Why You Can’t Afford Not To Retire Overseas
Over lunch Friday afternoon, friends in Dungarvan shared big news:
“We’re preparing for a move,” they told us, “from Ireland to Argentina.
“We work for a U.S. company,” they pointed out, “and earn our income in dollars. It doesn’t seem to make much sense to continue living in a place where we have to pay for everything in euro.”
The U.S. dollar is down nearly 6% against the euro since the first of this year…and it’s down better than 30% against the euro since it began its long slide in the first quarter of 2006.
In other words, our friends have a point…one that, believe me, hasn’t been lost on Lief and me these past couple of years, as we’ve divided our time between Waterford, Ireland, and Paris, France, places that not only use the euro but that also charge premium rates for the privilege of residing within their borders.
In fact, our friends in Dungarvan and we both might seem like suckers not to have imagined and accomplished our respective moves, theirs to Argentina, ours to Panama, long before now.
Another friend, living in Uruguay for the past two years, wrote recently, after a weekend getaway across the river to Buenos Aires, to remark, “I was surprised to see that the Argentine peso has remained relatively stable with respect to the dollar, while the Uruguayan peso has gained more than 70%. It makes BA look pretty affordable right now to us ‘Uruguayans.'”
Imagine how affordable it looks to our Irish friends! Currency appeal aside, the cost of both living and of real estate is so dirt-cheap in Argentina compared with Ireland that you wonder why the idea of emigration to places like the Land of Malbec and Tango hasn’t occurred to more residents of the Emerald Isle.
It’s an eminently appealing proposition. As our friends explained on Friday, “We bought our home here in Ireland 10 years ago. We could sell it today for maybe seven times what we paid for it.
“We spent a month in Argentina recently, traveling around to get an idea where we might like to settle. In places like Cordoba and Santa Fe, you can buy a big house, bigger than our home here in Ireland, with land for farming and outbuildings, for $150,000. That’s less than 100,000 euro.
“Plus, in a city like Cordoba, we could live very well on much less than we earn, meaning we could save and invest.
“Our dream is to find a place to settle in Argentina and also to be able to afford a small apartment in Paris so that, thinking long term, we could spend part of each year in the City of Light. If we sell now in Ireland, we should see enough net both to establish ourselves in Argentina and to invest in an apartment in Paris that we could make available for rental on the short-term market when we’re not using it.”
For the retiree, expat, or adventurer with Greenbacks in his pockets, Panama can make even more sense. Here, you have no exchange risk whatsoever. Panama has used the U.S. dollar as its currency since 1903.
Meaning that, though the cost of living in Panama may be higher than in Argentina, you don’t have to worry that it’ll increase as a result of further dollar decline.
That’s the big question, of course, on the mind of every American thinking about living and investing overseas right now. How much further will the dollar fall?
And, given its current demoralized position, the poor American can’t help but ask himself, can I really afford to think about pursuing my global fantasies?
A recent article in The New York Times concluded that the answer to that question is no…that the dollar’s fall to date means Americans need to think twice before making plans to retire or live abroad.
It suggested a new life overseas is now beyond your reach.
Falderal. That is, The New York Times couldn’t be more wrong.
Right, right…if your primary concern is cost of living, you don’t want to retire to Ireland or France right now. But neither do you want to stay put because you fear your U.S.-dollar nest egg has no buying power beyond U.S. shores!
I can’t say where the dollar will be versus the euro or the Uruguayan peso 12 or 18 months from now. But I can tell you that the smart move today to me seems to be to hedge your bets. Move your home base to a place with a low cost of living and an affordable cost of real estate.
And move your investments outside the Greenback. If you haven’t yet diversified by market and by currency, it’s not too late. In fact, the coming 12 months could be the best time in some time to get yourself out of the dollar.
Friend Bill Bonner got directly to this point in an issue of his Daily Reckoning e-letter last week:
“Sell America,” he said. “Sell its money, sell its property…
“In the short run,” Bill continued, “we could see a revival of the dollar….With no more obvious reasons for the dollar to fall…it has stabilized. Next,” he says, “it will fall for reasons that are less obvious and more important.”
Sell on the bounce. Sell your dollars and your dollar-based assets and buy…what?
A new life in a place like Cuenca, Ecuador, or Atlantida, Uruguay, the world’s two most affordable retirement havens (see our Ecuador and Uruguay Retirement Living Budgets), where you could live comfortably on $660 and $1,038 per month, respectively.
Or maybe follow our Irish friends to Cordoba, Argentina…or Lief and me to Panama City, Panama. If I had to make a shortlist of the world’s top retirement and lifestyle havens right now, these four places would be on it.
With your investment funds, buy land, coastal or productive. Best productive land buys in the world right now are to be found in Uruguay and Argentina. Best coastal buys are in Panama and Ecuador. Meaning you could combine your new, far more affordable life overseas with what could prove the wisest investment plays of your lifetime.
The real answer to the question, Can an American afford to live or retire overseas right now? could be that maybe you can’t afford not to.
As American (from Vermont) Jay Snyder (three-year retiree to Granada, Nicaragua) puts it:
“The truth is, retirees in the States right now face a serious dilemma. It’s impossible, really, for them to live on Social Security. And the cost of quality retirement living options has exploded. The current meltdown in U.S. housing costs doesn’t change this fact. Most retirees can’t afford a retirement home.”
At least not one within U.S. borders.