I would not retire overseas before doing these 5 things.
My name is Dan. This week marks my 19th year living outside the USA. I was 46 when I left the USA, but now I am 65. I was willing to take risks at 46 that I would not take today. Here are the risks I would not take today because of my age.
Money
The first is Money. I left the US 19 years ago, before I had enough money. So, how much money would I need to leave the USA today at age 65? I would need less money overseas than I would need to stay in the USA. But, how much is enough money for me?
I will share video of Qiang and me enjoying SE Asia as I explain.
So I will make some assumptions before making my calculations. Since most of you do not seem as interested in slow travel, which costs more, I will assume that I would live a mostly stationary life in SE Asia.
Based on several years of living all over SE Asia, I would normally set my initial stationary costs of living at around $1500 to $2000 per month for Qiang and me. But that is probably not enough for most people. You have to put your feet on the ground to determine your budget.
But there’s something new and important I need to talk about today. Things have changed on the ground overseas in many parts of the world.
The US dollar has been fluctuating against major currencies amid policy uncertainty. Plus, the US Congress continues to run large budget deficits no matter which party is in power. So, the US dollar faces some unpredictable challenges.
I am not an economist, but I think it would be prudent to set my monthly cost estimates higher until things stabilize. So I will raise my monthly cost of living requirements to $3,000 per month to cover the increased uncertainty. That is $36,000 USD per year.
My online business already makes double that, but you likely don’t have one. So, I will assume I have no online business. I will approach this as if I were just a guy who wants to retire overseas and live in Southeast Asia on $36,000 per year.
Today, I know I can do it for much less, but at age 65, with current economic uncertainty, I would want a larger buffer before leaving the US.
Now I am not a financial planner, but I like to read what they write online. I will share a few ideas I have read that apply only to me. You will have to discuss your personal situation with a certified financial planner.
With my new uncertainty buffer, I will need $3,000 per month. I would do that with either investments, a pension, supplemental income, or all three.
Investments
The 4% rule explains how large my investments need to be to cover $36k per year. If I had no pension or supplemental income, my investments would need to be of $900k USD.
Why would I need $900k if I had no pension or other income? The 4% rule says I can withdraw no more than 4% of my $900k USD, or $36,000. The rule says that my investments would likely last for a full 30-year retirement if I pulled out no more than 4% per year.
The rule assumes I would keep my investments in the market with 50% in stocks and 50% in bonds. I have included a couple of links so you can read more about the 4% rule. Schwab, Investopedia.
If my investment was less than $900k, which it is, I would need to supplement that 4% of my smaller amount with my pension or another supplemental income to cover my $36k living costs per year.
Pension
Many people reaching retirement age have a stream of income, such as social security or a pension, to help pay for retirement. In my case, I can sign up for my Social Security at any time. But I am letting my Social Security grow while my online business is covering my living expenses. The monthly payment grows at 8% per year until age 70.
What would I do if 4% of my investments per year, plus my social security, would not cover my $36,000 per year cost of living? I would create an online supplemental income before I would be willing to leave the US.
At age 46, I left the US without enough money to retire; I was too young for Social Security, and I had no online business or income. But I would not do that at age 65. So what would I do?
Remember, we are still talking about Money. I will cover the next four things I would do after I talk about …
Supplemental Income
Many overseas retirees create supplemental income by working part-time in retirement. Some teach English online, some do remote work online, some create YouTube channels, and others like me have created online businesses to supplement or fully fund life overseas.
So, I would create an online supplemental income before quitting my job and leaving the US. At age 65, I would not be willing to take the same risks I did at age 46.
Okay, since I have the $3,000-per-month problem handled via my business, I will move on to the next topic. But I will share a video you can watch that explains the business model that pays for my life overseas.
Banking
It doesn’t do any good to have money if you lose access to it while living overseas. I would not retire overseas until I had set up backup banking. Now I have great detail on this subject that you can get in my free eBook, so here is the short and sweet version.
Maintain Two Banks: I would set up two separate, unrelated banks in my home country before leaving. Each with its own ATM card, its own Visa credit card. Before leaving, I would also set up and test online banking with an authenticator application (best) or 2-factor SMS authentication (second best) on my smartphone.
I suggest Charles Schwab for one of your banks since they rebate foreign ATM fees.
Maintain US Address: Each bank would have a US address where my family or a trusted friend receives US Postal mail for me. I would not give a foreign address to my US banks or investment house. Some expats have had their accounts closed after providing foreign residence addresses to their banks.
Before leaving the US, I would set all of this up and verify that I can log in to both banks and transfer money between them. I would also set up both bank accounts, and any other postal mail I receive of any kind is emailed to me.
I recommend getting and reading my free eBook here for more details about how to do all of this.
Healthcare
Okay, my personal $3000 monthly costs with buffer are not intended to cover emergencies like healthcare. So I would want additional savings set aside to cover healthcare costs.
After spending time in the hospital myself and paying for another person’s hospital stay, I know how much cheaper health care is in SE Asia compared to the US. So, I would rather pay for healthcare out of my pocket as needed rather than buy health insurance.
So I would set aside an additional $30k to cover any health emergencies and treatments.
But I am pretty healthy. I work out 5 days a week and eat a low-saturated-fat diet. That may not be enough for you. So you may want to buy health insurance and add that to your living costs instead.
I would also verify that whatever prescription drugs I am taking are available in my new country. I could do that in one of two ways. I would either search online for a pharmacy in the city and email them and ask if they carry my prescriptions, or leave a message on the Expats Facebook page for that city or country asking if my prescription is available.
Communications
Set up smartphone communications so it is seamless for your personal and business contacts, no matter where you are in the world. Some investment accounts, banks, and government offices will only communicate with a US carrier phone number.
Tello.com is a US carrier that can issue you a number on your smartphone. Tello’s Wi-Fi Calling allows you to receive calls, make calls, and send/receive texts while overseas at no extra cost, treating them as domestic US usage for $7 USD per month.
You just get a local SIM card in your foreign country to access the Internet. Then Tello’s WiFi-calling and texts use that local SIM’s Internet access in whatever foreign country you’re in. Local SIMs in many foreign countries cost less than $10 per month.
Get your phone unlocked before leaving the US. Then install a Tello eSim in your phone, and no matter where you are in the world, your Tello eSim will be seen as a US carrier, so you can call, text, or receive 2-factor authentication texts from US banks and investment houses.
In your physical SIM slot, insert the physical SIM for the country you are in, and that physical SIM’s data plan will allow the Tello eSIM to send and receive texts and support Wi-Fi calling. That way, you will not pay roaming fees for Tello texts and calls.
Google Voice and WhatsApp work well for friends and family, but not banking or investment houses in the US. Port your existing US number (not your new Tello number) to Google Voice, then use that Google Voice number to set up your WhatsApp account.
Exploratory Visit
I would not retire overseas before an exploratory visit to verify the location’s suitability and the cost of living for my desired lifestyle. I would not rely on anyone else’s cost-of-living numbers but my own once my feet were on the ground.
Ideally, I would stay for a few months to verify that my love for the place continues after the first few weeks. I have met many expats overseas who thought they would love a new place after watching videos, but ended up moving again 6 months or a year later.
Avoid that double move by doing an exploratory visit overseas before making a final decision where you are going to move. In SE Asia, these countries are all only a short flight away for very little money. So do some exploring and pick your favorite before making a final decision.
Okay, so those are the minimum 5 things I would do before even considering retiring overseas, but those are only my top 5. Grab a free copy of my eBook, which goes into much more detail on these and many other topics. This will increase your chances of a successful life overseas.
And watch this video, if you want to know the online business model that I use to pay for my life overseas.