Are You Part of the Retirement Tsunami? Where Will You Retire?
by Ralph Smith |
If you have been working for the federal government for the decades that span your career, your geographic location has probably been determined largely by the job Uncle Sam is paying you to perform. Perhaps you live in the Washington, DC area for a job that gives you a higher income with more responsibility while you are secretly yearning to live in the mountains, at the beach or in a small town away from the hustle of a big city.
If you are part of the retirement tsunami that we read about as baby boomers get ready to leave government service–presumably by the hundreds of thousands–you have a number of options. When you retire, or when you are planning to retire, you can think about how you want to live the rest of your life. If moving to the shore or to a location with a different climate will make you happy, the freedom you have in retirement will enable you to choose a geographic location based on your own situation and preferences.
And, if you are a financially responsible individual, you will do a thorough financial check-up of your ability to live comfortably after you retire. Will you be able to afford living the lifestyle you want in a location that reflects your personal preferences?
You may conclude you cannot live the lifestyle you want. If so, here is an option you may not have considered for your retirement: Living outside of the United States.
There can be a number of reasons to consider living abroad in your retirement years. Typical reasons for living outside of our own country:
- a mild climate
- lower taxes
- lower cost of living
- lower medical costs
- culture change
- new challenges and experiences
- education and new perspective.
It is possible to live abroad with standards of living comparable to those in the United States. If you choose a country where the local currency is based on American dollars and the average wages are lower than in the U.S., you stand to benefit.
Also, depending on the country you choose, you may pay lower taxes as you will not be a resident of an American state and you may not have to pay taxes in the new country of your residence. A word of warning: Governments, including our own, take taxes seriously. Make sure you understand any tax obligations you may have before moving. As a federal retiree, you will not avoid paying American income taxes.
Americans who are considering living abroad often look at countries in Central and South America. Americans living in countries like Mexico, Costa Rica, Venezuela, Ecuador and Uruguay say they can live very comfortably on income of less than $2000 a month or much less depending on your location and your personal preferences. (See, for example, How Much Does It Cost to Live in Costa Rica?)
Some countries are now actively encouraging Americans, Europeans and Canadians to consider moving to their country. Panama, for example, will not charge property taxes for 20 years on new residents who are building or purchasing a house. You can also qualify for substantial discounts on medicine, doctor’s visits, entertainment and closing costs on the purchase of property. (See, Panama is a Paradise For Retirees)
Having said that, retiring abroad can be an adventure which means there are going to be many differences–some of which you will not be anticipating. If you are a person who does not like change, you should not seriously consider moving abroad.
First, there are likely to be many cultural differences. Americans, for example, expect a person to keep an appointment and to be on time. You may find that life is slower, more relaxed, and appointments for services and repairs are not taken as seriously in some countries. Or, if you are upset because it takes you a week or so to get a phone installed, getting a phone in your new location may make a week look like a dream come true.
And, before buying any property or making any major investments in a foreign country, you would be wise to thoroughly check out local requirements and consider using a local attorney who is familiar with the laws that may impact a foreigner purchasing property. The real estate laws and regulations you are used to dealing with may not be relevant in another country.
Second, for those who have traveled and found that English is widely accepted and spoken in the spots you have traveled, keep in mind that living in a country or town where English is not the native language is much different that meeting a friendly server or hotel clerk that is used to dealing with Americans. If you are going to live in a country where English is not the common language, you will want to plan accordingly.
Third, visiting a location for a day or a week is not the same as living there. If you are seriously considering retiring to an overseas location, go and stay there for several months or a period of time that will enable you to evaluate if you will really like it.
Fourth, consider your health and your insurance options. Each country is different. You may be able to participate in local insurance programs and some countries or locations have better medical facilities than others. You may be able to purchase health insurance at a lower cost than you will pay in the United States but some people will keep their American insurance–at least until they are sure they are satisfied with the options they have in another country.
Fifth, research your options carefully. There are thousands of internet sites extolling the virtues of living in locations around the world. Some of these sites are as reliable as a used car sales ad with their only purpose to encourage to send money and invest in property or "opportunities" that will leave you wiser and poorer and without the product or service you anticipated.
As a federal retiree, you will have an assured income that will give you a number of options. Moving overseas is not for everyone. But, for those with a sense of adventure, you may have many options to live a more comfortable life than you may have previously considered possible.
© 2014 FedSmith Inc. All rights reserved. This copyrighted article may not be reproduced without express written consent of FedSmith Inc.