Every so often I like to write about expat retirement. My father sort of did this, his situation was a little more complicated, but he lived the last 35 years of his life in Spain. The idea of spending some serious time, longer than a normal vacation, in another country is appealing on some level for a lot of people and it can also bail out an underfunded retirement.
When I say “no one will care more about your retirement than you,” I am making a call to engage fully with your planning which goes beyond just portfolio work and Social Security strategies. Things like how you will spend your time, how you will take care of yourself, how you will keep your mind sharp and yes, exploring whether you want or need to spend some time abroad and if so, doing the research to understand a couple of different locations, what the pros and cons are and how you’d manage things like family and your healthcare. For anyone new, the quote is attributed to Joe Moglia.
The prompt for this blog post is this article about a couple of beach towns in Uruguay. Reading the article, the places both sound idyllic. The article doesn’t really get into the quality of healthcare in Uruguay, just the availability which seems pretty good “and if you’re a retired expat, you’ll find Uruguay to be a tax-friendly jurisdiction. That’s because retirement pensions, social security payments, and rental income from back home don’t need to be reported in Uruguay.” Many countries have tax friendly policies for American expat retirees.
The argument for retiring in another country is that often, the cost of living is much less. Ecuador scores well on this front as does Thailand but there are quite a few others including in eastern Europe. It’s hard to compare the quality of the healthcare in some favorite expat destinations versus the US beyond they’re being much cheaper. You really need to dig in research-wise to draw a reasonably informed conclusion. My own biases lead me to think the quality of healthcare here has deteriorated significantly. Healthcare here could still be better than over there, I don’t know but I believe the gap has at the very least narrowed which is part of why I focus much of my personal life on health and fitness.
If you have chronic issues that need ongoing management then you have an extra layer or two of work to sort out whether you can successfully manage in your destination of choice.
Typically, articles about retiring abroad for underfunded retirees take an all-in approach. You can sell your house, live off the house proceeds, Social Security and maybe you can figure a way to make a little money with some sort of side gig (that’s easier to do of course with the internet) all in a new destination that is much cheaper than the US. Although the article doesn’t get into dollars and cents for Uruguay, I believe it can be cheaper than the US including or especially the healthcare, Ecuador is cheaper than Uruguay.
If you look around, you’ll find estimates for costs of living for retirees in the US averaging $4000-$5000/mo. Planned properly, an expat retirement can be half that, so the dollars and cents are compelling.
I’ve always been against the all-in approach, suggesting instead to keep your (hopefully) mortgage free home and rent it out so that you have a place to come back to if need be without being priced out of where you came from. The last year or so really makes the point in a lot of locations. Imagine moving overseas in 2018 having sold your home. If the pandemic caused you to reevaluate living abroad, how would you afford buying back in to where you left? Real estate prices where I live make no sense, they’ve gone up so much. Even if you could afford paying 50% more than when you left, could you do it emotionally? Yes it is better to leave emotions out of it but personally, I don’t think I could buy our current house today for what Zillow says it’s worth. Not selling and living off the rental income from your US property greatly improves your optionality for an uncertain future.
I’d be more interested in going to live some place for a year or two just for the experience of immersing into a completely different culture for a finite period. I’m not sure if we’ll ever get to it, we have variables in our life (fire department, dog rescue, wife’s family) that make the visibility for this unclear. Maybe we can go do something like this for six months at some point.
The picture in the header of this post is from Torremolinos, Spain, the town my father lived in.