Retire To... Da Nang?

How retiring overseas can bail out a retirement plan.

Marketwatch posted two lists in one article on the best foreign retirement destinations. One list was from International Living and the other from Live and Invest Overseas. This is has always fascinated me, it seems to be appealing to many people on some intellectual level even if they never plan to do it.

I've disclosed previously that my father lived in southern Spain from the age of 54 until he died at 88. I will spare you the family history as to how he ended up there but things here were not going well for him here and he created a life for himself there professionally and socially despite speaking very little Spanish. He rented, and I believe his rent was around €400, his health insurance was free or close to it but I would note that the quality of the care was very poor for him as a cancer patient (he smoked cigars for about 55 years and got throat cancer shortly after his 88th birthday) and everything else was very cheap too. His Social Security check was around $1100 and he got some sort of pension in Spain that was another few hundred and he made it work.

The other day my wife and I watched an episode of House Hunters International where the home buyer was interested in Granada, Nicaragua and the houses she looked at ranged from $125,000-$135,000. A couple of weeks ago I blogged about very low rents in Guatemala.

To the lists in the Marketwatch article, the countries on both lists were Mexico, Colombia and Portugal. Although the two lists used very different criterion, I am surprised there wasn't more overlap. If you're interested in this on any level, you need to do the research yourself but many of these countries want American expats and go out of their way in terms of tax breaks and discounts on basic expenses to woo Americans. A couple of places, including Panama, have the US dollar as their currency.

Medical care for the basics is usually very good based on a lot of reading I've done (no substitute for boots on the ground). By basics I mean checkups, managing non-immediately critical illnesses, trauma (breaking a bone) and diagnosing more serious problems. Choosing Latin America obviously is close enough for needing to come back to the US for treating something more serious.

I am convinced that retiring to a country that wants American retirees is a lifeline for underfunded retirement plans which is why I write about it so frequently, also it is an interesting subject to learn about.

Beyond the basics of figuring out preferable destinations in terms of interests, scenery and any other relevant areas, the things I mentioned above in terms of taxes, discounts etc there will of course require a lot of effort to find a workable living situation, be that renting or buying a place.

The takeaway is that with enough effort it would be pretty easy to build a lifestyle for less than $1500/mo, the Guatemala link above spells out a path to a $1000/mo.

Most of what I have read on the topic doesn't address being an older retiree or needing more intensive medical care which is why think a more workable solution is doing this as a younger and hopefully fit retiree.

Where many people are undersaved, the scenario that I think that can work is a couple have a nest egg that isn't yet big enough to sustain a meaningful retirement income stream and house that is free and clear upon retirement or earlier. The idea is to rent out the paid for house with the hopes that the net rent payment would cover the expat expenses without having to start Social Security early or tapping the retirement account which could then have the opportunity to grow for five or ten years. Then whenever you need/want to come back you have a house waiting for you, a larger Social Security payout and hopefully a larger investment portfolio.

I have been writing about this for a long time, maybe as a function of my father's experience with it and it seems like the idea is getting a lot more coverage as maybe more people are doing it. The bigger idea is thinking outside the box to solve any retirement plan shortfalls, this is just one idea.

Comments
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rogernusbaum
rogernusbaum

Editor

Thank you for reading the post, glad you found it useful

Shruthi
Shruthi

Very good conversation and thanks for keeping at a high level (though the craving for the details kept arising).

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