Retiring Abroad May Not be Paradise

houstongal says on Feb 5, 2008, 18:24:

Excerpt:
Banks are trying to make some of these processes easier. HSBC PLC has revamped its Premier Account to help customers moving overseas arrange for bank accounts and mortgages in their new country. The bank also provides documents necessary for obtaining services such as a mobile phone, which often requires a local credit hisotry. Charles Schwab & Co. has begun allowing its overseas customers, located in more than 200 countries, to establish standing letters of authorization so they can request with just an email that money be wired to an account abroad.

"It is now official: there's no place on earth where you will not find a Peruvian band." David Sedaris

0 funny, 0 helpful.

rocinante says on Feb 5, 2008, 18:27:

Full WSJ article:

"As the first wave of baby boomers hits retirement age, life overseas beckons. But be warned: Retiring abroad can have its logistical headaches.

Many of today's graying expatriates are heading permanently offshore to stretch their nest egg. Jon and Gretchen Nickel, formerly of Portland, Ore., settled in Panama, where they say they can live like the rich without needing a big bankroll. Lee Harrison and Julie Lowrey, from Vermont, moved to Uruguay because the lower living costs allowed them to retire years early. Other expat retirees are seeking foreign adventure, cultural experiences and exotic travel, without having to board an airplane.

But retiring to a foreign land can present a number of challenges, from opening a local bank account to avoiding being gouged for services. And while many countries, from Belize to South Africa, offer inducements to attract foreign retirees, making sure you've got health insurance can be a big problem.

Moving abroad also means leaving behind family and friends, though Internet communications can shorten the distances. There can also be safety and security concerns, depending on where you end up.

"People go on a vacation and love the place and say 'I want to live here.' But that's very different than living there day to day and buying groceries and dealing with your finances," says Hugh Bromma, chief executive of Entrust Group, a financial-services firm that caters to many expat retirees.

Roger and Jennifer Miller retired to the Caribbean nation of Dominica in 2005, expecting that meeting residency requirements "would be a cakewalk, and it wasn't," says Mr. Miller, 61, a former analytical chemist in St. Louis. What's more, he says, "expenses you expect to be cheaper often aren't" because locals expect Americans have money and charge more for services. He says life in Dominica "is about two times more expensive than I was led to believe when we started asking around down here about retiring here."

No agency tracks how many U.S. retirees live overseas. The federal government requires no forms. To help start you in the right direction, here are some things you should consider before making a move:

Banking and Finance

Online banking and brokerage accounts make managing money easy from anywhere you can find an Internet connection. But working with local banks can be frustrating.

Mr. Harrison, a former project manager with power company Exelon Corp., first retired to Ecuador at the age of 49, before relocating last year to a $160,000 beach house near Punta del Este, Uruguay, and a 1,000-square-foot apartment in Montevideo, Uruguay's cosmopolitan capital. In Ecuador, which uses the U.S. dollar as the national currency, he could deposit dollar-denominated checks at his local bank, though they generally took three weeks to clear. But Uruguay uses the peso, and local banks don't accept dollar checks.

So, like many retired expats, Mr. Harrison operates his finances from the U.S. He maintains a Citibank account in the U.S. and wires blocks of money to Uruguay three times a year at a cost of $45 per transaction. Other retirees also rely on local ATMs to tap their cash in the U.S., though fees for currency conversion and non-network ATM use can add up quickly.

Most retirees also keep their credit cards based in the U.S. Mr. Harrison says he buys lots of merchandise online "and American vendors generally don't let you use a foreign credit card." Bills also are paid online.

Opening accounts can range from simple to vexing. Mr. Harrison's bank in Uruguay "just wanted my passport. It was so easy." For the Millers, the process took weeks. They didn't bring any documents, and the Dominican bank they chose wanted letters of credit and references from the couple's U.S. bank.

Banks are trying to make some of these processes easier. HSBC PLC has revamped its Premier Account to help customers moving overseas arrange for bank accounts and mortgages in their new country. The bank also provides documents necessary for obtaining services such as a mobile phone, which often requires a local credit history. Charles Schwab & Co. has begun allowing its overseas customers, located in more than 200 countries, to establish standing letters of authorization so they can request with just an email that money be wired to an account abroad.

Health and Social Security

Social Security won't be much of a problem. The Social Security Administration will electronically deposit a monthly Social Security check in many banks around the world, though not all. Still, many expat retirees, to avoid challenges with local banking, have their Social Security checks electronically deposited into their U.S. bank, which they can then access online.

Health care is a bigger concern. Few U.S. employers offer health-care coverage to expat retirees, and U.S. carriers typically don't provide individual coverage to Americans living abroad. Moreover, the federal Medicare program generally doesn't cover costs outside the U.S. As such, many retirees either pay out of pocket or, once eligible for Medicare at age 65, return to the U.S. from time to time for care.

The Nickels bought a catastrophic health-care policy from a European insurer to cover them in case a pricey medical emergency arises in Panama. The policy costs less than $2,000 a year, but kicks in only after the first $10,000 in expenses. "I'm gambling at the moment that my health will hold out to 65," says Mr. Nickel, 62 years old. "Once I get Medicare in three years, I'll be flying to Houston or Miami more often for my health care."

There is some good news. Health insurer Cigna Corp. a year ago rolled out a new insurance plan, covering health, dental and vision, that allows employers to extend health coverage to retired workers who move abroad. The plan currently covers about 200 retirees living abroad, but the insurer expects larger numbers because "we anticipate the trend to retire overseas will grow," says a Cigna spokeswoman.

Many retirees also say that basic health care in many parts of the world is very good and inexpensive. Many doctors are Western trained, and some local hospitals are affiliated with U.S. institutions. Hospital Punta Pacifica in Panama City, for instance, has partnered with Baltimore's Johns Hopkins Medicine International.

In some countries, retirees who become residents gain access to the national health-care system. Mr. Harrison, who just gained Uruguayan residency, is considering joining the national health plan. He says a friend recently joined and pays the equivalent of $65 a month for coverage that includes hospitalization, doctor visits and prescriptions.

Measuring one country's quality of health care against another isn't easy, since so many variables exist. However, the World Health Organization's World Health Report 2006 (available at www.who.int) contains some statistical indicators to help compare health systems across various countries.

Still, for most major medical issues, "you probably want to return to the U.S.," because of superior medical technology in U.S. hospitals, says Robert Gallo, who founded Escapeartist.com, a Web site that offers information about overseas living. Internationalliving.com, to which Mr. Harrison is a contributor, also offers information on living overseas.

Housing

Some expat retirees rent property, others buy. The Millers bought land in Dominica and are building a 900-square-foot home with a big veranda in southern Dominica overlooking the Caribbean. The Nickels gutted and remodeled an apartment on the 24th floor of a Panama City apartment building and built a "very nice kitchen area" because they like to cook and entertain.

In some situations, there can be legal issues to owning property abroad. Mr. Gallo, of Escapeartist.com, encourages people to set up and own their property in the name of a Panamanian or British Virgin Islands corporation. When you go to sell it, you sell the corporation and the property just switches hands, easing transfer of title, Mr. Gallo says.

Taxes and Legal Issues

Many countries try to lure foreign retirees. Belize's nearly decade-old Retired Persons Incentive Act, for instance, allows retirees over age 45 to import their personal effects duty free, and to earn retirement income tax free. Countries from Italy to Panama to South Africa and Thailand offer a "pensioner visa" or "retirement visa" to Americans who can prove a certain level of monthly income. The visas can provide a variety of benefits, such as automatic discounts on certain purchases and the ability to obtain a local passport.

Still, the Internal Revenue Service taxes Americans on income no matter where it's earned in the world. Tax regimens vary widely overseas, and you may or may not be subject to local taxes. Many countries have tax treaties with the U.S. to alleviate double taxation. A list of countries with such tax treaties is available at IRS.gov; search "tax treaties A to Z."

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

0 funny, 0 helpful.

houstongal says on Feb 5, 2008, 18:44:

Thanks Roc! You must get the online version of the WSJ. I still prefer paper.....

"It is now official: there's no place on earth where you will not find a Peruvian band." David Sedaris

0 funny, 0 helpful.

miamimike says on Feb 5, 2008, 18:56:

Mexico curently has the Lock on American Expat Retirees! Close Proximity to the US is one big reason,,, In my Ex-Wife's hometown of Guadalajara, there are 70,000 + NorthAmericans living there. More move in every day,,, If you stay in the Typical Mexican Barrios, housing is still pretty cheap, $20K condos, simple Houses ect. . Not sure how many more 1000s are in San Miguel de Alende, Cancun, Acapulco, Ajiic, Chapala but these American Enclaves are expensive as you get soaked on housing. Who wants to live in a Tourist Trap city anyways? . Their Visa system for Retirees is pretty straight forward and transparent not to mention Retirees can join the NSS(National social security) Health Insurance system for aroundd$30 monthly. And its pretty good benefit wise. Mexico has put forth a Lot of Effort in attracting Retiring Americans, Canadians to their Country and it has paid off. These Retiree Dollars are great sources of hard Currency with little downside to the Host Countries,,,Honduras, Panama and Nicaragua has had these Pensionada Visas in effect for over 10 years where you are allowed to Import all your household effects tax free(initial move trip) as well your boat, Car and Motorcycle. You can repeat this process every 2-3 years with the Car/cycle/boat Import.

My Avatar-- Sarah Palin Says " "You know the difference between a pit bull and a hockey mom?? Lipstick!" Now on a Short Verbal Tether by the Honorable John McCain

0 funny, 0 helpful.

Gator says on Feb 5, 2008, 19:00:

Ünless you are willing to FULLY integrate and forget about, "THIS IS THE WAY DID IT BACK HOME, FORGET IT.

"Credidi pretio parvo emere et magno vendere tibi in animo fuisse!" .

0 funny, 0 helpful.

rocinante says on Feb 5, 2008, 19:05:

I do the paper as well. I read enough on the screen with thses webiste. However I found this on line at what I believe is the author's blogspot.

I have a feeling that the US government supports/encourages overseas retirement as the dot com bust, 401 K pension scandals and the failing Social security system screwed over a good deal of boomers. Plus it makes sense for some. I just hope they stay in Panama/Mexico/Costa Rica/Uruguay.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

0 funny, 0 helpful.

houstongal says on Feb 5, 2008, 20:25:

Smart of you to track down the author's blog! Back to reading my paper......

"It is now official: there's no place on earth where you will not find a Peruvian band." David Sedaris

0 funny, 0 helpful.

CatGirl says on Feb 5, 2008, 20:30:

HG & Roc - thank you for the info. this has been quite the topic of discussion. Interesting no "actual" studies have been done. I wonder where one could pull this data from to look at a large enough sample size?

Possibly tracking it through our new US Passport System? Tax Returns? any thoughts

Hard for me to believe that a marketing company would be able to track this with a better and more reliable sample size...hmmm

Roc: Excellent feeling.....I think you may be right on target...Purrr

Love and Time: the only two things that cannot be bought, but only spent

0 funny, 0 helpful.

christobeldawg says on Feb 5, 2008, 20:50:

very interesting but I keep thinkin where is the direct info on living in Colombia, as this is what most here are interested in

admittedly, arriving can feel great too

0 funny, 0 helpful.

CatGirl says on Feb 5, 2008, 21:11:

Dawg: You mean direct info from people that have retired in Colombia (from the US?). Kitty is just clarifying...

Love and Time: the only two things that cannot be bought, but only spent

0 funny, 0 helpful.

christobeldawg says on Feb 5, 2008, 21:15:

si, pretty much, or those not retiring but thinking of living there part of full time

admittedly, arriving can feel great too

0 funny, 0 helpful.

CatGirl says on Feb 5, 2008, 21:41:

Maybe that could be a good post question?

Love and Time: the only two things that cannot be bought, but only spent

0 funny, 0 helpful.

scotty says on Feb 5, 2008, 23:56:

Houstongal, interesting post, gives one something to consider before making a move.

Get Rhythm, when you got the blues. Johnny Cash

0 funny, 0 helpful.

Atrevido says on Feb 6, 2008, 04:43:

When I moved to Colombia the peso was running 2600-2800 to the dollar. Now it’s 1900 and change so the cost of living has risen dramatically in a few short years. Apart from that things like banking and health insurance are easy. Both require a cedula which you will get that within a few weeks of arrival with a temporal ts visa. If you are a city dweller life couldn’t be easier. You’ll have no need for a car since taxis and buses are extremely cheap (by US standards) and a “tri-moto" or “carretilla" will deliver whatever you need to your house. Rent in "stratas" from five on down is way below what you would pay in most of the US and you can have a non full time maid and cook for about ten or twelve dollars a day. And of course in most Colombian cities you’ll have summer or spring all year long and never see the freezing point.

Country living on the other hand is more complicated and basically you have two choices as I see it. One: you can have a “finca" worth ten or twenty thousand dollars on the outskirts of a poor village where you produce something you sell. If you have a vehicle at all it will be a fifties era Willys to haul the coffee, platano etc. that you produce. If you don’t produce something and the land is idle then you will be seen as suspiciously rich and be a kidnap or at least extortion target. In fact no matter how poor your “finca" is you will be suspected of being rich just for being a foreigner, especially so if “americano“. The other country living option is just the opposite. You live on a “finca" with an expensive home costing somewhere between eighty to three hundred thousand US on the outskirts of a city. The property has a lot of flower gardens but no income generating product. To keep the property up you have a “mayordomo“. This is a full time employee and his family to whom you not only pay the minimum salary and health benefits etc. but for whom you also supply a rent free house on the property including electric gas and water. The property is usually in a “parcelacion" or subdivision that contains other like properties and has security measures like a “portero" and locked gate. Typical transport would be 4x4 pickup “doble cabina" or SUV.

I’m generalizing of course and your mileage may vary.

0 funny, 0 helpful.

houstongal says on Feb 6, 2008, 10:17:

Cdawg: "very interesting but I keep thinkin where is the direct info on living in Colombia, as this is what most here are interested in"

Did you check the escapeartist.com website mentioned in the article? There appears to be info on Colombia there.

CatGirl: The article mentions that no one tracks such info. The US government has multiple huge databases that could be mined for all sorts of research, but I bet it's nearly impossible to conduct such research. Tapping into the various databases would be a data miner's dream.

"It is now official: there's no place on earth where you will not find a Peruvian band." David Sedaris

0 funny, 0 helpful.

Robert Jorge says on Feb 6, 2008, 10:22:

Good post Atrevido.

BEWARE of gold diggers.

0 funny, 0 helpful.

miamimike says on Feb 6, 2008, 10:53:

Atrevido--the Current CP:USD exchange is still a great deal for Americans even at today's Rate.My first visit in the mid 90s, the exchange was 600:1 USD so everything is reletive.We thought that was great! LOL

My Avatar-- Sarah Palin Says " "You know the difference between a pit bull and a hockey mom?? Lipstick!" Now on a Short Verbal Tether by the Honorable John McCain

0 funny, 0 helpful.

nine inch nails says on Feb 6, 2008, 11:16:

Excellent link. Thank you. I have a couple more pointers for my 3rd trip to Colombia next week (3 days CTG y el fin en Medallo)! Muchas gracias.

"They know nothing, they know nothing." J. Cramer

0 funny, 0 helpful.

Atrevido says on Feb 6, 2008, 13:34:

miamimke if you started paying an employee minmum wage say four years ago and his salary has risen 6 point something percent every year but the value of your dollar has dropped almost a third things aren´t so hunkydory. In ´96 or ´97 can´t remember, I got 975 to the dollar at a money exchange so the peso must have been worth around a thousand. I think somebody here posted a historical peso/dollar chart once. Don´t remember who though.

0 funny, 0 helpful.

Atrevido says on Feb 7, 2008, 14:42:

The last time the peso was in the six hundreds was 1992.

0 funny, 0 helpful.

miamimike says on Feb 7, 2008, 15:20:

Gator posted that Chart and it showed the CP even at much lower exchanges,,,

My Avatar-- Sarah Palin Says " "You know the difference between a pit bull and a hockey mom?? Lipstick!" Now on a Short Verbal Tether by the Honorable John McCain

0 funny, 0 helpful.

Gator says on Feb 7, 2008, 16:53:

1991 January to December 578.96 588.63 598.46 608.45 618.61 628.82 639.37 652.11 667.18 679.30 694.70 638.61

1992 January to December 644.27 636.54 641.59 653.83 664.37 697.57 705.14 691.68 702.81 716.88 725.45 737.98

Now back in the "good old days."

1982 January to December 59.84 60.63 61.40 62.21 63.02 63.84 64.69 65.55 66.42 67.68 68.97 70.29

The really, really good old days, read it and weep: 1950 January to December 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96

"Credidi pretio parvo emere et magno vendere tibi in animo fuisse!" .

0 funny, 0 helpful.

miamimike says on Feb 7, 2008, 17:37:

Thanks for the history Gator! Interesting numbers,,,

My Avatar-- Sarah Palin Says " "You know the difference between a pit bull and a hockey mom?? Lipstick!" Now on a Short Verbal Tether by the Honorable John McCain

0 funny, 0 helpful.

bufalo says on Feb 7, 2008, 17:38:

1. don't see Montevideo as cosmopolitan - I lived there a few years back. Great place, but cosmo?????

2. Not all ATM fees add up, I've lived off of mine and have never paid a dime, nor peso for it's use.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

0 funny, 0 helpful.

tomtom33 says on Feb 8, 2008, 03:02:

Of course the exchange rate doesn't tell the whole story. When the exchange rate was 600 to 1, you didn't pay 2500 pesos for a small dish of ice cream.

0 funny, 0 helpful.

Lowell says on Feb 8, 2008, 05:26:

exactly correct. seems like everything is still on the rise here.

Alfred E. Newman. "What. Me Worry?"

0 funny, 0 helpful.

borat says on Feb 8, 2008, 12:49:

don't forget, it's hardly in the interests of clients of the wall st journal for nationals with cash to spend to take it and spend it elsewhere.

what you believe is not important, it's what you do that counts

0 funny, 0 helpful.

rocinante says on Feb 8, 2008, 12:52:

G south - c'mon over to the other thread MS is on the hot seat

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

0 funny, 0 helpful.

CatGirl says on Feb 9, 2008, 10:49:

HG: "The US government has multiple huge databases that could be mined for all sorts of research, but I bet it's nearly impossible to conduct such research. Tapping into the various databases would be a data miner's dream."

Yes I agree. Many times this type of data is collected in mass that can be quite helpful if looked at and collected correctly. Problem is how it was collected at the time and/or trying to find something that can interface with what you have and pull this info so it will make sense or be of any use to anyone. Then there are those internal Dept problems jaja we cant do anything about that jaja

Love and Time: the only two things that cannot be bought, but only spent

0 funny, 0 helpful.

lpdiver says on Feb 9, 2008, 17:22:

Atrevido...Thanks for the information. It confirms my casual personal observations. I do have the homefield advantage of being married to a paisa so many of the problems (banking, doctors, etc) other gringos encounter are solved (less problematic).

I am especially appreciative of the insights on finca living. I am leaning towards a small "working finca" fairly close (100 km) to a major city. I have no hopes of making money but rather of maintaining appearances. I have hit it off well with a brother in law that would kill for the opportunity to run it.

I am especially intrigued with bamboo construction and would fancy myself as a cross between Buckminster Fuller and Simon Velez.

t

"cook some rice!"

0 funny, 0 helpful.