In this report we ask, is cheap retirement overseas ending?
I just interviewed an American today that had to leave Vietnam. I will post that interview in a few days. Luckily it has a happy ending. Stay tuned. Yesterday I also got a comment on a video asking for a perfect cheap retirement destination that would last for a few decades.
Is Cheap Retirement Overseas Ending?
I have some good news and some bad news for you today. The world is changing at a rapid pace. A perfect overseas destination that you pick today for retirement, is not guaranteed to remain perfect forever. So, is cheap retirement overseas ending?
Not even your home country is guaranteed to remain the same over the next 5 to 10 years. International and domestic politics and the economy are going through a rough period all over the world. I grew up in the cold war and things were tense then too.
I remember as a kid hearing adults talk about moving to New Zealand if nuclear holocaust ever seemed inevitable. Back then, New Zealand was considered the only safe place if the east or the west ever decided to launch nuclear missiles. I don’t hear that talk anymore.
However, internationally, the east and west seem to argue more about trade and economic policy these days. This is not a political channel, but it seems to me that there is at least as much risk of internal political conflicts within nations. Internal politics is ugly right now.
Even in my home country, the USA, there are people on both the left and right that threaten to leave the country if their side doesn’t win. Politics had nothing to do with why I left the USA. I left 14 years ago to see the world. I love my country, but I don’t want to live there.
I prefer to live outside the USA because I love how it feels. I am not running away from anything. My cost of living outside the USA, even after 14 years, is less than my mortgage payment alone was when I left the USA in 2007. I have a better life now with less money.
But the USA is not the only country that is experiencing internal political and economic troubles. So does all this international and national turmoil mean that overseas cheap retirement is a thing of the past? Of course not. You just have to remain more liquid and flexible to rise above any challenges.
Let me give you a few examples of how being more liquid and flexible will help you maintain a beautiful cheap overseas life outside your home country. For your health and well-being, the two greatest risks to retiring internationally are your health and your money.
I have already done a report on how I handle those two risks, your health, and your money. That is not what this report is about. But you can still read that report. Just click the “More Information” link below this to get the link to that report. Two Biggest Risks.
In this report, I will instead talk about how I handle the two other biggest risks that could end your overseas cheap retirement in a particular country. The two other biggest risks are political and economic turmoil in your retirement country.
I want to explain to you how I intend to avoid these two other biggest risks–political and economic turmoil. I will discuss them in that order.
Political Turmoil
Let us assume for a moment that you have completed your exploratory visits to several countries and you have picked your favorite retire cheap in paradise country overseas. For argument’s sake, I will call that country Perfectland.
I can’t give you advice on how you should handle political turmoil arising in Perfectland. But I can tell you how I avoid being stung by political turmoil in Perfectland, should it occur. I already hinted at the solution above. The way I would avoid political turmoil in Perfectland is to remain liquid and flexible.
Let me give you a few examples of how politics could go bad and how remaining liquid and flexible will help me survive and thrive during overseas retirement. But let me make one thing clear first. Political turmoil has never occurred in any country during my 14 years of world travels. So don’t panic, just think about how you would handle it.
Freezing Foreign Assets: When two countries disagree on trade or security issues, one of the countries can freeze the assets of citizens and corporations of the other country. If you are living overseas and the leaders of your home country take a position on trade or security that is contrary to the interests of the foreign country you are living in, that could create political turmoil for you personally.
In rare circumstances, all of your personal assets including bank deposits, real estate, and personal possessions could be frozen in that foreign country. This is very unlikely, but it does happen from time to time. Here is how I reduce that risk to me personally.
My solution: I don’t buy real estate or open bank accounts in foreign countries if I can avoid it. I keep my assets in my home country. I just rent when I am in foreign countries. When I need cash I just pull it out at ATMs. I keep a very low financial profile in foreign countries. If the turmoil threatens my enjoyment, I would just hand the keys back to the landlord and head out of that country. Since I would not have any substantial money in the foreign bank, I would not have to worry about transferring the money out before the assets were frozen. This is why I like to remain liquid and flexible with a very little footprint in a foreign country.
Objection 1: People have said to me, “Dan, If I wire just enough money each month from my home country into my retirement country bank. That way I avoid any ATM fees that would be imposed by the foreign banks when I pull money out by ATM..”
I would also be comfortable with that solution because they are not storing 6 months or 12 months worth of money in a foreign bank. They just wire in what they need each month. In that case, I suggest using Transferwise to save money on wire transfers (link provided).
But I avoid ATM fees another way. I have a Charles Schwab Investment Account debit card that rebates my ATM fees to me once a month. Either way is fine, but I prefer not having a financial footprint in foreign countries that could raise questions of taxation. You can also read my detailed report, Top Banking Mistakes I Learned Living Internationally.
By keeping my money in my home country bank and by renting instead of buying, I avoid the risk of my overseas government freezing a large chunk of my retirement assets. I reduce this risk by remaining liquid and flexible.
Objection 2: People have said to me, “Dan, I am buying real estate in the foreign country instead of renting, because I don’t want to get into a situation where inflation pushes rents up faster than the cost of living adjustments I get on my social security or pension.”
I have an entire report of all the reasons I do not buy real estate in foreign countries. But I deal with inflation another way. Instead of buying in a foreign country, I just keep my real estate in my home country and let a property manager take care of it for 8% of the rents collected.
Since I believe rents are even more likely to inflate in my home country, the USA, at least as fast as they do in most of these retire cheap in paradise countries, my rental income from my home country is likely to rise faster than my foreign rental expense. So as the rents increase on my real estate back home, that increase will more than offset the inflation on my rents in paradise.
Plus, I will have a home to go back to if I ever decide to move back to the USA. I will just have the manager give my tenants a 60-day notice. So I keep a low financial footprint in foreign countries and remain liquid and flexible so I can move to another country.
Okay, what is another kind of political turmoil that I watch for?
Nationalism: Over the last few hundred years, political leaders around the world have used nationalism as a way to get political attention. Foreigners within a country rarely ever have enough money or influence to affect the daily life of the citizens of any given country. But populist politicians around the world often try to get elected by telling citizens that they will get rid of foreigners or treat them poorly.
My solution: If nationalism happens in the foreign country where I am living as a foreigner, I will just leave that country. I will move to another foreign country that I love. This is another reason I do not buy real estate in foreign countries. Nationalism often peaks when an economy is hurting. Populist politicians scapegoat foreigners to avoid scrutiny of their poor management record. If the nationalists are in power this is another reason to worry about freezing. That is another reason why I do not buy real estate in foreign countries nor do I place large amounts in foreign bank accounts. I keep a low profile in foreign countries so I am flexible and do not have to liquidate accounts or real estate in a foreign country.
Taxation: You may move to a country because you like their taxation laws. Maybe they treat foreign retirees in a favorable way. But what will you do if their tax policy changes?
My Solution: I hop on an airplane and fly to greener pastures. Since I don’t have any real estate there or foreign bank accounts, I have no assets in the foreign country they can freeze.
Visa Policy Changes: Every country gets to make its own visa laws. What if a country keeps changing its visa laws in ways that are unfavorable to me?
My solution: I move my retirement party elsewhere. That is easier for me since I am a renter and I don’t have any money in foreign banks. I just head to the airport and seek greener pastures.
Home Country Political Turmoil: “Dan, if I keep all of my real estate and other assets in my home country, how do I protect myself if my home country goes into political turmoil and decides to confiscate my assets?”
My Solution: My analysis is simple and maybe naive. I don’t believe I am a big enough fish to fry in my home country. Plus, I follow all the laws in my home country and I pay my taxes every year. My analysis of this risk is simple. I think having assets in my home country, the USA is a lower risk for me than trusting the financial system in Perfectland.
But if I had a few million bucks to protect (which I don’t), I would probably talk to a lawyer that specializes in offshore tax-havens. But remember, I am not advising you, I am just sharing my risk analysis with you. You need to talk to your lawyer and accountant before making any decisions or taking any actions.
Next, I will talk about economic turmoil.
Economic Turmoil
I like to read. If you have read about history at all, you have probably read that the economy has collapsed a few times over the last few hundred years, in various countries. In fact, the entire world economy has been in trouble a few times.
US Dollar Devaluation: What would I do if the US dollar drops in value relative to the currency of the foreign country I am living in? For example, what if I have a monthly retirement check of $1500 USD and it is suddenly only worth $750 dollars per month where I live?
My Solution: First, I feel it is highly unlikely that the US dollar devaluation would be so substantial relative to most of the retire cheap in paradise countries I have reported on. But even if it did, there is a good chance that one of the other countries I report on would devalue even lower than the USD. Since I do not buy real estate in foreign countries, I would just head to the airport and fly to greener pastures. Much of the world is presently tied to the US dollar. So there is likely to be a good alternative retire cheap destinations for decades to come if the US dollar devalues.
Foreign Banking Collapse: So what would I do if I am in a foreign country and the banking system collapses? What if I go to an ATM machine one day, and no money comes out? Maybe the bank that owns that ATM is bankrupt. Or, maybe there was a run on the banks and they are out of cash?
I am not talking about a temporary problem that can be solved with my international banking secrets report. I am talking about a sustained problem caused by the financial system of a foreign country in which you are residing.
My view of the world is that this is very unlikely. But what if it did happen to me? What would I do?
My Solution: In this example, it sounds like the USA banking system is okay but the banking system in the country where I am living is failing. First, I carry a few weeks’ worths of rice around with me when I am in a foreign country. Plus, I carry some emergency cash. So I should be able to buy more rice for the time being. But if jets are still flying, I would head to the airport and fly to another country or the USA depending on the state of the world economy. I keep just enough cash in USD to pay for a flight. I keep USD because it will likely hold value even if the local currency crashes.
Objection 3: “Dan, I keep gold or silver to protect me from a currency crash or bank runs. Why don’t you keep gold and silver instead?”
My Solution: I don’t carry gold, silver, or diamonds. I believe gold and silver are viable options for people living a stationary life in their home country. But I am on the slow travel world highway. I believe the risk of having the gold and silver stolen from me as I travel the world is higher than the risk of a financial collapse. So I don’t carry gold, silver, or diamonds.
World Economy Crash: What would I do if the entire world economy collapses when I am living in a foreign country?
My Solution: I think my home country, the USA would have a better chance of surviving through such a tragic time in world history. So I would fly home on the next jet and do my best to make sure family and friends in the USA survived a tragic time like this. I carry a small amount of emergency cash in USD. So I would head to the airport, buy a ticket, and fly home.
Thank you for reviewing this report, is cheap retirement overseas ending? For me, the answer is no. I will continue to explore the world under almost all of the above political and economic turmoils. But you should consult your lawyer and accountant before taking any action. I am just a guy on the Internet that likes to read and think about what I read.
This is Dan of Vagabond Awake, the Youtube Channel for VagabondBuddha.com. The world is your home. What time will you be home for dinner?
Here are some additional resources you may find helpful: (1) (Free eBook) How I Fired My Boss and Traveled the World for 14+ Years, (2) Retire cheap Reports All Over the World, (3) How to Make Money Online: The Hobby Income Course, (3) My Youtube Playlists for Each Country, (4) How to Retire Early.