Challenges for Americans thinking about Retirement Outside of the US

retirement moneyIt ain’t like it used to be. Today’s retirees look at the 401K savings they worked so hard on over the years nearly disappear and suffered gigantic equity drops on the home they spent 25+ years paying for each month.  We’re part of the Baby Boomers generation that had so many opportunities in the last part of the last century, only to see it pretty much crumble over the last ten years or so.   CNN Money reported that 90% of our generation said they were hit by an unanticipated economic event that took a huge dent into their retirement savings, to the tune of an average of $117,000.  Over 40% were hit with 5 economic events that socked them for an average of $144,000.  Almost all of Boomers are in the same boat.

For me personally, I saw an equity drop in my house by about 45%, wiping out my big retirement nest egg from the house completely.  I know of many others that were similarly hit by the drop in the US housing market since ’06.  I also was hit with my drop in the 401K savings, which sunk by about 80% over the ten years following 2001.   My situation is pretty much what happened to nearly everyone of my age.  It has created a whole new dynamic to our retirement plans.  Is it any wonder that we are pessimistic about the American economy?

Gone are the ideas of having a cabin up in the mountains of Oregon spending retirement days fishing or baking apple pies.  Now, retirees have to think about how they are going to keep income coming in way into their later years and finding a place that is affordable to live, and that has evolved into an exodus of retirees moving outside of the USA.

At the same time, living expenses for a retired person in America has increased substantially and still headed upward.  Medical insurance, thanks to actions by the federal government have been spiking and there is no chance that they will go down.  Co-pays and limitations are putting some serious setbacks on the over-50 crowd.  I think it is fair to say that it is just about impossible for anyone to live in America today on social security retirement money alone.  Retired people in the US have to have some income coming in to supplement their living, either through a part time job or a big savings account or a pension.  God knows we can’t depend on any help from our nearly unemployed, cash-strapped adult kids.

Unfortunately, many have seen pensions dry up or never happen, and social security is all we have.  With costs being what they are in the US, it is hard to see how anyone can make it during retirement living in the US without a lot of extra help on top of social securi

Another survey has found that the average retirement age is now 61.  Two decades ago, it was 57.  More than half the people between 58 and 64 and not yet retired believe they will have to continue working till at least age 65.  And the Wall Street Journal reports the next generation, Generation X, will be in much worse shape than the Baby Boomers.  All this paints a pretty grim picture for retirement in the USA for at least the next couple of decades.

One of the big avenues for escaping this predicament is moving outside of the US for retirement.  A lot more people are taking this alternative now and it is proving to be a way to cut that cost of living substantially.  Social Security retirement checks go a lot further in many places outside of the US without sacrificing quality of life, perhaps with a much higher standard of living.  It has worked for me moving to Thailand, and it is working for many others retired in Asia, Mexico, Latin America and other remote locations.  It is an alternative that should be considered by anyone that is facing these financial challenges to managing retirement.

Moving overseas for retirement has become the newest wave for Americans.  Based on State Department figures, there were 5.3 million Americans living overseas in 2009, and that figure jumped to 6.8 million by 2013.  That is a big increase in 4 years, and the trend is upward.

Fortunately, I was able to buy a nice house in Thailand free and clear.  It is not that difficult when real estate prices run around half or less than comparable properties in the US.  And in Thailand, like a lot of countries, there is no property tax on your home.  I was also able to buy a new car cash and put a bit of savings into a Thai bank.  With the lower cost of living and no house or car payments, my wife and I are able to budget just $500 a month for the two us for expenses.  That is a budget that is easily manageable and would be impossible anywhere in America.  This level of living is not just in Thailand.  I hear from many that find a similar situation in Ecuador, Chile, Mexico and in many Asian countries.    The New York Times recently ran a story of a newly retired Berkeley, California woman that retired to Mexico and opened a small shop for some extra income that reads similar to my experience in Thailand.

Unfortunately, for an American living overseas it is not just a bowl of cherries.  The US government considers its citizens to be assets of the country and the foundation of the tax codes is to squeeze as much as possible from those assets until they expire.  The US requires all citizens to file tax returns with the IRS, no matter where they are living, reporting income earned overseas —- one of only two countries in the world that have “citizenship based taxation” (the other country is Eritrea, in Africa).  (The only exception to filing is if you earned $18,500 per year or less for a joint return or $9700 for a single). So if you earn income in another country, you may be in a situation of paying taxation to both the US and your new country (double taxation).  For some countries, if you have your own business in another country, the IRS may also requires you to pay 15.3 per cent of your income in self-employment taxes (which is for social security).  And you may be required to keep accounting records in the local currency plus records in US dollars.  And no matter where you live, as an American you must report on any financial assets that exceeded in total $10,000 anytime during the year.  Penalties for mistakes are draconian, so you are likely to be spending a lot on accounting services.

An important factor that needs to be considered in overseas retirement that can have a big effect on the cost of living:  if you travel back to the States often, your savings for living overseas can easily be eaten up.  If you are going to retire outside of the country, you have to give up on the idea of traveling back often to visit family.  For my wife and I to travel back to the US together from Thailand with the normal expenses of traveling in addition to the air tickets, we spend more than $3000 each trip.  If we do that a couple of times a year, the savings of living in Thailand is seriously removed. We ask our family to come and visit us in Thailand.

The other major point affecting cost of retirement overseas is medical.  Medicare, VA care and other US government programs won’t work outside of the US.  If you have to use these programs, you have to factor in travel (if it is possible) to get care in the US.  In your retirement location, you are going to need to buy additional medical insurance or count on paying for medical care in cash.  Getting medical insurance in foreign countries is not always easy; in Thailand, there are no new insurance policies for anyone age 60 or older at any price.  Fortunately, the medical care cost is a small fraction of the cash price for care in the US.

If you are contemplating retirement overseas, you have to look at all of the advantages along with the disadvantages to make the right decision.   Then you need to compare it with what retirement would be like if you stayed home.   If the economy has beaten down your financial situation, your stay-at-home option may leave you in a very tough hand-to-mouth existence, but moving overseas is not for everyone.  You have to decide if it is the best option for you.

If you want someone to handle the hassle of moving for you, check this out…

27 June 2013 – STUDY: 76% of Americans live paycheck-to-paycheck – Fox News (local Northern Kentucky Ch. 19)

24 June 2013 – The World’s Most Affordable Places to Retire - CBS Moneywatch

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12 thoughts on “Challenges for Americans thinking about Retirement Outside of the US

  1. In 2006 I told everyone I know to sell their home, every person I told that to laughed at me. And in fact everyone I knew went out and purchased a home, all the women I know did that. Not one single solitary person to my knowledge listened to me, not one! Why? Because people don’t understand the game that’s being played on them, they listen to the TV, they listen to the news, they listen to the papers, not realizing all of these things are manipulating them on purpose, to do the exact opposite of what you should be doing. Where did most all people buy their home? Answer, right at the exact top of the housing market. Where did most all people sell their home? Answer, at the exact bottom of the housing market. Where did most all people sell the stock market? Right at the bottom at 8,000, where did they buy back in at? They haven’t, now the market is at 15,000. Where did most all people buy gold at? Right at the exact top, and where will they sell gold at? Right at the bottom which won’t come for many years yet. It’s kind of funny, because these same things keep happening over and over again for hundreds of years, and yet nobody ever learns from the past, they always repeat the same mistakes over and over and over again. And it’s so easy to manipulate them, so easy to lie to them and con them, and they all fall for it time and time again. And they never seem to understand, they never wake up. I see this in trading all the time. As a professional trader we always buy when everyone else is selling, and always sell when everyone else is buying, this is how true trading works, and people don’t understand that. In 2006 everyone I know went out and purchased a home, I told them they were making the biggest mistake of their life and they laughed at me for it, and told me I was the dumbest person they ever met before. People will never understand, they are fodder is what they are, and I’ve learned that this is the way it’s meant to be, that’s why the people who control everything refer to everyone as cattle, because that’s exactly what they are, without them realizing it. They are cattle, to be grown and herded and milked, and eventually slaughtered. And the cattle will never wake up, because cattle cannot think for themselves, they just follow along with whatever they’re told to think or do. And us Rams just sit back and laugh. Never again will I tell anyone what to do, now I just help myself and nobody else.

  2. And you know what’s funny, when everyone was buying their homes at the exact top of the housing market, the Media was saying how women are smarter and more successful than men and that they were all buying homes and men were not, ROTFLOL. If only people realized what was truly going on, I would like to think that people wouldn’t stand for it and would rebel against their masters, but they don’t even understand who their masters are, and they even think their masters are the good people when in reality they are the ultimate enemy of all mankind. But people will never learn, they will never understand, it’s for them to be deceived and become poor without them even understanding how it happen to begin with. And all you have to do is do the exact opposite of what everyone else is doing, this is how you make money. And it works time and time again with mathematical precision like clockwork, and people will never understand because they don’t realize how people are there in the Media to specifically lie to them, the very people whom they look up to and trust are the people who take everything away from them with a simple lie. It makes somebody like me very jaded by people, one side is evil and lies through their teeth, the other side is generally good but too stupid to understand any truth, so both sides are dumb by their very natures. One side are liars and con artists, the other side manipulated cattle, neither side is the side I’m interested in being on. This is what’s made me successful financially in this life, and it’s so easy to do and yet virtually nobody understands it, and if they do they keep it to themselves. And if they do tell other people as I’ve done they quickly learn that’s a complete waste of time and learn to just shut up and not say anything, to just let everyone be deceived and manipulated and believe every lie told to them. My next door neighbor got an offer in 2006 for his home for $550,000 cash, I told him to take it, he did not. Now I just saw the poor guy walking down the store with his wife because now they have no car and are destitute, and they are broken people, and I tried to help them by giving them real advice and they like everyone else simply didn’t understand, they just thought that housing was going to skyrocket forever and not come down. Same story with my uncle, he bought QCOM with $15,000, in about 8 months it was worth a little over one million dollars, I told him to sell immediately, he laughed at me. Then he rode QCOM down from 1,000 a share to 30 per share. People will never learn no matter who they are. It’s just not for them to understand and thus they do not nor ever will understand.

  3. And if you understood how money is suppose to be, you would understand how evil the current system is. The way money is suppose to be is that the USA government prints the money and then puts that money into circulation at no interest to the people as a means of exchange. And then the trick is to only have enough money in circulation to provide for an adequate means of exchange. Too much money is bad and too little is bad, the real trick is to have the right amount at all times. What this does is create a very stable economy. If you buy a house for $1,000, your children will grow up and also purchase a house for $1,000, as will their children and their children, there is no inflation. The way the system is now is done on purpose making you have to speculate to get ahead of inflation, and then enters the shills to manipulate people into doing a certain thing while they themselves do the opposite, thus taking away everyone’s money from them without them even knowing how it happen. If we didn’t have this system there would be no way for them to do that, that’s one reason why we have the current system in place so that these shills can take everyone’s money from them through manipulation, it’s like a game to them, they love making people poor and causing them hardship, and then people wonder why they’ve been kicked out of every country in Europe over and over again. And why it’s illegal to speak out against them or go to prison. The money system we have right now all around the world is 100% satanic, and people don’t know that because the Media would never reveal the truth to them, the Media is the enemy themselves, and everything the Media says about every subject there is under the sun is a lie, all done on purpose to dumb everyone down into oblivion about every subject there is, not one truth is spoken in the Media about any subject, not one. If people knew that they wouldn’t listen to the Media, but they don’t know that and they will keep listening to them all the way down to the end. Here comes the asteroids threat and here comes the attack by the aliens, just as predicted in the 70′s by Von Braun. And people all over the world are going to listen and watch and believe what they’re being told, and I’m going to be laughing uncontrollably the whole entire time…..

  4. To anyone who truly wants to come out of the money matrix and learn the real truth about money and how it’s suppose to work, I highly recommend the following video which is a three and a half hour long documentary on money:

    http://www.youtube.com/watch?v=NaHmiyDzW54

    In this video you’ll learn the real truth about money, and you’ll learn the most successful form of money was tree bark used by England for over 700 years!

    This is the video they don’t want you to watch!

  5. Good analysis of the current situation. Although I have many friends who are not hurting. I am a former investment banker and will tell you that if you buy good companies and hold you will do just fine. Unfortunately, most of the American public is ignorant and really uneducated and when coupled with the feeling of the right of entitlement and greed, then the trouble begins. Social Security was never meant to be a retirement program, duh! I by choice have been out of the U.S for 7 years and visit once every two years. I feel no sympathy for The U.S….all actions have consequences…so be it!

  6. Ref: Health Insurance
    There are many options for Expats over 60 years old to obtain Health Insurance. The biggest provider is probably BUPA . If you sign up by age 65 they will insure you up to 70 years old. Sign up by age 60 and they’ll insure you for the rest of your life.
    http://www.bupa.co.th/en/individuals/health-insurance/individual/index.aspx

    Some other providers are “Thai Health” and “LMG Pacific”. For more information: http://www.donslifeinthailand.com/Health_Insurance.html

  7. I got a question for you Greg. I think it’s safe to say that you and I both grew up in not only the greatest country in the world with respect to modern culture and advancement in virtually every field there is but also in maybe the epicenter of where much of this occurred, namely California and namely northern California around San Francisco. You grew up before me so you’ve seen even more than I’ve seen, but we both know how much has changed. Much of it for the better, the roads are cleaner, less trash everywhere, people don’t litter like they did, no cigarette butts on the ground everywhere, cars hardly putting out any pollution, cars running much better and lasting much longer under microchip control, etc. There are many good improvements, even crime has come way down compared to what it was. The problem now is corruption, and corruption of culture, a purposeful conspiracy to subvert and pervert peoples minds into either believing things which are false to begin with or teaching them to act the wrong way on purpose using movies and TV and even music. And of course causing great hardship on people economically, although I can tell you this that things are coming to a great roar over here now once again. Here comes the traffic and the lines and people all over the place once again, depressions do have their good points :-)

    Anyway, here is my question for you. Since you and I have had this luxury in our lives to have grown up in such a great country and gotten access to such a great education and grew up in a modern and very advanced culture, what’s it like being with your wife because of that? I mean, just as maybe you’ll never truly understand her culture and how she actually grew up and everything she has been through in her life, she also cannot imagine your life either. I mean what it was like in 1980 California for instance, the movies and the music and the commercials on TV so entertaining and the massive culture we were surrounded by, from cartoons as kids to music as teenagers to great TV to watch and after school specials on TV to the books at the library etc etc etc. You want to read what the top professor is saying about biology, you can buy his book and learn from him, etc. The amount of knowledge and information and education and culture and happenings of every kind was enormous, and growing everyday.

    I’m sure she cannot imagine that. So what I’d like to know is what is it like for you to talk with her, what does she like to talk about? Is she inquisitive about any of that or maybe she doesn’t even think about stuff like that? Does she teach you about her culture a lot?

    What about God? I think you don’t believe in God right? And as a Buddhist she wouldn’t believe in God either right? What about if you did believe in God, this doesn’t really pose any type of problem does it with a Thai girl? Do you think one might be open to the possibility of their being a spirit being so powerful and so smart that they were able to create everything you see on this planet? Or would that be a ridiculous notion to them do you think? But if that be true, why is their marriage in Thailand? Marriage is sanctified by God, I wonder where their marriage comes from if that be true, do you know?

    Anyway I’m just trying to get some insight into what you’ve learned in your marriage?

    • David: Good questions and I will do my best to answer them the way I see it. We do not agree on everything, but that’s OK with me.
      1. Just because the US had the most advanced entertainment, great TV and music and movies and all the other bounties of a wealthy country does not make the country the greatest country in the world. Great education? Not sure on that one, and I did go through post graduate levels at a University. I did complete what was required of me because I like to see things through till the end, but on reflection now many years later I realize that the quality of information stuffed into my memory slots may not have been the best.
      2. Where my wife grew up in a small agricultural city, they did not have electricity till she was in her mid-teens. She slept on a mat on the floor (which actually resulted in her having very good posture), and helped her dad doing farm type work. She was well fed, went to school and also went to a university. In her mid adult years, she came to the US to work and that is where we met.
      3. My wife has lived as an American (as my wife) and understands American culture pretty well. I have stayed in the home she grew up in, know her parents pretty well, and I understand her growing up fairly well. Over the years, we have taught each other about why people do things the way they do in our respective cultures.
      4. My wife is not a Christian, she is a Buddhist. I grew up in a Christian household, went to church every Sunday and have a respect for the power that is enforced in Christianity. From my wife and others that I have met in Thailand, I have learned a bit about Buddhism, and am still learning now. I have a great respect for that religion as well. They have different concepts about how to live life, with Christianity demanding adherence to rules by the fear of God and the consequences of not obeying him; with Buddhism having people obeying certain tenants in order to have good Karma, and there is no fear of punishment from a powerful spiritual being, just a fear of having bad Karma. This is an over-simplification of the basis for the two religions, of course, but I am trying to show the vast differences in the two ways of thinking.
      5. In Christianity, marriage is sanctified by God. Marriage is no less important in Buddhism. Sanctity of marriage is one of the 5 main precepts of Buddhism. It is not just Christians that have an appreciation and respect for a good marriage. It is just in Christianity, there are many laws governing how a marriage should be, and Buddhism does not have the concept that there must be laws from God with punishment for disobedience.
      6. What have I learned from my marriage? Even though my wife and I have differences in the way we grew up and our religious thinking, we have the same day-to-day issues as any Christian to Christian marriage. We do not shutter in fear of the wrath of God as some Christians do, and do not feel obligated to study all the laws and demands the Christian religion requires of their followers. We do have a meditation room in our house, with several Buddhist statues. My wife goes in that room often to pray, bless past relatives, do Buddhist chants and simply meditates. We both visit Thai Temples in the area for blessings by the monks and other Buddhist practices.
      On this blog, I will not go any deeper into religion than in this comment. This blog is not the best forum for discussion of this subject area, and I recognize that everyone has deep seated religious values, and questioning some of these values on this blog could easily offend some people.

  8. Good Post Gregg !

    You & your wife do well to get by on $500 a month.
    Like you we own our place here & vehicles but average
    35,000 baht per month or about $1100

    I chart/log everything & the biggest expense is 15-18k a month on
    meals/food. Because my wife works till 7-8pm we tend to eat dinner out all the time.
    So not bad considering, Although we have many nights dinner costs us less than 100 baht we also have many at 300 baht

    Looking back our cheapest month was 23k baht/ $742 so not bad & doable.
    Food here is very inexpensive to us compared to the US
    Also electricity is very cheap compared to home at home in the US we paid $250 a month here we pay less than $60

  9. Hello Greg,

    I have enjoyed your posts after recently discovering your blog. My wife is also Thai, we own a restaurant in Sacramento, and I consider more and more a possible retirement in Thailand – have taken 5 trips so far – traveled from North to South. Family lives in Ubon (less tourist town, great park and night market). Retirement would be more like 4-6 months out of the year. I will reach out to visit as our next trip draws near.

    My reason for writing today is that I wanted to share an article in the Wall Street Journal titled “IRA Payouts May Avoid State Income Tax” (July 8th, 3013, page, R12, by Georgette Jensen), that may be of interest to you as you research various State-by-State tax treatment on retirement income distributions. Not a tremendous amount of detail, but it does touch on an area of taxes you have been writing about recently.

    I look forward to future posts on the topic and to connecting in Thailand.

    • Thanks for info on the article. The link to it is here: http://online.wsj.com/article/SB10001424127887324188604578541751270494278.html

      Sounds like you are a similar path that I was on a few years back. My wife and I owned a Thai restaurant in Castro Valley in the Bay Area and would travel regularly to Thailand. Pretty soon, that stretched into extended visits. After awhile, we were offered a nice price for our business and we took the plunge and moved permanently here. This is a good place to retire. Good luck as you progress on this path.

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