Record numbers of baby-boomers are fast approaching retirement in the US, and one thing they all have in common is a yearning for a comfortable retirement.
The economic state of the nation means that for many Americans, retirement abroad will be the only way they can ensure they have the comfortable life they dream of however.
To ensure that your overseas retirement is a success, there are three key elements that need to go into the planning of it, as we will now illustrate.
1 – Money Matters – More Than Anything Else!
Sometimes it’s considered crude to talk openly about money. However, when it comes to affording a decent retirement, openly looking at your financial situation and discussing your money matters with a professional is critical rather than crass.
We work our entire lives, pay our taxes and save as much as we can whilst ensuring our family has a good life – and then we retire! At this point we all really hope that our pensions have been well invested and that our guaranteed income from our investments will provide for a comfortable life.
However, with improved healthcare and better living standards many more of us can now look forward to a very long retirement. And believe it or not, this is not entirely good news. When it comes to money matters it is critical to ensure that the wealth you have accrued is well invested and protected to ensure it lasts as long as you do!
One of the reasons driving many American baby-boomers abroad is affordability. That is they are well aware that their pension income can go much further in a lower cost country overseas. This is a fact – but it is not one that removes your need to carefully look at how money is managed to make sure it will really provide for a decent income throughout retirement.
Take the time to assess your wealth status with the assistance of a professional, qualified and correctly regulated adviser. Use their expertise and services to correctly save and invest your money so that it is properly structured to enable you to achieve everything you want to once you move overseas.
You may need to look at where you bank your money and whether you will need to open a bank account in the country you’re relocating to. You might have to think about currency conversion too if you receive your pension in US dollars but live in a country with a different currency.
You might want to think about whether any savings and investment programs that are still running are best invested in terms of taxation and also risk. Note: many advisers prefer to encourage retired clients to take a less risky approach to the investment of their wealth.
Finally, look very closely at the cost of living in your chosen overseas country. Factor in day-to-day grocery costs, any taxes you may have to pay, real estate related costs, medical or health insurance fees, utilities and transportation.
Get a really good assessment of the cost of living, ensure you can comfortably afford it and only then should you make the commitment to relocate overseas.
2 – Location, Location, Location – Research is Essential…
If you do a search on ‘cheapest places to retire abroad’ you’ll find countries as diverse as Panama, France and Argentina listed. However, one man’s affordable country is another man’s luxurious and unaffordable dream. So bear in mind, cheap is relative to how wealthy you are!
When searching for a place to call home in retirement affordability is a very critical factor. Additional critical factors are elements such as the climate (too hot can be unbearable, too cold can cost more in terms of heating bills). Security and crime levels are important; considering local economic stability is also vital.
You will also need to look at the healthcare standards locally, and what treatment costs. Accessibility is a factor for those who want to be able to maintain contact with family and friends. What about the language barrier? And are there cultural or even religious obstacles to your comfortable integration?
You may have thought that picking a country to retire to was the easy part – however, to get it right on all levels a wealth of research needs to be done into how suitable a given nation is for your personal retirement requirements.
When you have drawn up your shortlist for consideration you need to visit to make sure what you think is true about a country is actually accurate. If possible visit for a prolonged period of at least a few months before you commit to a permanent relocation abroad.
You can rent a home and get a good feel for what day to day life is like if you spend longer in a nation than just a week or two. You need to see life up close and personal, rather than just seeing a country through the eyes of a holidaymaker.
Going on vacation overseas is a vastly different experience to living abroad.
3 – Home is Where the Heart is – Where Will You Lay Your Hat?
The final key element to securing your overseas retirement is finding the right house to call home. A property that drains your financial resources and your physical energy with its demands for repairs or heating, for example, will not be the best place for you to lay your hat in retirement.
A further advantage of making an extended visit to your chosen nation before you relocate permanently is that you can rent a home and get to know all the different neighbourhoods.
A suburb or city, hill top location or quaint village that initially looks ideal may turn out to be too noisy, lively, dead or deficient in terms of amenities. So you need to spend time looking at where you would most like to live before seeking out your ideal home therein.
When it comes to looking at real estate you need to understand the rental or ownership rules and laws in the new nation. It may be that foreigners cannot own property, or it could be that taxes for purchase are very high.
You might prefer to build your own house or rent somewhere fully furnished or totally bare! In other words, you will have a lot of choice therefore it will be your responsibility to get it right.
Do your research on the ground once you have retired overseas – and don’t rush to commit long-term to the first apparently suitable house you come across. As stated, an initially ideal location may prove to be unsuitable – but only a little time will tell.
Rent first before ever considering buying, and rent short-term so that if you want or need to move on you can easily do so.
Remember that real estate markets in different nations are built on different fundamentals, laws and economic elements. So, ensure you understand the dynamics and prospects for a market before you buy in and commit for the long-term.
About the author: Rhiannon Davies is the editor of ShelterOffshore, and writes extensively about living abroad and achieving the dream of a new life overseas.