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Author: MainiacJoe Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: What about retiring overseas Date: 8/7/2003 11:29 AM
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Hello,

This is similar to the Where will You Live? thread but distinct enough to warrant its own thread I think.

What are the advantages and disadvantages of retiring overseas?

Here are some ideas I've had, but I'm really hoping others have thought more about it.

Advantages

1. Much lower cost of living
2. Cross-cultural experiences
3. Tax benefits perhaps?
4. Some great scenery out there

Disadvantages

1. Far from friends and family
2. Cross-cultural experiences
3. Political risk

- Joe
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Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 146 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 11:46 AM
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1. Much lower cost of living

And, depending on where, a much lower standard of living. I'm sure there are sweet spots here and there, but by and large from what I've seen, we do get what we pay for in this country.

3. Tax benefits perhaps?

Actually, I was under the impression it would be more like tax penalties. I don't know this area of tax law well, but I've heard repeatedly that ex-pats get a significant amount of their income double-taxed by local income tax and US income tax (typically AMT).

Yes, US tax. The IRS still wants you to pay US income taxes even if you live abroad. There's also a confiscatory tax for giving up your US citizenship entirely. It's comparable to the estate tax, I understand, and as such it really will take a bite out of most people who are ready to FIRE.

Another drawback I can think of is learning a foreign language. Now, it's true that in many other countries, far more people speak multiple languages than we do. However, they often learn at an early age. Learning to become really fluent as an adult is often difficult. I knew people from Guatemala who spoke only broken English after living in the US for a decade, or no English at all. Imagine yourself with the positions reversed.

English speaking countries are rarely on the "cheap" list.

I'm not against the concept, it's just that I've thought about it before, and the answer always seemed to be that the drawbacks were huge.

- Gus

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Author: WXFranklin Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 148 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 12:25 PM
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I've lived overseas and even though it was less expensive in some places, nothing beats the convenience and opportunity of living in the US.

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Author: FriedaChopsticks Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 149 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 12:52 PM
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This is an interesting question.

When I was in the Peace Corps, I was surprised by how many retired folks were in Ukraine with me. It was a fantastic experience for me, and it turns out it was a pretty sweet gig for them too.

One of the advantages, financially, was that the PC gives you a stipend that pays for all of your expenses. They fly you over there, find your housing for you, etc. Because you are technically a volunteer, you can still collect SS at home. At the end of your ~27 months, you receive a "readjustment allowance", which is a few thousand dollars to help you get your life going back in the US. For many retirees, they rented out their homes while they were gone (leaving details and POA to their children or others), so this was more income for them.

Additionally, you have relatively good medical care because Congress insists that we have high-standard care. Yes, they have limitations on some supplies or testing equipment (memories of a pelvic exam with the Peace Corps Medical Officer using a flashlight are swirling through my mind) but you aren't on your own faced with going to a witch doctor or anything. Another advantage: we got our US prescriptions for free. The only difficulty we had was that the PC has pretty strict medical requirements, so we had to go through a lot of tests before we were assigned to a country. I think after a certain age, you have to go through more tests to ensure you don't have heart trouble, etc. (Medical clearance can be a beauracratic nightmare. I swear, getting medical clearance is the longest part of the application process.)

Another benefit to living abroad through PC is an emotional network with other Americans. You are instantly meeting people who are going through the same emotional issues that you are.

Finally, the retirees had an additional advantage that those of us in our 20's didn't: effectiveness. Ukrainians believe wisdom comes with age. In Ukraine, there is a lot of respect given to the older generations. In general, these folks were very effective in their positions. A lot of them had a harder time with the language, which is a human condition. But they made inroads into the communities that some of us "whippersnappers" couldn't.

For various reasons, I didn't stay in Ukraine. But SO knows that as soon as we are FIRE, I would sign up for the PC again in a heartbeat.

FriedaChopsticks
-- didn't realize she could go on so long about PC.

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Author: tutone Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 150 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 1:08 PM
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Frieda -- Please tell us more about your Peace Corps experience. My wife and I have considered doing this at some point in the future. I'd like to hear your impressions of hte experience.

Did you feel like the time was worthwhile?

How hard was it to adapt to life outside the U.S.

Would you do it again?

Any negatives we should know about?

tutone

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Author: mazske Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 154 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 2:07 PM
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What are the advantages and disadvantages of retiring overseas?

My wife is from Panama so I've given this question a lot of thought.

Currently, I live 3 1/2 hours from the closest family member and we rarely see them. Her family lives in Panama and we go about 5 years in between visits. That means both of us are use to living away from our families.

Panama, Costa Rica, Mexico and some of the other Central American countries are all possibilities for someone like us to retire to. The advantages are that we like the warm weather and the relaxed atmosphere. The cost of living is much lower than here as well, so our dollars would go farther.

Some of the disadvantages are the fact that health care is not on the same level as in the US to my knowledge. That would be a big concern of mine as I get older. Unless, I was in Mexico and I could easily and quickly get back to the states.

Another disadvantage is the fact that I'm a "gringo". If I were to retire to Panama with my wife, word would quickly get around that the gringo has some bucks. Why would this word get around. Well, if we were to retire to Panama, we would use our "extra" dollars to live in a nicer house. We would probably drive a decent vehicle as well. Those two facts combined with the fact that I'm American would cause most locals to automatically assume that I am filthy rich.

As time passes and I grow older, would this attract some young bucks to try to break into my house to rob me? This could happen anywhere in the world, but as a blue-eyed American in Central America with a nice house, I think the odds would increase.

Time changes everything, but the way we think now we will FIRE inside this country somewhere. Of course, don't take this the wrong way, if all the Mexicans keep coming to the US, maybe there'll be some nice places in Mexico that us old Gringos could go to.


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Author: FriedaChopsticks Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 161 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 2:36 PM
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tutone,

Oh boy, don't get me started! Sorry this is so long. If you have more specific questions, I'm happy to answer them.

Did you feel like the time was worthwhile? Would you do it again?
I would definitely encourage anyone to look into the Peace Corps. I would do it again in a heartbeat when I'm older. The toughest part would be finding a time to uproot my life and go. It gave me a perspective on how other people live that I didn't get from travelling. I learned patience and to go with the flow. It also showed me how I took things for granted that I didn't even realize I took for granted, such as phone connections that always work or white soft toilet paper. I also found myself getting frustrated with folks back home (read: Mom) who couldn't comprehend that the phone doesn't always work or which way the eight hour time zone difference was or that not everyone wants to be like us. That's how quickly my perspective changed.

The benefits were amazing. I taught English and watching my 5th formers sing Old McDonald (complete with Oink Oink) at the top of their lungs made me so proud. They LOVED it. Teaching high school kids showed me that teenagers are teenagers everywhere. They were not interested until I began to talk on their level (I busted out the Britney Spears, who is ridiculously popular over there.) Then, however, the teachers were worried I wasn't teaching but playing with the kids. It's a fine line...

How hard was it to adapt to life outside the U.S.? Any negatives we should know about?

I would say that adapting to life outside the US was not as difficult as I expected. There was enormous culture shock, but you've prepared yourself for that. It's almost like you've armed yourself that this is going to be the toughest thing you've ever done, and then you get there and you realize you can do it. You still have bad days and then you need to remember "I signed up for this. I knew this was going to happen." And the PC does a good job of helping you recognize where you are in the culture shock process. Plus you have Americans around you (I went over with 70 other Americans) who are going through the same thing. That helps enormously.

For me personally, my toughest adjustment was working with the bureaucracies of a US government organization in a foreign country. I'm a very organized person who doesn't always go with the flow. I try, but it doesn't always happen. Surrendering a certain level of control over my life was a very difficult thing to do.

There are lots of discussion boards on Yahoo! out there. The one I monitor the most is for people about to go to Ukraine. http://groups.yahoo.com/group/peacecorpsukraine/

The main PC discussion group is here.
http://groups.yahoo.com/group/peacecorps2/

They would be happy to answer your questions at either place. Or email me, I would be happy to do so as well. As you can tell, I love to talk about it.

FriedaChopsticks



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Author: Volucris Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 163 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 3:07 PM
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Yes, US tax. The IRS still wants you to pay US income taxes even if you live abroad.

I know the first $80K is US tax free if you live overseas and earn the income from an overseas company. I'm not sure about investment income though.

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Author: fredinseoul Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 187 of 5069
Subject: Re: What about retiring overseas Date: 8/7/2003 11:15 PM
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I've heard repeatedly that ex-pats get a significant amount of their income double-taxed by local income tax and US income tax (typically AMT).

Yes, US tax. The IRS still wants you to pay US income taxes even if you live abroad.


Gus,

This is not 100% true. I work in the Republic of Korea for a US Company. I do not pay federal income taxes nor do I pay Korean taxes.

We fill out a form and submit it to the IRS. No taxes.

fredinseoul


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