Your Retire Overseas Budget Fully Loaded
How Much Does It Cost To Retire Overseas?
Oct. 1, 2009
Panama City, Panama
PLUS:
- Cash On The Run--Crossing An International Border With More Than US$10,000 In Your Pocket...
- Help For Expats In Lyon, France...
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Dear Live and Invest Overseas Reader,
"I liked your recent budget example, showing that you could live on US$1,233 per month in Cuenca, Ecuador. But what about expenses you left out? Pharmacy items, cosmetics, clothes, wine, medicine, hardware store purchases, travel outside Cuenca, birthday gifts, Christmas gifts, etc.? I don't think the US$1,233 figure is realistic. I'd like to see a fully loaded monthly budget. I'm thinking this might be more like US$2,000 to US$2,500?"
Ah, this tricky cost-of-living question. How much does it cost to live as a foreign retiree in Cuenca, Ecuador (or Country X)?
Correspondent Christian MacDonald, who lived in Cuenca with his wife for two years, prepared our Ecuador budget. Christian's pencil is sharp, and he reports that a retired couple could live comfortably in Cuenca on US$1,233 per month, including the cost of renting a house, or on as little as US$654 a month if you own your own home.
Christian's Ecuador budget, like all budgets we share with you in these dispatches and in the Country Budgets section of our website, itemizes all recurring expenses associated with living in each place. Our budgets are real and, in fact, realistic. However, as the reader I reference above suggests, they are not the full story, and they do not, I promise, represent your cost of living.
First, our budgets reflect basic living costs for a retired couple. If you're planning to make a move on your own, your costs should be a bit less.
Second, and more to the point, ours are starter budgets. They include costs for housing, utilities, food, entertainment, basic transportation, household help, property taxes, and HOA fees. That is, all necessities of life. You and your significant other could live comfortably on the amounts we quote in each case, and, in every case, I know couples living on these budget amounts we represent, even less.
However, you must assume that your cost of living, wherever you decide to settle, will be something else, because so many costs are variable, sometimes dramatically so.
What standard of living are you willing to pay for and will your budget support? What medical concerns do you have? How often do you like to go out to dinner? Do you make regular charitable contributions? Shop weekly for new clothes? Will you be bringing an exotic pet with you that will require special food? How much do you spend each month on wine? On having your nails done? On theater tickets? We can't help you budget for these things.
For every country we consider, we prepare at least two budgets--one including rent and one showing your cost of living in that place as a homeowner. For the renter budgets, we use an average rental amount. Your rent, of course, could be more or less. We include an amount for Home Owner's Association fees where appropriate (in some places, the home owner pays the HOA fee; other places the expense is passed along to the tenant), again an average amount. You could pay more in a brand-new building with extraordinary amenities or less in an older, more "local" building with no doorman or underground parking.
The transportation expense we include in each budget does not include the cost of owning a vehicle. I recommend that you avoid keeping a car of your own if you can. It's an expense and a hassle in most cases. In places where you really can't get away without owning one (living in the interior of Panama, for example, or Argentina), you'll want to figure a separate vehicle budget (including insurance, fuel, annual registration, maintenance, repairs, parking, speeding tickets, and maybe the cost of bribes to the local police to avoid speeding tickets).
Utilities costs I detail should be in line with what you'll incur. You could, though, of course, spend much more on your telephone bill if you want to stay in touch with friends and family back home and don't the time, for example, to invest in setting yourself (and them) up with some kind of VOIP service (I recommend Skype, www.skype.com).
Our budgets include the cost of regular household help. In countries where full-time maids are the norm (in Latin America, for example), we typically build in the cost for one. Otherwise, we include the cost of someone to come to your home once a week for a few hours of cleaning each visit. For most people, this is sufficient. If you would like more regular household help in, say, France or Italy, you'll have to expand your budget accordingly.
Our food/household expense includes not only groceries, but also things like cleaning supplies and basic toiletries. However, it doesn't include Clinique night cream or Polo cologne.
Entertainment is the biggest wild card. Our budgets allow for dining out at reasonably priced (not five-star) restaurants perhaps once a week, going to the movies a couple of times a month (if the place in question boasts movie theaters!), and visiting a museum or taking in a show, again, once or twice a month. In addition, our monthly entertainment expense includes the cost of in-country travel, enough for one or two trips a month (including the cost of renting a car, say, or taking an in-country bus or, sometimes, flight). Does that describe your habits? If not, make adjustments accordingly.
Note that, in some cases, our entertainment expense can be quite low. This can be because, frankly, there's not a whole lot to do in that place that's going to cost money, or it can be because costs for things like dining out or attending a show are plain low.
Here are other things our budgets do not include: laundry service, dry cleaning, haircuts, spa treatments, computer equipment, film, electronic gadgets, DVDs...you get the idea.
They do not include the costs of international travel. If you intend to fly back to the United States regularly to visit the grandkids, you should make a separate budget for this.
Also, these are not capital-expense budgets. If you intend to buy a house when you move overseas, you should create a separate capital-outlay budget (including the down payment; the broker's commission; attorney, or notaire, fees; mortgage expense if you're borrowing to buy; furnishing and decorating costs; and the cost of any improvements you intend to make to get the place the way you want it before you move in).
Similarly, you'll need to consider the capital outlay associated with purchasing or importing a car.
Now, with all that in mind, go here (to the Country Budgets section of our website) to take a close look at what it will cost you to live full-time, with your significant other, in the overseas retirement haven of your dreams. In most cases, you'll find that your regular cost of living overseas could be less, maybe significantly less than it is right now.
Plus, of course, living overseas, you'll have the adventure of your lifetime.
Kathleen Peddicord
P.S. I finished this week the manuscript for the book I'm writing for Penguin (How To Retire Overseas, due in bookstores March 18, 2010, but available pre-order now on Amazon). It features fully detailed budgets for the costs of living in the world's 15 top overseas retirement havens. I'll share previews with you over the coming weeks. Stay tuned.
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"I just read about an expat expo in Lyon, France, Kathleen," writes Correspondent from that country Lucy Culpepper. "Readers already in Europe or thinking of coming this fall might find it worthwhile.
"The International Expat expo will take place Oct. 17. There will be speakers and exhibitors on everything from banking and working in France to insurance, schooling, and cultural adaptation, plus other issues specific to expat life in Lyon.
"Registration is at 10 a.m., and the program will continue until 6 p.m., concluding with a live concert (The Stone Mamas) and cocktails. The cost to attend is 8 euro until Oct. 16; on the day, admission is 10 euro.
"For more information/reservations, go to: www.lyonalacarte.com/indexEng.html."
"I was reading your recent article about Belize, Kathleen, and I have a question about investing. I am not a trader and rarely invest over the counter. However, I am having trouble finding a straight answer to what I think is a simple question: Can a U.S. citizen legally take his/her funds, get on an airplane, fly to some non-U.S. island or possibly, for example, Belize, and invest the funds in Forex trading?"
-- William W., United States
The simple answer is, yes.
However, it's not really that simple. You can take up to US$10,000 with you across an international border without declaring the event to customs. More than US$10,000, and you must indicate the amount of cash you're carrying at the border crossing. If you're an American, this will trigger a memo Currency Transaction Report (CTR) to the U.S. IRS, which likely then will take an active interest in your financial affairs.
Having succeeded in carrying the cash with you across the border, you'll find it difficult anywhere in the world to deposit it into a bank account. Nowadays, any bank anywhere is going to want to know why you're making a deposit with cash (rather than by sending a wire transfer, for example) and where the cash came from in the first place. |
