Your Live, Retire, And Invest Overseas Questions Answered
Back in the office in Panama City today, I find that the mail has been piling up…
“Kathleen, do you need a visa to travel from the United States to Belize? If yes, how do I get one?”
–Priscilla W., United States
No, U.S. citizens do not need a tourist visa to visit Belize.
“Kathleen, I have been reading your e-mails on retirement outside the United States and on opening a bank account in another country, etc., in preparation for the impending changes. Does one have to renounce U.S. citizenship to do these things?
“Folks whose stories you’ve told, attendees at your retirement seminars, etc., do these people still retain their U.S. citizenship?”
–Manto V., United States, on Facebook
Yes, most people who pursue these ideas (to do with living, retiring, owning real estate, investing, opening a bank account, etc., in another country) retain their original citizenships.
Which is to say, no, it is not necessary to renounce U.S. citizenship (or whatever citizenship you hold currently) to retire to another country or to open a bank account in another jurisdiction.
Neither retiring or relocating overseas nor opening a bank in another country has anything to do with citizenship. It can have to do with residency (which is not the same as citizenship), but even that is not necessarily the case. It is possible to spend time in many countries without establishing formal residency, as it is possible to open a bank account many places without becoming either a legal foreign resident or a national (by obtaining local citizenship).
Banking overseas and organizing your financial affairs to mitigate your tax burden, again, can be completely separate from both citizenship and residency questions.
“Kathleen, in a recent e-mail from you, Lief Simon wrote about the apartment you’ve just purchased in Medellin, Colombia.
“He said: ‘Meantime, there is some good news. The exchange rate has swung in our favor recently, meaning that the dollars I transfer now to cover the cost of the renovation will buy about 7% more Colombian pesos than did the dollars I transferred in July for the apartment purchase.’
“Doesn’t that mean the property is also worth 7% less?
“So, if this turns out to be a 2008-like crisis (or worse), and the Colombian peso goes down 40%, that’s a 40% hit to the value of the apartment, isn’t it?
“Wouldn’t that be a great time to buy in Medellin?”
–Daryl J., United States
On the one hand and considered from a certain point of view, yes. The pesos we spent to purchase this apartment are today worth less versus the U.S. dollar.
In fact, though, the apartment is worth 10% more in peso terms considered on a per-square-meter basis…as we’ve added 10% more area (by extending the living room, the dining room, and one of the bedrooms out on to what used to be the very oversized terrace).
And I expect that the apartment will be worth at least twice what we paid for it once the renovations have been completed.
The point is that there are many factors to take into account when trying to make this kind of determination.
Furthermore, it’s very difficult to try to time the purchase of real estate to coincide with currency fluctuations. First you have to predict the movement of the currencies involved and then you have to be able to close on a piece of real estate within a particular window. I’ve done it successfully in Argentina, but, again, it’s not easy.
Will the Colombia peso fall further against the U.S. dollar? I believe it will. Will it fall 40%? I’d be surprised.
Perhaps the most important thing to remember is that real estate isn’t a short-term investment strategy. You can’t worry about day-to-day exchange rates when making this kind of investment decision.
What you can do is time when you move money in or out of a currency for the purchase or the renovation of a piece of property to take advantage of short-term currency fluctuations.
The U.S. dollar was up against the Colombian peso last week, as I noted in my dispatch last Friday. I see it rising further, which is why I’m holding off a bit longer converting more dollars into pesos.
“Kathleen, I am finding your 52 Day course to be well-organized. It is providing good insights into the process of living abroad.
“I do have a question about something that seems to be missing from the discussion related to health insurance. I am covered in the United States by Medicare, including a supplemental plan with Blue Shield and the Prescription Drug Plan.
“At this point I am thinking I shall spend extended periods in various locations, rather than settling in one, and shall return to the United States frequently to see my kids and their families.
“I have looked at both travel insurance and BUPA, and it seems to me there are three limitations that I do not think you have covered in your course.
“First, you may well be stricken in a location where you would prefer not to receive treatment. Second, I want in any event to make my own informed decision as to who treats me and how. Third, I want to make sure that my insurance has high limits.
“For these reasons, I have opted to purchase Medjet Assist, a program under which, for an annual fee (I think US$250), you are covered for medical evacuation to the United States at your own election.
“I would be interested to hear your comments.”
–Chris T., United States
A medevac program will help only in an emergency. It’s a good thing to include as part of an overall medical coverage plan; however, for any situation that is less than life-threatening, it may not be the best option.
BUPA offers high-deductible options and probably the most flexibility for selecting doctors, etc. In addition, I believe BUPA has a medevac option. However, BUPA is generally more expensive than other options, and you can’t qualify for BUPA unless you’re living outside the United States.
You can buy a BUPA policy to cover you in the States but only as part of a global coverage plan that is based in another country.
“Kathleen, I served in Colon, Panama, at a sonar station near the Gatun locks way back in World War II. Days off, I rode a boat up the Chagres River or spent the day on the Pacific side photographing people and scenery.
“I have just retired from construction work in New York, sold every last tool I had, and now have no place to go! I am 86, in good health, with no family left. Things up here are just ridiculously expensive, and I would love to relocate down to Panama, having read a great deal about the country, as it is today.
“My problem is this: I have no 401K, no retirement plan, as I never set one in motion, and I have only a certain amount of funds available.
“All I would have to bring with me is the money I have put aside, some US$400,000. Do you think this is a possibility, to make a home for myself in Panama and live out my life down there?
“I would appreciate any advice you can give me.”
–Jack B., United States
Yes, I think you have more than enough of a nest egg to live comfortably in Panama.
You could qualify for the Person of Means Visa by putting US$300,000 into a CD in this country. If you organize a CD at around 6%, that would give you US$1,500 a month in income, which would be sufficient to enjoy a reasonable (though not extravagant) lifestyle here.
Your main concern might be health insurance, as, given your age, you wouldn’t be eligible for local health insurance and coverage from an international agency would be very costly.
If, though, you have Social Security on top of your US$400,000 nest egg, you could bank that each month to build up a kind of self-insurance fund. In case of a serious health situation, you could return to the States, where I’m assuming you’d be covered by VA services.
“This is for Lief…
“Lief, I had a wife like yours once. Little did I know that she was remodeling for our eventual divorce–and the house she was making over was to be her eventual home.
“After a few years, we reconciled, and now I love the money that she spent. Our home is in San Miguel de Allende, Mexico, my favorite place in the world.
“Keep up the good work. We really enjoy your info. I hope that Medellin works out for you and Kathleen. We did not have very good experiences there but loved Cali.
–Bill S., United States