe trip his summer and told me that she never wants to go back there and instead wants to travel more in Asia. On the other hand, she was just too scared to visit me in Colombia and the language barrier is high there so she could not be as independent.

[Valuethinker]

A fellow I know who lives in Mexico much of the year was telling me he's very careful about letting who know how much money he has available .... He loves Mexico but said statistically it is "the kidnap/ransom capital of the world" and that the bank employees are in cahoots with the police who are in cahoots with the kidnappers - best to appear to be a poor man. I don't know how much of that is paranoia vs fact though? It seems to be working since he has not been kidnapped yet!

Alas I suspect in Mexico it is not paranoia. I don't know statistically what the risks are, but at least by reputation it is a fearsomely corrupt place.

I think one basically does not want to live in the northern states? Where even the locals are afraid to go out at night. Where the narcos and the government are having a multi-way war (and its often unclear whether the police are in fact simply working for another gang).

But Mexico City did have a rep for kidnapping-- in that I went to school with Mexican kids whose parents sent them to sunny and warm Canada to study because of fear of it. I don't know if that is still the case.

The insinuation that police-bank employees-criminals are all in bed together is, I fear, entirely true of modern Mexico.

It's not a place where you want to flash your wealth. Even to having a lot of money in the bank account.

[Valuethinker]

I wonder how many people are having this discussion of retiring to the United States.

Because of the health care and other issues, I believe it is almost impossible. You have to have worked there for some years before retirement. Also I think the visa situation is difficult/ impossible now?

The vast majority of Canadians who 'retire' to Florida or Arizona do it for 6 months a year less 1 day. Because at 6 months + 1 day they still qualify for Canadian provincial healthcare. Condo in Toronto, place in Florida. Spend the winters down there, and the summers back home (where in any case those places are really too hot for a lot of Canadians).

[Valuethinker]

I don't have any actual figures, but I have noticed over the last 25 years that the US$ seems to have lost much of its value in asia -- specifically, in Australia, New Zealand, Indonesia, Malaysia, and the Philippines. I just know that my money went a long way in the past, and not so long at present. Maybe somebody can disprove this. It is very disappointing, but I guess the great deals had to end at some point.

It's absolutely real.

Consider the Yen was over 200 to the dollar 25 years ago? (maybe 30). And now below 100? (without checking).

AUD was like $2.50 to the USD at one point, and now trading more or less at par? NZD something similar.

The same thing happened in Europe the years before, 3 decades after WW2. It was 4 DMs to the dollar in the 1960s and now EUR and USD are pretty close to parity (+/- 20%). Americans who used to travel regularly to Western Europe in 50s and 60s now tell me it's too expensive (actually most of them that I knew have died, but they were travelling in the 90s and found it much more prohibitive).

What you are seeing is a long term convergence in living standards, and as Singapore now has (?) GDP per capita above USA, and places like Malaysia and Taiwan become developed (GDP at least 50% of US per capita) they get more expensive. HK must be one of the most expensive places in the world to live now-- I would compare NYC *favourably* to it on cost of living (gulp) although taxes higher in NYC.

Even Indonesia is in so much better shape than it was say in 1998 during the Asia Crash. Still an underdeveloped country with extremes of wealth and poverty, but nowhere near as destitute.

[Valuethinker]

I don't have any actual figures, but I have noticed over the last 25 years that the US$ seems to have lost much of its value in asia -- specifically, in Australia, New Zealand, Indonesia, Malaysia, and the Philippines. I just know that my money went a long way in the past, and not so long at present. Maybe somebody can disprove this. It is very disappointing, but I guess the great deals had to end at some point.

Australia is certainly not a cheap destination anymore - with the US dollar deflating so much and their currency doing so well it makes an American feel like the poor cousin compared to 14 years ago when I started doing a little work there. My Ozzie friends are all very happy with the performance of their super-annuities(forced retirement savings that is) and real-estate though!

I think OZ is in a terrible bubble (worse than Canada) and it will deflate, and it will hurt hard. At least twice before in Australian history they've had a real estate and resources boom, and it's always ended quite unhappily.

If you look at the Australian resources boom it's done 'the Dutch Curse' ie it has driven out a lot of other successful exporting or import replacing industries by pushing the currency and the cost of living up, and pushing wages up. Australia's prosperity is highly dependent on a few key natural resources: gas, iron ore, coal etc. It is in fact probably worse than Canada in that respect.

Whether we get back to AUD $2.50 to the USD (ie around $0.40) I don't know though. Like CAD worth $0.60 USD, it may not happen again.

[Valuethinker]

Sharke,

Resources I used in my planning: esplanner financial planning software, books by economist Barry Eichengreen on the dollar, as well as retirement books like James Otar's.

My cost of living here currently is much lower than in the US, but I am comparing Manhattan with Bangkok. Missouri would certainly have been cheaper than that. But less interesting.

I echo the point on Eichengreen-- th e best writer on the subject.

Your only real option is to globally diversify your portfolio. Then whichever currency bloc does well, you have some investments in that currency.

That still will not hedge your SS income, so, arguably, you should invest *only* in non USD assets, but I think that is too extreme a position (the 50% of equities that are the USA in global indices seems enough).

[Valuethinker]

Very interesting article over on yahoo. My wife has lived in spanish speaking countries for 3 years total, but the longest I've stayed is a month. Our hope is to give our kids an international living experience at some point in their childhood. Peru may be a good choice. (We've also talked about Ecuador, Panama, DR, and Costa Rica).

Quito I noticed a *lot* of guns. I think this is quite a dangerous place. I had heard similar things about Lima?

Costa Rica sounds nice although I think the main city has quite a gang violence problem?

Panama I cannot speak to but I always had a morbid fear of the 'expat' lifestyle where you hang around and get drunk with other people from 'home'. That's why I never wanted to live in Hong Kong (where the Brits tend to do that).

[Valuethinker]

I'm late to the party here, but thought I'd pitch in some on basic expat issues and healthcare. I'm a China expat - 2 years in remote China working and another 3 to go.

Thank you, it is very interesting. You are an expatriate, and you describe attitudes and habits of some other expats. I am curious if you have encountered retirees in rural China. I think many retirees prefer Thailand to China, because they can speak English in the former, not just because it is more cost effective.

Victoria

China is also a highly polluted and quite basic country, and you really do have no civil rights. The cities are phenomonally dirty-- this really is like London in the Industrial Revolution (albeit with cars and electronics).

I can't imagine too many people retiring to China (although Taiwan sounds nice) unless they have language/ family roots there.

[Valuethinker]

Over the years I have seen posts about retiring overseas and another issue that has come up is that if you or a spouse dies while overseas that there can be all sorts of inheritance issues that may be determined by that countries laws. This is can apparently especially be a problem with divorces, remarriages, cohabitating, jointly owned real estate, and step kids.

There is also a question if your US wills is valid and where your estate will go through probate and what estate taxes will apply. This is likely not a show stopper but it would be a good thing to have on your list of things to research.

to be exact, in Europe, in Civil Law countries like France, your will is negated-- it's what the law says, NOT what your will says.

Seems odd to those of us from Common Law countries, but they do inheritance strictly by (their) book.

[Valuethinker]

Some countries don't like you to run a web-based business and others don't care. .

An important point.

Many (most?) countries have restricted internets. A colleague of mine in the Gulf States (not Saudi, which is so repressive and boring that unless you are an Arab speaking muslim, you will hate it-- on second thought, I know Arabs who hate it, even Jeddah) uses a VPN to pretend to be from a British site, otherwise no tv downloads, no political or press websites, all sorts of things like that. Even that is pretty dodgy.

Singapore will, no doubt, being Singapore, track everything you do and have interesting restrictions. Ditto HK.

Don't assume this simply applies to 'Tianaman Square' queries etc. The definition of 'politics' and 'pornography' can include basically anything they don't want you to do.

So don't count on the sort of internet reliability, access and functionality we take for granted in a western country.

[VictoriaF]

Quito I noticed a *lot* of guns. I think this is quite a dangerous place. I had heard similar things about Lima?

I was in Ecuador in 1998, and it seemed safe enough. I went wherever I wanted, and nothing has happened to me. I understand risks, probabilities and luck; my point is that I did not feel threatened.

In 1999 I went to Peru for several weeks and met people who came there from Ecuador. They were telling me about daylight robberies in "safe" areas of Quito.

In Peru I've also met some people who traveled to Ayacucho. Ayacucho still had a dangerous reputation as the base of Sendero Luminoso (the Shining Path), and because of that their travel experience was fantastic. With Sendero Luminoso mostly extinguished, Ayacucho has become reasonably safe, and rare travelers were revered. (I was planning to go to Ayacucho in 2000, but I had to change my travel plans.)

My limited exposure to South American countries and talking to people make me think that generalizations can be deceiving, and that even a safe/unsafe situation can quickly change to its opposite.

Victoria

[jridger2011]

I am not sure about European countries but I would not be keen on retiring to Asian countries since the desirable areas to live are very expensive. I cannot imagine living in rural China and the isolation outside of whom you will be retiring with. The people are very different from most Americans in the way they think and how they approach life, and the language is difficult to learn once you get to the rural areas where dialects are not documented. That doesn't sound like a great way to save money at all unless you have roots there and could find yourself reconnecting with extended family. I can't imagine the ongoing costs of travel between Asia and the United States to visit people and attend their important life events.

[reggiesimpson]

Take a look at India. The English influence is still predominant in their culture especially the English language.