It's been three years since my wife and I moved back to Colombia with our son. We had met in Medellin while I was doing business consulting around the free trade deal with the United States. We moved back to Iowa in 2008 for a job as an economist but always knew we would be back ‘way-south' to live. A blogger friend of mine, Pauline of InvestmentZen.com, is also living the expat-lifestyle and offered to share her PeerStory.
This is her story.
Pros and Cons of Relocating Abroad
Seven years ago, I gave my boss my resignation letter, sold or stored most of my stuff, and left a cold winter to relocate under the sun. Ever since, I have lived in Morocco, Guatemala, and spent my summers in Europe or the US. I haven’t seen a winter for longer than a few weeks, and it was always on purpose. Sounds like a dream, right? After working hard, saving and investing for over a decade, to be able to sip cocktails in a hammock all day long?
Well it is pretty cool most days. But relocating abroad has its drawbacks as well.
The first thing you need to think about are your reasons to retire abroad. Most of the time, one of the first ones is money. You want your nest egg to last forever, and it seems more complicated to do so in the US. I get it. Although life in the tropics isn’t as cheap as you might think, unless you are willing to sacrifice your quality of life.
For example, down in Guatemala, I live in a $150,000 house. It is not a seven bedroom mansion, just a simple house with a couple of AC units and stone walls. I am on the shores of a beautiful lake, but it is in a remote village in the jungle. The closest hospital is half an hour away, and so are the supermarket, the airport and the rest of amenities most people like to have nearby.
$150,000 can get you a pretty nice house in the Midwest. Probably just as big as mine, and without the risk of hurricanes. The last one left us without electricity for a couple of days, I almost lost a deep freezer filled with 120lb of meat for my Great Dane.
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Regarding food, Guatemala is a fresh fruits and vegetables paradise. You find almost everything all year long and they’re super cheap. But imported products, from bacon to wine to cereals and even milk come at a premium. Butter is imported from France or New Zealand!
And if you retire abroad, you would have to add to your living costs the cost of keeping ties back home. That can be a flight or two every year (especially if you need a visa run anyway), calling home, paying for a storage unit for the rest of your stuff, and so on. Most expats I know keep paying a US health insurance policy which is pretty pricey.
You can of course make it work in Guatemala on a Guatemalan minimum wage, around $300 a month. But that means living like a (minimum wage earning) local. Renting a simple hut for $50, probably with a dirt floor and a primitive plumbing system, eating a diet of mostly rice and beans, and using the rest of your limited budget to use internet at a café and take the bus to explore around once in a while.
[I've found it's much easier to live abroad while working for U.S. wages through freelancing or other work from home strategies. I don't know any expats here in Colombia that would want to work on the minimum wage of COP690,000 (about $235 a month) or the kind of lifestyle it affords. Want to know how to live anywhere you want and still make money? Check out my latest income report and how I made $7,500 last month blogging from home.]
So what exactly makes retiring abroad attractive? From how I see it, it has to be about more than just money.
- Increased quality of life. You can rent a mansion in Guatemala for $2,000+. That is the cost of a one bedroom in New York. Even $700+ will get you a nice house with plenty of space, fully furnished.
- Lower salaries. You can hire a housekeeper for $15-20 a day and a nurse for around $30-40. Pretty useful in old age.
- Cultural experience. I don’t see the point of living abroad if you are going to stay between expats. Learn the language, the culture, cook local dishes… and broaden your horizons.
- A new basecamp. I use my house in Guatemala to explore Mexico, Honduras, El Salvador,… and the other regions of Guatemala. Each trip would cost me thousands of dollars if originated somewhere else.
- Different values. In Europe and the US, we have lost our sense of community, our simple values. Down in Guatemala, families live together, social bonds are strong and you say hi to strangers in the street. It is weird at first, but I guarantee you no one is depressed in my village, on the contrary. Growing old in a place like that if you were a bit lonely in the US can be very beneficial.
- An easier life. I don’t know if that is the best way to put it, but I find things are pretty easy in Guatemala. People don’t go around mumbling it can’t be done. They find a way. I built my house, designed it, supervised it, was the general contractor, the plumber and the electrician. Without asking permission or having a degree in architecture. I Googled the stuff I ignored. And my house was built in six months. I love how easy it is for entrepreneurs to start a new project. Sometimes I feel we get shot in the foot before we even started with all the paperwork and tax burden in the North.
On the other hand, retiring abroad can be made more complicated. You have to think about
- How you will handle immigration status. Although most countries welcome retirees with open arms.
- How you will handle taxes
- How you will handle your assets back home. Rent, sell, keep?
- If you are bringing a car, or if you’ll need one how to register it.
- The language barrier that can make things tough at first.
Still not decided if you want to retire abroad? These 9 Expats share their Living Abroad Experience
In any case, retiring abroad is a fabulous experience. I would advise you go wherever you’d like to retire for 2-3 months at first. Leave everything the way it is and take an extended holiday. Talk to locals, other expats, and see how it goes. If you hate it, no worries, everything back home is like you left it. If you love it, go for it!
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.