Retire like royalty in a low-cost paradise
Many Americans looking to retire early and live in style find themselves tempted by low prices in pristine, faraway lands. Here are 5 keys to really making it work -- and a few delightful destinations to consider.
By Liz Pulliam Weston
Even after three years of bloodletting in the stock market, you still haven't given up on your dream of retiring early. The only question is how?
The answer for a growing number of Americans making the leap into early retirement is moving to a country with a lower cost of living. The U.S. State Department estimates some 4 million Americans live abroad, not counting military and embassy folks. About a quarter of those are estimated to be retirees.
Poke around on the Web, and you’ll find a whole industry devoted to retirees looking to live like a despot on $15 a day -- usually under tropical skies with daily maid service and umbrella-bedecked drinks thrown in for good measure.
From a financial perspective, spending your golden years overseas is certainly tantalizing. Consider how far your Social Security checks might go:
In Quito, Ecuador, where a full restaurant meal costs about $1 -- double that if you add wine or beer to your meal, which typically includes soup or salad, an entrée and dessert.
In Ajijic, Mexico, a community near Guadalajara that’s home to more than 3,000 expatriate Americans, where you can rent a sprawling three-bedroom, two-bath hacienda for about $700 a month.
In English-speaking Belize, where retirees don’t have to pay taxes on the first $75,000 of income and where property taxes on a $500,000 home run about $90 a year.
In Spain, where the weather is good, health care is affordable and Europe is at your doorstep.
The cost of living may even be low enough for you to retire years earlier than you might otherwise.
Louisiana banker Tom Vidrine, for example, fell in love with Belize on his first trip to the Central American country in 1990. He bought a vacation home and spent the next seven years saving money so that he could retire in 1997 at the ripe old age of 45. He says an American can live a comfortable life on one of Belize’s many tropical islands for $2,000 a month, or half of that on the mainland.
“My only regret,” said Vidrine, “is that I did not come sooner.”
If you’re the kind of person who considers only the financial aspects, however, then retiring abroad could be an absolute disaster. Ruth Halcomb, who runs the LiveAbroad.com Web site from Santa Fe, N.M., has seen it many times. (See link at left under Related Sites.)
“Some people sell their stuff, move and try to settle,” Halcomb said, only to “change their minds and come back.”
At a minimum, people who consider retirement abroad should be adventuresome, flexible, tolerant and patient, the expats I interviewed agreed.
Here are some other traits that come in handy:
You’re willing to make new friends
“The people who do well are couples who depend on each other a great deal,” Halcomb said, “and who don’t have a great sense of community or good friends they’re going to miss terribly.”
That’s not to say you won’t make new friends, particularly in areas that attract a lot of other foreign retirees.
“There are enough retired people here who are looking for friends and new acquaintances,” said Chuck Svoboda, a former diplomat who retired to Spain’s northern coast, “that there’s no difficulty in building a fairly large circle of them in a short time.”
Improved cell phone networks and Internet access also have made it easier for expats to stay in touch -- so much so, Svoboda grouses, that it sometimes “keeps people from enjoying what this country has to offer.”
But you’ll still be hundreds if not thousands of miles away from family and friends, who probably won’t visit nearly as often as they would if you were still in the States. You may not mind watching a grandchild grow up in photos, but if you want to be there in person, overseas retirement probably isn’t for you.
You're open to experiencing a new culture.
It seems obvious, but the rest of the world really isn’t like the United States. Some people never adapt to the strangeness or to the notion that they’ll always be foreigners, no matter how many other expats live in their chosen community.
“I met a Frenchman who said, 'You Americans, you welcome me with open arms, but in my country, it wouldn’t be the same,' " Halcomb said. " 'You would never be French.' "
In most countries, language barriers can pose a problem even to the most intrepid. Hildreth Serrano, an American registered nurse who lived for more than a decade in Germany, thought she’d do fine living and working in the Czech Republic -- until she got there. Although she loves living in Europe, learning a new language has been daunting.
“I would have to say the worst thing (about living abroad) is being reduced to having absolutely no language ability -- going from being a fairly articulate professional to total mute non-comprehension,” Serrano said. “It is bewildering, disconcerting and adds to a sometimes overpowering feeling of isolation.”
You're not a Type A personality
If you’re the kind of person who gets impatient waiting in line at the post office, for example, then dealing with bureaucracies in other countries could drive you up a wall.
A simple banking transaction in Mexico can be an afternoon-long affair, while getting a phone installed in many countries can take months. Utilities and other bills often must be paid in person in countries with iffy postal systems -- and that means long periods standing in lines. Stores might be open only a few hours a day, and closed for innumerable holidays, making you long for a 24-hour mini-mart.
“There was a huge culture shock when we first went to Ecuador,” said Suzan Haskins, an Omaha native who has worked for International Living, a newsletter and Web site, in Ecuador and Mexico. (See link at left under Related Sites.) “We’d have five or 10 things we wanted to accomplish in a day and we’d be lucky if we got one of those done.”
You’re willing to do some research
Some of the Web sites, magazines and newsletters about international living are also in the business of promoting real estate or tours, which means they have a vested interest in painting the best possible portrait of living abroad. They can also help you to find out about special programs that some countries have to attract retirees and any restriction that may exist on buying real estate.
You can use those resources for preliminary research, of course, and to get in touch with Americans who have moved to the country of your choice. Contact these expats to get a clearer idea of what life is really like there.
Many experts on living abroad also recommend renting a home in your chosen country for six months or so before deciding whether to move there permanently. Make sure your stay includes the time of year with the worst weather. By then, you’ll be more certain whether you’re making the right choice.
You have an exit strategy
Regimes can change. Your health can decline. Prices can rise -- particularly if the tropical paradise you found gets discovered by lots of other ex-pats. (Of course, if you bought real estate there, it might be a good thing.)
Then there are the horror stories:
In Mexico, about 350 American retirees were evicted from their homes in Baja California’s Punta Banda two years ago after the country’s Supreme Court ruled that they leased the property from the wrong owners. Some of the retirees had poured their life savings into homes they had built on land that was supposed to have been theirs for 90 years, leaving them with few resources to restart their lives.
Foreign retirees in Spain face losing property and houses to eminent domain decisions -- the government plans to seize the land to promote more development. Not only will the owners not be compensated, but they are often asked to pay huge assessments to help build the roads for new development.
So no matter how much you think you’re going to adore your new country, remember that a day may yet come when your love affair goes awry. Consider setting aside enough resources so that, if you need to, you can come home again. http://moneycentral.msn.com/content/Retirementandwills/Retireinstyle/P44319.asp