How Moving Overseas Can Save Your Retirement
April 9, 2013, Panama City, Panama: Spain’s property market has collapsed and property values have fallen by 50% and more, creating a crisis investment opportunity for global property investors.
Dear Live and Invest Overseas Reader,
A woman named Hazel, now in her 90s, along with her husband, raised five children in southern California in the 1950s. One day a neighbor came over and proudly announced he had set aside US$500 for daughter Loretta’s college education! Hazel so envied that neighbor. Hazel and her husband had nowhere near that much money. How was she going to put five kids through college?
No one knew. But Hazel went out and got a job as soon as her kids were a little older, saving what she could for the kids’ college. In the end all five kids went to college, and graduated, and somehow the bills got paid, with Hazel’s savings, student loans, scholarships based on financial need, summer jobs, after-school jobs, and so on.
Loretta never made it to college, then again, that US$500 wouldn’t have helped much anyway. By the 1960s and 70s college cost way more than US$500.
I think life often turns out like this. We wring our hands about not having enough money–in this case, to send the kids to college–yet we somehow get the job done in the end. We find a way.
We Americans are going through similar hand-wringing today over retirement.
Hazel’s five kids and 80 million other baby boomers are reaching retirement age. As a group, boomers have nowhere near enough money to retire. In a recent poll, “fifty-seven percent of U.S. workers surveyed reported less than US$25,000 in total household savings and investments excluding their homes.”
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably–the highest level in the study’s 23-year history.”
You can read more about the study here.
So no one knows where the retirement money will come from.
Hand-wringing. I’m reminded of Hazel and her five kids to put through college. She and the kids somehow managed it. And I’m sure that the 28% will somehow manage it, too, perhaps, I’d suggest, by moving overseas.
Let’s be clear. Money rarely falls from the skies, even if you move overseas. And the truth is that it costs as much or more to live many places around the world these days than in the United States. Even low-cost countries like Thailand and Mexico have become dearer as the dollar weakens against the local currencies. So if you lack the money to retire, you’re going to have a tough time of it regardless where you choose to live.
Still, for those on a budget, I see three advantages to moving overseas.
First, you have more housing choices, especially in the Third World.
Those of us who have lived abroad for some time have met many old-timers who seem to live on nothing at all. They happily wander throughout the expat community, often in bars or cafes, without spending any money. If you scratch a little you find these people live in very small quarters, what the English call a bedsit and New Yorkers an SRO (a small room with a bed, shared bathroom down the hall). Bedsits have largely disappeared in the developed world. But you still find them in Latin America and Southeast Asia, in cities and small towns.
Often these people take up house-sitting once they get to know other expats. The bedsit then becomes a storage room that they can sleep in between gigs. Housesitting offers the chance to live in bigger, better housing and even get paid for it at times. Not bad if you’re forced to live on US$1,000 a month, say.
Most retirees in the United States collect more than US$1,000 a month from Social Security. But I know a woman who retired on less than that. She moved to Thailand and spent her life savings to buy a town house and a motorcycle. Her small check these days goes a long way, covering utilities, a little gas for the moto, low-cost health care, and then all the things that make life worthwhile.
She found a way.
The second advantage to retiring overseas if you’re retiring on a small budget is that, when you move abroad, you get away from peer pressure.
Downsizing back home, if you’re forced to do it for budget reasons, makes you feel bad. Sure, you can handle the blow to your self-esteem. But you can avoid that blow altogether if you move overseas, into a new community, with new faces and new outlooks.
Finally, when you move overseas you become more flexible. That first move takes a lot of work. You get rid of stuff, set up an internet-based banking routine, straighten out your credit and debit cards, maybe sell the car and house, and go through the emotional hit of leaving behind a lifetime of familiar people, places, things, and joys.
Once you’ve made that first move, though, succeeding moves become easier. So if the first country you choose becomes too expensive, too dangerous, too dull, too routine, or too insular, you can easily move again. You may even follow one of your house-sitting clients to a new country, if that client has come to rely on you for six or seven months each year.
Perhaps you find yourself among the 28%, reaching retirement with very little money saved, with only a small Social Security check to carry you through. If this is the case, you’ll have to be creative to make retirement work. But you’ll find a way. One option, if you enjoy trying the new and approach life with a spirit of adventure, would be to retire overseas. You’ll have at least three things going for you.
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