The Retirement Adventure

For a growing number of Americans, the question isn't exactly when they can afford to retire, but where. So, it makes sense that I've been getting questions lately about how to retire abroad. As people look ahead it can be daunting to consider rising costs like food, energy, housing, property taxes, and, oh yes, healthcare. All of this and more leads many to look beyond our shores as they consider how, and where, to spend their time in retirement.

According to the Social Security Administration, around 400,000 American retirees are living abroad. This number is expected to grow as more baby boomers try to retire, or even just age gracefully, within their relatively modest means. And with healthcare costs for a couple estimated at $260,000 (as per a Fidelity study updated in 2016) and long term care adding perhaps another $130,000, the prospect of greatly reducing these costs in a foreign country while leading a more fulfilling lifestyle, is attractive.

Obviously, deciding to "offshore" yourself in retirement is a huge decision that has a wide variety of variables. Although many have opted for "developed" countries like Canada, Japan, and Germany, more Americans are looking to the developing world for a slower pace of life, high quality yet affordable healthcare, and cheap rents. But since the big questions for most people pertain to location and cost, let's look at a list of the top ten destinations that tries to balance lower costs with a higher standard of living.

The following list is compiled and updated annually by International Living, a magazine covering a variety of topics associated with living abroad. What follows are their top ten destinations for 2017. While not all are in the developing world, that's the trend.

For each destination, I've posted the potential basic monthly cost of living for a retired couple, assuming they rent their abode, using data from another provider, www.liveandinvestoverseas.com. If any of the destinations interest you, take some time and peruse the details available on this, and other websites, before buying your plane tickets.

1. Mexico - $1,467 in Puerto Vallarta; it's about $1,200 in San Miguel De Allende
2. Panama - $2,440 by the Panama City beaches, a popular destination for expatriates
3. Ecuador - $1,230 in Cuenca
4. Costa Rica - about $2,000; lower in San Jose and a bit higher around Lake Arenal
5. Columbia - $2,102 in Medellin
6. Malaysia - $875 in George Town, another popular expatriate spot
7. Spain - $2,124 in Barcelona
8. Nicaragua - $1,499 in Granada
9. Portugal - $1,385 (among the lowest in Western Europe)
10. Malta - About $2,000

Sounds pretty good, right? When you could live in Languedoc, France, on a monthly a budget starting at $1,735, maybe it's worth a shot. Of course, you would want to learn French, find someone to rent your house to, decide what to do with your cat (maybe you bring your cat), and the list goes on and on. As you can imagine, there are many considerations when thinking about moving overseas. Here are some of them:

Have you travelled to the destination repeatedly and know something of the language, seasons, and culture?

Does the cost of living you're aiming at get you the lifestyle you're looking for (beachfront dreams on a mountain village budget)? How will you access your money?

If you plan to travel back to the U.S. (or other destinations) frequently, how easy will it be? Will you be close to an airport? How good is the local infrastructure?

How important is economic/political/governmental stability to you, as several of the countries listed above are relatively poor and lack the stability you're used to?

Think about natural disasters. Is the coastal or island destination you've found in the middle of hurricane alley? Is that mountain in the distance an active volcano?

A big question for most people revolves around healthcare. While your Social Security benefit travels with you, most Medicare components would cease unless you continue paying premiums while you are away. This means you'd be paying two healthcare premiums, one in the U.S. and one in the new country. Fortunately and ironically, the countries listed above have good healthcare systems that cost a fraction of what ours does. As a matter of fact, Ecuador, Mexico, Portugal, Malta, and Spain each score higher than the U.S. in overall quality of care and cost metrics.

Another set of questions has to do with who will handle your affairs while you're enjoying the good life. You might engage a property manager to rent your house and, of course, you can retain the relationship with your humble financial planner. And unless you renounce your citizenship, you'll still need to file and pay U.S. taxes. While most or all of this could be done via a good Internet connection, you won't be able to cut the cord completely.

It's also a great idea to get firsthand knowledge about the country from other expatriates. Along these lines, websites and chatrooms are great resources for more information and personal experiences of those who have blazed your potential trail. Here are two (more are available via a Google search):

www.expatforum.com

www.expatexchange.com

Here are the two websites I referenced for the country list and budget data, plus a link to the Fidelity study:

http://www1.internationalliving.com/sem/retirement/retirement-index/report/ppc.html

http://www.liveandinvestoverseas.com/

https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-in-retirement-rise

Have questions? Ask me. I can help.

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