Retire Overseas Fundamentals
Lief and I have begun conversations with our first Live Overseas Personal Consulting clients, and I’m being reminded of the fundamentals. For example…
This can seem an intimidating, even paralyzing hurdle. If you’ve never spoken a second language or even if you speak, say, a little Spanish but not enough to hold a business conversation or to negotiate a rental lease, you can worry how you’ll get things done, how you’ll keep from being taken advantage of, and how you’ll make friends. The concern can be greatest if you’re thinking of making a move on your own.
I do strongly recommend you invest in learning the language of your new home if you don’t speak it already. Otherwise, your experience of living there will be much less rich than it could be. At the same time, I wouldn’t let your lack of language skills become a deal-breaker in your mind. Unless you intend to settle someplace super-remote, in most of the countries we recommend in these dispatches, you’ll find English-speakers enough to get by, certainly at first.
If the idea of learning a new language gives you night terrors, focus on places where the locals speak English (Belize, for example, or Roatan, Honduras).
If, on the other hand, you’re up for the challenge and the fun of acquiring a new lingo, a total-immersion program of at least one month is the most efficient and effective approach. Home-language programs can be helpful for the fundamentals, and a private tutor can work. But the quickest way to learn the most is to drop yourself into a situation where you’ll have no choice but to speak the new language all day long, day after day.
- Health Insurance
If you’re an American, your current health insurance will not follow you beyond U.S. borders and neither will your Medicare. Neither of those things is necessarily bad news, though, and, again, your concerns over health care and health insurance in a new country of residence should not keep you from making your move. Health insurance in some places we recommend will cost you a fraction what you’re paying now for coverage in the States and can even cost less than Medicare. Plus, some places, the cost of medical care is so low that the best option can be to forgo the expense of health insurance altogether. More here.
My best advice on this issue is to research your options as early on as possible. If you know that your plan, even some years down the road, is to reside in another country, it’d be wise to make your decision regarding health insurance now. The older you are, the more difficult it will be to get an international policy from an international agency like Bupa and the more costly the premiums will be.
- Visas, Residency, and Citizenship
Depending on the nationality you carry, you can spend up to three months most places where you might be interested in spending three months on a tourist visa. Sometimes, this tourist status is renewable for, say, another three months, meaning you could reside many places you might be considering for your new life overseas for up to six months before you have to address the question of how to obtain a more permanent visa. And, in fact, you can avoid the permanent or long-term visa question altogether by keeping your new life overseas mobile. Spend three or four months at a time in three or four locales each year, and you wouldn’t be physically present anywhere long enough to have a visa issue.
Note that there are residency visas and there are work visas. These are not the same thing, and a residency visa typically does not give you the right to work locally. For this, you need a work visa specifically, something not easily obtained as a foreign resident in most countries.
Note also that residency and citizenship are not the same thing. “Residency” refers to where you live (reside). “Citizenship” means you are a national with the right to a passport from the country in question. In some cases, extended legal residency can lead to citizenship.
On this score, Americans have it tough. If you are an American (that is, if you hold a U.S. passport and even if you hold a U.S. Green Card), you are obliged to report to the U.S. Internal Revenue Service of your worldwide income every year. No matter where you reside or where else you might also hold citizenship, you never lose this obligation to Uncle Sam (short of renouncing your U.S. citizenship and relinquishing your passport or giving up your Green Card).
In addition, as an American abroad, you may acquire a second tax obligation in the country where you take up residence.
This is not to say that you owe taxes in both jurisdictions or, certainly, that you owe double the tax. You have tools at your disposal (most important the Federal Earned Income Exclusion) to mitigate your annual tax burden, and, in fact, depending on the jurisdiction where you take up residence, you can reduce your effective rate of tax significantly as an American abroad. It’s even possible, depending, again, on the country where you choose to reside and on where and how your income is derived, to live tax-free. No hype and completely legal and above-board.
The key is to get good advice. If you’re an American, you need not one but two good tax advisors, one in the States and the second in your adopted homeland.
- What Should You Do With All Your Stuff?
This is another issue, like health insurance, to consider sooner rather than later. Will you keep your house back home? What about your car? Furniture? Family heirlooms in the attic? Yard sale purchases in the back of the basement? Where will it all go?
Deciding what to do with a lifetime’s worth of accumulated stuff can be a daunting proposition. Ideally, you want to bring as little as possible with you to your new home. It seldom makes sense, for example, to ship a car from one country to another (remember the costs of shipping and of import duty; as well, recognize that your current vehicle may be inappropriate for your new home…the roads in places like Nicaragua and Belize, for example, eat little Toyota sedans for breakfast).
Neither is it typically prudent to ship an entire container load of furniture from one country to another. I say this having done exactly that three times now…so, yes, I understand how difficult it can be to part with certain worldly possessions.
“Kathleen, I’m hoping you can help me. On the Internet and in other e-letters, I am reading where apartments are renting in Panama City for under US$600 per month. However, when I speak with real estate agents in the city, they tell me that it is hard to find a place for that price. What do you think?”
— Nunzio B., United States
It’s possible to find an apartment to rent in Panama City for less than US$600 per month. Possible but not easy and not likely through a real estate agent. They earn their living based on commissions, so it’s not in their interests to mess around with the super-affordable end of the market.
That said, in truth, decent US$600 apartments in decent neighborhoods in this city are thin on the ground. If you do find one, it will be through the local classifieds or word-of-mouth, it will be small (that is, tiny), it will be in an old building with an old elevator or maybe no elevator at all, and it won’t be in a convenient or appealing location.
You’ll hear of the odd exception, but this is the rule. Panama City is not as affordable a place to live as it was even 18 months ago. Elsewhere in the country still can qualify as super-cheap (we met a woman on the east coast of the Azuero Peninsula last weekend, for example, who had just rented a four-bedroom house on the ocean for US$175 a month; it doesn’t get cheaper than that), but those days are over in the capital.
“Kathleen, what happened to Panama? I thought you lived there, but your recent e-letter comes from Uruguay?”
— George T., United States
Yep, I’m living in Panama, but, with the help of far-flung and ever-wandering correspondents, contributors, friends, and colleagues, I bring you these daily dispatches from all over the world. You never know where you might hear from next…