How To Retire Overseas On A Budget

How To Afford To Live Anywhere On Earth

“Vicki and I recently spent a month in the United States,” writes Retirement Planning Guru Paul Terhorst. “Now we’ve returned to Argentina, where we have a house in a rural area outside Buenos Aires.

“As I look back on our U.S. trip, I recall that, item for item, most things in the States are cheaper–sometimes far cheaper–than in the southern cone countries of Brazil, Argentina, Uruguay, and Chile. By ‘item for item,’ I mean a pound of chicken or beef, a computer or a camera, a tablet or a pen in the stationer’s, an airplane ticket, a car and gallon of gas, a garden hose… All these things are cheaper in the United States.

“So what’s new, right? Despite claims to the contrary, the United States has followed a weak-dollar policy for at least 10 years. Traders picked up on the trend and hammered the dollar, year after year, with only a few temporary pauses. As a result, Americans these days–and even many Europeans–pay more for many things overseas.

“Still, you can often live well overseas, in spite of higher costs.

“First, you’re helped by what I call the Third World Syndrome. The Third World Syndrome means you can get high-quality products and services in the Third World that have disappeared in the United States. For example, an equivalent four-star hotel in Buenos Aires would likely cost more than, say, a four-star hotel in Houston. But you can also get a no-star, neighborhood hotel in Buenos Aires at rock-bottom prices. These small family-run hotels offer clean rooms, private bath, and personal attention. In most parts of the United States, these no-star hotels have disappeared, are badly run, or in lousy neighborhoods.

“Another example of Third World Syndrome would be food stalls and food carts. In poorer countries the food stall’s owner and his family often serve you personally. They have no employees and operate with minimum costs, often sharing a simple dining space with many other stalls. You take advantage of the savings. Again, these food stalls and carts have largely disappeared in the United States.

“Another example: I recently took an American developer friend to a rural Argentine hole-in-the-wall restaurant. My friend loved the food, loved the low prices. He also noted about US$50,000 in code violations that would have to be fixed if this were the United States. That US$50,000 would amount to closing the place.

“In addition, moving around the way we do, we’re able to reduce living costs through arbitrage. Clothing and shoes, for example, often cost way more outside the States. So on U.S. visits, I shop at Ross or Marshall’s or at Nordstrom on sale. I also buy clothes in the export shops in Thailand. (Export shops sell high-quality overruns and seconds.) When textiles skyrocket in price somewhere (like Argentina right now), I buy elsewhere.

“Similarly, I buy over-the counter ibuprofen, disposable razors, vitamins, and other items in the United States. I buy prescription medicine in Thailand or Malaysia.

“On this U.S. trip, I bought a fry pan and a wok. Those items in Argentina are of such bad quality, or such a high price, that we’re put off. I even bought a fly swatter in the United States. I know that sounds silly, but consider. Fly swatters in Argentina amount to cheap, plastic affairs imported from China. We go through two or three a year. I’m tired of buying them. For about the same price as the cheap import in Argentina, I bought a durable, metal fly swatter in the States that advertised it would last forever.

“Even in high-cost countries, you’ll find some items remain good value. For example, at a Chilean wine shop, a good wine costs about 10 bucks, a very good wine about US$20. Even better restaurants in Chile typically mark up wine two times, versus the three or more times mark-up you pay in U.S. restaurants and the four times mark-up you’ll pay in France. If you like wine, you do well in Chile and Argentina (and France if you avoid drinking in restaurants).

“Another example: You can buy a tender, juicy steak in a top Buenos Aires eatery for US$20 or so. That’s much more than a few years ago, but still good value.

“Finally, remember that housing accounts for a huge part of your monthly expenses. No matter where you live you’ll find some housing choices less costly than others.

“Years ago I read a book called ‘Nickel and Dimed’ by Barbara Ehrenreich. As an undercover journalist Ehrenreich lived on low wages in Boston and other cities. She gives a poignant account of her struggle, especially the crummy housing choices she faced. She had to live in a slum, take on an unstable roommate, deal with a crooked landlord, whatever. She wound up miserable both at home and at work.

“I think the writer ran the experiment backward. She chose Boston and the other cities largely at random and had a hard time making a go because of the housing problem.

“I’d submit that first we need to find suitable, inexpensive housing of some sort. Once we get the housing right, we can then afford to live on less–even on a Wal-Mart salary.

“You have a choice when you move overseas. Whether you head to France or Croatia, to Brazil or Uruguay, first get the rent right. Make it your top priority. If you get the rent right, you can live almost anywhere on earth. In a high-cost country you might settle for an apartment over the garage instead of the big house in front. A guest house with shared kitchen rather than an apartment. A house-sit, temporary digs, a mobile home, whatever.

“When Vicki and I lived in Chapala, Mexico, we befriended an older guy named Lyle. Lyle had had a tough life and somehow wound up in old age living on a US$600-a-month military pension. But that never bothered Lyle. He simply left the United States, moved to Chapala, and found himself a room for US$100 a month. That left him US$500 to spend on tacos and Dos Equis beer, which Lyle consumed in great quantity. Sure, his simple bed-sit was small and Spartan, with bathroom down the hall. But Lyle lived way better than he could have elsewhere, and he thoroughly enjoyed himself well into a fine old age.

“Conclusion: If you want to live overseas, even in expensive countries, you can do it. As my friend Billy says, you want to live your dreams rather than dream your life. By taking advantage of Third World Syndrome and arbitrage, ferreting out good values in the host country, and getting your housing costs under control, you can live or retire almost anywhere on this earth that appeals.”

Kathleen Peddicord


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