That day is coming, though, so Lief and I are fitting together the pieces we've accumulated into a more formal Next Stage Plan. This plan has Paris as its hub. That's part of the reason we're in the City of Light this week, to lay more Next Stage groundwork. Specifically, this week, we're registering Jackson for school; he'll begin attending the Lycee International next year (we hope...assuming his interview with the admissions department this week goes well!) and graduate in 2017. Meantime, Jackson being in school in Paris rather than Panama City allows Lief and me to reposition ourselves to where we want to be when Jackson flies the coop. No, we're not decamping from Panama City. That city, where our Live and Invest Overseas headquarters are now firmly established, is part of the long-term plan, too. So is Los Islotes, on Panama's Pacific coast...Medellin, Colombia...Istria, Croatia...Cayo, Belize...and beyond. Paris and Panama City? Medellin, Colombia, and Cayo, Belize? The crashing Pacific coast of Panama's Azuero Peninsula and a medieval mountain village in the heart of Istria, Croatia? As I said, we like contrast. Thanks to our natural affinity for the place and the four years we lived there when the kids were younger, Paris feels like home, and, when we're too feeble to get on another plane, that's where you'll find us. Until that day, we also want to spend time regularly in the other places on our list and maybe in some others, too, that we've yet to identify. When we come and go from these spots, we want to do it as "locals," not tourists, and with a purpose. That's why we've worked hard to build infrastructure in each location that has gotten under our skin and stirred our imaginations. In each of these places, we've made friends and made investments, we've found partners and launched businesses... We've bought apartments, built houses, planted trees, and cultivated gardens. We've become involved in the local communities, contributing, as we can, to help support local schools, for example. When we show up in each location, we want to have something to do with ourselves (in addition to drafting these dispatches). We want company for cocktails and companions for dinner, but we also want to be engaged in activities with an aim. In Cayo, Belize, we're trying to learn a little about farming and self-sufficient living, with the help of friends in that part of the world who qualify as experts at those things. In Istria, we intend to try our hand at viticulture. What we know about wine right now is that we like to drink it. Istria is a great place to grow grapes to make it, so we're counting on friends with experience in the region to show us how. On Panama's Pacific coast, at Los Islotes, we're building an oceanfront community in the Spanish-colonial style. Here we're also investing in a small wood-working operation so we can learn to make doors, windows, and moldings for the houses we'll be building and maybe furniture, too. In Paris this week to enroll Jackson for his final two years of high school, I'm coming face-to-face with the passage of time. The eventual "Next Stage" of life that Lief and I have been piecing together in the background for years is nearly upon us. We'll soon be "Next-Stagers." Yikes. For my 40th birthday (more than a decade ago), Lief took the kids and me to Galway for the weekend. We were living in Waterford at the time. Walking along the seafront in Galway town the eve before the big day, Kaitlin, then 14, looked up at me and asked, "Does it bother you that your life is over?" Before I could respond, she continued... "I mean, you're married. You have two kids. You've been doing the same job forever. Does it bother you to think that all that is already all figured out and over?" A 14-year-old's take on turning 40. Now that milestone is way back in the rear view, as is the big 5-0. Does it bother me? Well, sure. We'd all like to slow things down if we could. On the other hand, nothing's over till it's over. When will that be? Lucky for us, we don't know. So we'll keep pushing ahead and moving around, Next-Stagers with a plan. Kathleen Peddicord
What expenses am I thinking of? Trips back to the United States and U.S. health insurance.
We recently heard from a Seattle couple planning to retire to a tropical climate. They're on a budget and are thinking of Ecuador, which they know to be a good low-cost choice. They're interested in Ecuador rather than one of the tropical countries in Southeast Asia (which could, in fact, be more affordable than Ecuador) because they want to be closer to "home." They plan to make "frequent" trips back to Seattle.
I told them to forget about saving money. If they make frequent trips to Seattle their cost of living, all in, after moving to Ecuador will almost certainly exceed what they spend now.
Let's run some numbers for this couple. A quick check on Expedia shows fares from Guayaquil, Ecuador, to Seattle at about US$1,300, or US2,600 for two. Those are the deep-discount, advance-purchase, come-hell-or-high-water fares, non-refundable, non-changeable. In many cases, the couple will have to pay more.
But airfares are only the beginning. The couple will have to get from their overseas home to Guayaquil, in a bus, car, or taxi, maybe spending a night in a hotel. Once in Seattle they may need a hotel, too, and a rental car. They'll need presents for the grandchildren, and they'll want to have dinners out with family, including a few splurges.
We have to make some guesses, about total trip costs and what the word "frequent" means. For the sake of argument, let's put the trip costs at US$5,000 per and figure on three trips a year. That totals US$15,000, easily more than the couple might spend annually on rent, food and entertainment, or any other cost category living in Ecuador.
The couple faces a second major expense, tooâ€”health insurance back in the United States. Many expats keep their U.S. insurance just in case, especially if they plan to visit the United States from time to time. Let's say U.S. health insurance for a couple in their 50s comes to US$500 each per month, or US$1,000 monthly for the two of them. In addition, they'll have to come up with co-pays, deductibles, and other health-related out-of-pocket costs.
Again, we're making assumptions, but it's easy to imagine this couple's medical costs associated with their time in the United States exceeding US$15,000 a year.
Those medical costs will likely go up under Obamacare. Insurance companies already predict big increases, especially for individuals (as opposed to groups). And Obamacare requires minimum standards of coverage, co-pays, deductibles, and so on, depending on the plan you choose. The low-cost, high-deductible plan that costs only $500 a month might disappear.
Note that we're assuming this couple of retirees is younger than 65. After age 65 most Americans would be covered by Medicare during trips back to the United States. (Medicare doesn't cover medical costs overseas, but I recommend keeping it even if you do retire overseas as a back-up.)
What's the bottom line of all this? Every year our Seattle couple might spend US$15,000 or more on travel to the United States, plus US$15,000 or more on U.S. health insurance (at least until they reach Medicare age). They could easily find that these costs, US$30,000 in total, exceed the cost savings of moving to Ecuador in the first place.
So what to do? Expats and retirees overseas can easily get around these two big costs by skipping those trips back home and by opting for medical care abroad, which can be significantly, dramatically less expensive than coverage in the States.
We know retired expats on strict budgets who do exactly that.
Many of us, though, want the freedom to travel back to the United States to see the grandkids, attend a wedding or two, visit the old neighborhood and friends, whatever. In that case we should be realistic about what we'll spend on travel and, if we're under age 65, on health insurance. Otherwise, travel to the States and health insurance while in the United States could easily be the two biggest costs in an overseas retirement.
This isn't a reason not to retire overseas, of course. It's a reality check to help with your retire overseas budget planning.
Jerry and Helen kept their two cars, one for each of them. They stayed in the same house, with the same mortgage and taxes, utilities and gardening costs. They kept the golf club membership, their pets, and their symphony tickets. Food costs stayed the same. So in retirement's early years Jerry and Helen had pretty much the same expenses as before, plus they figured they'd go out and travel more, go out to eat more, go out with friends more. They would save a bit of money on work clothes. Jerry had more than enough ties, enough dress shoes. But that small savings was more than offset by trips to Europe, cruises, wine tastings, and more time at the golf course.
By contrast, Vicki and I retired in Argentina. We moved out of our luxury apartment to a small, one-bedroom condo in Buenos Aires with minimal maintenance costs. We lived without cars, without pets, without much of anything. We wanted a small apartment to serve only as a base, a place to land now and again between our overseas trips. Often during our sojourn at "home" we house-sat for friends who lived in the suburbs and wanted to spend their summers in Punta del Este. Our living costs in retirement fell to practically nothing, mainly just air travel, local hotels, and food.
Make no mistake: To retire cheap, you need to relocate. We at Live and Invest Overseas recommend that, when you are considering where to retire in the world, you relocate to a new, sexy, exciting place abroad. After all, as long as you're going to relocate you might as well do it in a big way. Relocating in your same neighborhood seems boring, almost depressing. The word downsizing comes to mind. Relocate to Vietnam, on the other hand, and the mind fills with fun and adventure, the new and exotic.
So, again, Jerry and Helen started their retirement spending more. That was 10 years ago. I can report that, today, Jerry and Helen continue to see their spending go up. They recently remodeled their house--a major expense--and bought new cars. They still take short, expensive trips abroad, afraid to leave their house and pets for very long.
Vicki and I, on the other hand, probably have about the same expenses as when we retired in 1984, adjusted for inflation. We've moved in and out of Buenos Aires a number of times since then. In our view, Buenos Aires these days has become too expensive, and too dangerous, a place to live comfortably. But we'll go back. Meanwhile we're spending most of our time in Southeast Asia.
And that's the point: We're used to relocating. When one place becomes unacceptable, we move to another. When one place we enjoy a lot, like Paris, costs big bucks, we balance our budget with stays in Southeast Asia.
Every time we move we get a kick out of it. We have our emotional struggles, to be sure. We have to get rid of stuff, over and over. But we're used to it, and each time the move becomes easier. With e-mail, Facebook, and Skype, we maintain heartfelt friendships and a sense of community with others we've made connections with around the globe.
Paul TerhorstContinue Reading:
"Call me weird, call me unromantic, call me obtuse. But I think having a first grandchild--or any grandchild--would come before a sheep. I also figure that building a house, even if only a rental, and getting a new job, even if in the same field, would come before a sheep. But not Susan. Susan has few priorities. She's at her best when she improvises in the moment. Susan keeps intensely busy. She rarely reflects on where she's going with her life or what's most important to her or even whether she's happy.
"To live a life that goes beyond crisis management and keeping busy, a life that makes us happy, I'd argue we need to know our priorities.
"Someone once said that when a man's knowledge is not in order, the more of it he has the greater his confusion. In talking about retirement, I think we can say that when a man's priorities are not in order, the more likely he'll misspend the golden years.
"If someone offered you a hundred dollars for every number you could name between 1 and 1,000, you'd start with 1, pass to 2, and so on, until you got to 1,000. You'd never think of saying, 'Well, I know 961 is in there. And 154...and 26. And then there's...' No. If you did that, you'd forget some numbers. You'd leave money on the table.
"You'd prefer the alternative--that is, you'd go right through the numbers, following the well-ordering principle you learned in high school.
"Yet we have a tendency to forget the well-ordering principle in our personal lives. If what we want in retirement is life, liberty, and the pursuit of happiness, we ought to think rigorously about how we plan to get those things. We ought to order our priorities and make sure that everything we do, every move we make, and the money we spend, leads us toward what we want out of life.
"For example, if our moods change according to the weather, we need to find a place where the weather brings out our most pleasant moods.
"A recent study published by Businessweek.com anoints Fargo, North Dakota, as the best place to live in the United States.
"I'll tell you up front: They never considered the weather.
"Business Week looked at affordability (house prices) and quality of life (low crime, high education levels, low poverty levels). Fair enough, right? We all like low crime.
"But note what they left out, namely, weather and what to do with yourself once you're set up in Fargo, North Dakota. Fargo's website says 'Fargo-Moorhead is a lively, cultural community that boasts a pleasant variety of things to do and places to see.' There's a celebrity walk of fame, an air museum, historical buildings, an old vaudeville theater, a historical and cultural society, an art museum, a zoo, and children's museum.
"I'm sure Fargo must be a comfortable place--for someone else. Those activities might keep me entertained for a day or two. But I know my priorities. I know that I suffer tremendously in cold weather. And I know that I need out-of-the-ordinary things to do.
"Recent research tends to support the notion that we should do something out of the ordinary to better our lives. Researchers at Science Direct state that, "If money doesn't make you happy, then you probably aren't spending it right." Their recommendation: Buy experiences instead of things.
"For example, you could buy a life overseas.
"You've probably thought about moving to France, Mexico, or Vietnam. The happiness research suggests you should go ahead and do it. You'll be better off. First you need to travel to and experience those countries that have caught your eye. Then you need to move and fill up on the local scene.
"You'll want to keep your priorities in mind. If you like to go to the theater, keep pets, talk on the phone to family back in North America, go on long hikes near home, ride bikes, or eat meat and drink wine--or all of those things--you need to find a part of the world where you can do all of those things. If you're on a budget you need a place where you can afford all of those things.
"Vicki and I take the travel idea to extreme. We're perpetual travelers, PTs. We wander around the world going to, and also returning to, places that fully engage, excite, entertain, and educate us. I recently spent a month in Eastern Europe simply because a friend was going to attend a birthday party in Bulgaria. We started to think about it and put together a jaunt through Bulgaria, Romania, and Ukraine.
"Recently I talked with a young man named Ron, from California. Ron had just finished his freshman year at Calvin College in Grand Rapids, Michigan. It so happens that I was raised in California, and I, too, spent a year in Grand Rapids. One of the things I hated back in Michigan was the short daylight hours. As I remember it, in winter it didn't get light until 10 a.m. or so, and by mid-afternoon it was dark again.
"But my memory can fail, so I checked with Ron. What time does it get light in winter in Grand Rapids? Ron thought hard, then shook his head.
"'I don't know,' he said.
"He just hadn't noticed. From what I gathered, Ron was too busy having fun, making friends, and otherwise getting on with his life to worry much about what time it got light. Yet when I was there the daylight factor drove me nuts.
"Conclusion: One of the best things about retiring and moving, especially moving overseas, is that we can find a place more suitable to our priorities. But remember the key first step: We have to know what our priorities are.
"Are you like Ron, unconcerned about daylight, or like me, suffering in darkness? And what's more important, a pet sheep or a new grandchild?
"Make a list of your priorities, and the related pros and cons of where you're thinking of living. Follow through. Spend your money and time on a life that fits."
Editor's Note: Paul Terhorst writes a regular retirement-planning column, sharing his retirement-planning wisdom monthly with subscribers of our Overseas Retirement Letter. Details are here.Continue Reading:
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Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.
Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
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