The guide to retiring overseas
Geo-arbitrage is a useful tool at any stage of one’s life but especially so during retirement, when being in a high income area no longer matters and when priorities shift to quality of life, cost of living, access to medical care etc. In this guide, I explore the pros and cons of retiring overseas, detail how to get started and share some useful advice.
Simon @ FS / Bali, Indonesia
The pros
Quality of life
Maintaining a high quality of life as far as possible into retirement should obviously be a major concern for all of us. What constitutes a high quality of life differs from one person to another, however, and defining what it means for you should be the first thing you do. Is it warm weather? Proximity to the ocean? A vibrant nightlife? If what constitutes a high quality of life for you is rain, wind, hill walking, whiskey and you currently live in Scotland, expatriation may not be your best option. Most people desire something they cannot get at home, however, and retiring overseas represents a real opportunity to change that. Think of a beach loving Belgian moving to the Australian Gold Coast, for example, or a Hong Kong ski enthusiast moving to Hakuba. You get the picture.
Cost of living
Moving to a lower cost of living area can artificially increase your purchasing power. Let me give you an example: John plans to retire on a 40000 USD a year pension. John currently lives in Seattle where according to his calculations, he will be unable to maintain his current lifestyle on that amount. He may even be forced to move out of the city or downsize significantly. I think it is fair to say that under those circumstances, it does not make a lot of sense for John to retire in Seattle. If John was to instead retire in a place like the island of Penang (Malaysia) with the same pension, he would be able to afford an oceanfront condo, three restaurant meals per day and many activities every month. Given those circumstances, what do you think John should do?
Community
From my own experience, I have never been happier than since I moved to a location with a large community of like minded individuals. In the small town in Canada where I grew up, I stopped fitting in once I started expanding my worldview and living “unconventionally”. For you it may be fishing or golf or whatever really, being surrounded by people who share your passions and lifestyle is incredible and will definitely have an impact on your quality of life.
Culture
Retiring overseas is a great way to experience new cultures and open doors that were previously closed. For example, if you are a spicy food fanatic, moving to a place like Thailand could allow you not only to eat spicy food everyday but also items that may be unavailable in your home country. Exotic foods are not the only cultural element you will encounter in your new country, the way of life will be different, people will view things differently and will interact with each other differently. Depending on your personality and beliefs, this may be a pro or a con.
Disconnect
Do you want to spend your retirement doing almost exactly the same things you did when you were working, except for the work itself? Retiring overseas gives you the chance to truly disconnect from your current life and routine and to reinvent yourself. Moving overseas also allows you to decide who you want to stay in contact with and who you simply do not want to see again. Having that additional control over your life will make you feel great, trust me on this.
Business opportunities
Not everyone wants to continue doing business into their retirement. Some, however, may find running a small business or investing in the markets a great way to spend their free time and make some extra money to supplement their pension income. If that is your plan, moving overseas can represent a great way for you to access new business opportunities.
The cons
Distance
While modern air travel has made our world considerably smaller, Earth is still a vast place and getting from point A to point B may still involve a multitude of connections and dozens of hours in the sky. Few expats enjoy having to fly 10-25 hours to visit their family and friends every few months. For some, it may even be a deal breaker. Before you move to another country, you have to decide whether you are comfortable being geographically far away from your home country and whether the cost of travelling back and forth and the time spent on the planes is worth it for you. That is not to mention the timezone difference, especially an issue for phone calls.
Health care
While an increasing number of countries have excellent health care, many do not. Whether you are healthy or not, having access to excellent health care is crucial and could even mean the difference between life and death should you fall ill. You also have to consider the price of private health insurance as your current policy will probably not cover you in your new country. For those on a very limited budget, this may be a deal breaker as a good insurance policy will cost you at least a few hundred EUR / USD per month (the older you are, the more expensive it will be, especially if you have pre-existing conditions).
Cultural barriers
While a change in culture can be great fun, it can also be an absolute nightmare. I have met several expats who struggle to maintain the peace with the locals in their new country as the cultural gap is too wide. If your plan is to move to a remote island, a village in India or such kind of places, I strongly recommend going as a tourist first to “test the waters” and see for yourself whether you would be comfortable living there long-term. Do not rely on online testimonials and stories, many retirees will sing the praises of their new country even if in reality they hate it. The reason is that they cannot bring themselves to accept that they made a mistake and that they probably are too “invested” in their new lives to go back.
Cost of living
We have all heard of how cheap places like Thailand and the Philippines are but what a lot of people fail to understand is that those countries are only cheap if you live a very local lifestyle. If you want eat in nice restaurants on a daily basis, go out to pubs/lounges every week, workout in a world-class gym, shop in brand name stores and partake in regular activities and hobbies, those places may be just as expensive, or maybe even more expensive, than your home country.
What should you do before retiring overseas
Learn the local language
Learning a new language is not easy, especially for someone of retirement age, but it can be a very rewarding experience and speaking the local language will definitely improve your quality of life in your new country. If you do not want to learn a new language or cannot do so, you should look for countries where your native language or English is widely spoken. For example, in South East Asia English is widely spoken in Malaysia, Singapore and the Philippines but not in Thailand, Cambodia, Vietnam and Indonesia.
Insurance
Buying an health insurance policy and a repatriation policy before moving abroad is very important (in some cases, it may be more advantageous to buy locally after your move), for some countries it can even be mandatory in order to qualify for a retirement or long stay visa. I have written a guide about health insurance, you can read it here.
Prepare your banking strategy
Having a solid banking strategy in place is a very important step to take before expatriation. I have written a guide about how to build such a strategy, you can read it here.
Get the appropriate visa
Once you have completed the first three steps, you should apply for a retirement or long stay visa for your chosen country. Make sure you apply plenty of time in advance in case your application is declined and you need to re-apply or if the embassy asks you for more documentation. In most cases, you will need to include in your application an up-to-date background check from your national police agency so I recommend getting that document as soon as possible as processing times can be lengthy in some countries.
Set up your own VPN / VPS
Setting up a VPN account is important as it will allow you to continue using the same websites and services you are used to. For example, if you move from the UK to Thailand, setting up a VPN will allow you to continue watching the BBC, Channel4 etc. It will also prevent red flags with the banks, and issues accessing services that may be geo-restricted. Regardless of the provider you choose to go with, make sure to get a dedicated IP address as shared addresses may be blacklisted / banned by some services.
Set up mail forwarding
Setting up mail forwarding is important for a multitude of reasons. It will make you appear as if you still live in your home country and that can be very important for some services. It will also allow you to keep the same physical address even if you move often. I also recommend keeping your home country phone number, maybe by switching to the cheapest plan with your mobile carrier. This will allow you to continue receiving 2FA text messages, and may be useful when accessing some services.
Get in touch with local expat communities
With the internet, it can be easy to find expat communities in your chosen country. Not only will joining such communities allow you to make new “like-minded” friends even before your move but it will also allow you to learn from the experience of others and avoid making their mistakes.
Makes plans in case you die abroad
Last but not least, you should make plans in case you die abroad. This is not a pleasant one for obvious reasons but it is absolutely crucial that you do not skip this part as it will save a ton of trouble for your family, not to mention money. I have written a guide that covers this in details, you can read it here.
