Part I Ten Steps You Can Take Now at Home How do you get from the life you're living now to the new, better, cheaper life you're dreaming of for your retirement overseas? You break the adventure down into steps. Step 1: Know Yourself This will be a piece of cake, I told myself as we prepared for our move from Baltimore to Waterford what now seems like a lifetime ago. How different can Ireland be from the United States? My husband, my daughter, and I, we'll slide right into Irish life. I discovered quickly, though, that I'd been overly optimistic. The Irish speak English (sort of), but they operate differently from Americans. In truth, adjusting to life in Ireland was more difficult than we ever could have predicted. We discovered that launching a new life on the Emerald Isle was in some ways more challenging than it would have been in Ajijic, Mexico, say, or Boquete, Panama. Ajijic and Boquete are established expat communities, home to thousands of foreign retirees who speak the same language, share the same interests, and approach life in the same way. There are no expat communities in Ireland. In Waterford, we settled in among the locals and embraced Irish country living. We had no choice. Our Irish neighbors were friendly and welcoming, but sometimes we longed for American company. For fellow Yanks who'd appreciate our offhanded cultural references, understand our slang, and laugh at our jokes. In Paris, we had a different experience. While you won't find established expatriate communities in the French capital, you will find lots of expats. Living in Paris, we made new friends who were Italian, Spanish, Portuguese, Argentine, and yes, to our relief, American. We made many French friends in Paris as well, but we had no trouble finding American company when we wanted it. In Panama City, where we've called home for nearly a decade, again, we're living among the locals. We're not the only gringos on the block, as we were in Waterford (our next-door neighbor hails from Arizona), but we're not living in a gated community of fellow foreigners, either. One of the fundamental choices you must make as you survey the world map in search of the overseas retirement haven with your name on it is this: Would you be more comfortable retiring to an established expatriate community, a place where you'll have no trouble slipping into the local social scene and finding English speakers who share your interests? Or do you want to go local, immersing yourself in a new culture completely? This important early decision may never have occurred to you. But I encourage you to consider the question directly and as early as possible in your "where and how should I reinvent my life overseas?" thinking, for the answer sets you on one track or another, and they lead to very different places. It can be easier, frankly, to seek out a place like Ajijic, where your neighbors would be fellow North Americans, where you'd hear more English on the street than Spanish, and where you'd have like-minded compatriots to commiserate with over the trials and tribulations of daily life in a foreign country. Ajijic, for example, could as easily sit north of the Rio Grande as south. It can seem like a transplanted U.S. suburb. This can make it a terrific first step for some, a chance to dip your toe in the overseas retirement waters rather than diving in headfirst. In Ajijic, you'd be living abroad and enjoying many of the benefits (great weather, affordable cost of living), but the surroundings and the neighbors would feel familiar in many ways. You could shop at Walmart, meet up with fellow Americanos for bridge on Thursday evenings, and never have to travel far to find English-language conversation. On the other hand, life in Mexico would be a very different experience if you were residing in a little fishing village or a small colonial city in the mountains where you were the only foreigner in town. Settling among the locals means you must learn to live like a local. Is that thought appealing, exciting, and invigorating? Or is it terrifying? Be honest with yourself as you consider your response. In addition to that fundamental question, in my experience fourteen other factors are important to take into account when you're shopping for a new country to call home. The key is to consider each of these things within the context of your personal circumstances. I list these considerations according to a general order of priority. Your personal priorities may be very different. You must determine for yourself what's most and least important to you. On which points are you happy to be flexible? I'll walk you through some exercises to help prompt your thinking, but here's the list for reference: Cost of living Cost of housing (renting or buying) Climate Health care, both the quality and the cost Infrastructure Accessibility to the United States Language Culture, recreation, and entertainment Residency (if you want to be able to stay indefinitely in the country you choose) Environment (things like pollution levels) Taxes Special benefits for foreign retirees Education and schools (if you're making the move with children, in which case this becomes one of your top priorities) Safety I include safety last on the list not because it's the least important but because you can take for granted that every place I introduce in these pages is safe. In some, you won't even have to worry about locking your doors at night. Everything else on the list of factors to consider is a matter of priorities and perspective, but unsafe is unacceptable. One of the most important issues for anyone considering a move to another country is cost of living. In some cases a reduced cost of living is the primary and driving agenda. It's also the issue most affected by your answer to the "go local/don't go local" question. Living among the locals can decrease your cost of living significantly, certainly compared with the cost of trying to export your U.S. lifestyle to another country. Climate is probably the next most common reason (after cost of living and cost of real estate) for thinking about moving to another country and could be your main motivation for considering the idea. Some places around the world boast springlike temperatures year-round. For many, this is reason enough to relocate at least part of the year. Issues such as taxation and special benefits for retirees, on the other hand, are important but probably not key factors. You don't want to organize your life around tax codes or senior discounts. These are secondary factors that may help later when you have narrowed down your choices and are torn between two or three destinations. If you have an ongoing health concern or if you're moving with children, your priorities are set for you. If health care is your key issue, then your Dream Havens list can include only places with first-class and first-world health facilities. If you're moving with children, the determining factor is the availability of international (preferably bilingual) schools. If you're considering starting a business to help support your adventures overseas, then tax and other government incentives targeting entrepreneurs and foreign investors can tip the scales for you. Culture, recreation, and entertainment are not key but important considerations. How do you like to spend your time? What diversions would you miss most if they disappeared from your life? Considering the issues on this list is perhaps the most important part of planning a new life abroad. Every decision should be made based on your preferences and circumstances, which I will help you to think through. I encourage you to get out a pen and pad of paper now and work through these exercises with me. You can use these notes for reference as you read through Parts II and III, where we'll consider current top overseas lifestyle options, country by country, region by region. I'll help you connect the dots between your priorities and preferences and the pluses and minuses of each destination of interest. First, though, we need to clarify your priorities and preferences. To that end, consider the questions that follow honestly and fully. Cost of Living What is your total monthly income, not including your current paycheck? Tally up all your income beyond any salary that will disappear with the move. If you're moving in retirement, maybe you have Social Security, pension, 401(k), or IRA funds. Whatever your age, maybe you have investment income. If your total monthly income as you project it beyond the end of your current working life isn't enough to support the lifestyle you want in the overseas destination that has your attention, what are your options for supplementing it? You could: Invest for income. If you have available investment capital, consider using it to create an ongoing monthly cash flow. The easiest option for this is a rental property, perhaps in the location where you're considering moving, meaning you'd be generating cash flow in the local currency to supplement your local living costs. Start a laptop business. In today's world this is easy, common, and possible anywhere you have a good Internet connection. You could become a travel writer, a travel photographer, a consultant in a field of expertise, or an online teacher, to suggest just a few of the possibilities. As I write, I know expats making good incomes plying all those online trades and many others. Start a bricks-and-mortar business. This is usually a more ambitious undertaking than a laptop enterprise, but the options are nearly unlimited and can allow you to leverage past professional experience or to pursue a long-set-aside hobby. Obvious business ideas for an expat most anywhere in the world include opening a restaurant, a bar, a bed-and-breakfast, or a hostel. Less typical but very realistic possibilities include auto repair, pool cleaning, landscaping, and hospitality training services. (That last item is desperately needed in many developing-world destinations trying to cater to growing expat communities but unable to find local help with any sense of real-world service.) When thinking through the cost of moving to a new country, remember what I refer to as the "capital budget" of the initial move. This can be as controlled as gas and tolls if you're moving part-time from Arizona to Mazatl++n, Mexico, for example, which would constitute one of the easiest possible international adventures. If, at the other end of the spectrum, you want to move full time to Panama and bring your entire household of belongings and two dogs with you, you'll need to allow for a capital budget that includes plane tickets (including for the pets), shipping, and residency visas. If your savings don't stretch to cover the capital budget you face, the quickest way to raise cash to cover the deficit can be to sell some of those household belongings you're otherwise thinking about paying to relocate with you. Cost of Housing (to Buy or to Rent) First, decide whether you intend to buy or to rent your new home. I strongly encourage you to rent, at least at first, for six months or longer. Renting long-term as an expat or retiree overseas has serious advantages, too. We'll discuss these in a minute. Whether you own or rent your new home abroad makes a big difference in your budget. If you invest in a home of your own, you have no rent, but perhaps you have a mortgage. If you have a mortgage, you have a life insurance expense, as this is required when financing property almost everywhere in the world. In addition, as a property owner you have the cost of repairs, maintenance, property insurance, and (sometimes) taxes. On the other hand, owning your home overseas gives you an asset that you can rent out for income while you're away. I know many people who've chosen not to limit their adventures abroad to a single new country but move between or among two or even three. Invest in a home in each place, rent it out while you're elsewhere, and the rental income can offset your carrying costs and maybe even provide income in the local currency to cover living expenses when you're in town. If your intention is to divide your time between the United States and another country, you may want to keep your home stateside. In this case, renting while abroad can make even more sense. If you are more interested in owning than renting, this position has a lot to do with which countries you should consider for your list of dream havens. Determine your property purchase budget. Is it contingent on the price you realize from the sale of real estate back home? Once you know how much you can spend on your new home overseas, you can focus your list on those countries where that budget will allow you to afford your dream home. Climate Do you enjoy a change of seasons? Do you need regular sunshine? Do you mind rain? Can you handle heat? Humidity? Do you prefer a varying length of day? Are you okay living in a place that is at risk for hurricanes? Health Care Do you have preexisting conditions? How old are you? These are the two most important factors when it comes to qualifying for international health insurance. It is possible to get health insurance to cover you anywhere in the world at any age . . . if you're willing to pay for it. Affordable options, however, become limited after age seventy-four. If you have an ongoing health concern, this is your primary consideration, the issue around which you must organize your plan. Focus on countries where the cost of health care is affordable, and restrict your search within those countries to places with top-tier health facilities. That is, choose a place near an international-standard hospital (this typically means a big city, probably a capital) where, ideally, at least some of the staff speak English. Would you be uncomfortable seeing a physician whose first language is not English? Infrastructure Do you lose your cool if you can't send an email the first time every time you try? Do you plan to start an online business? If the answer to either of these questions is yes, limit your search for where to chase adventure overseas to places with first-world infrastructure, including and especially reliable high-speed Internet. Would you mind living on a dirt road? Would you mind your road access being temporarily cut off during the rainy season? Do you need American television? Would you be unhappy without football on Sunday afternoons? Are you afraid of the dark? In much of the world, electricity isn't 100 percent reliable. Would you be comfortable owning a car and driving yourself around in a new country? If not, think about places where you could afford a full-time driver or where a car is unnecessary. Excerpted from How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad by Kathleen Peddicord All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
