One of the really attractive options for retirement is moving to another country and, for a fraction of the cost of living in the U.S., living like royalty. Well, I’ve been hearing a lot of stories about this over the last year, and I think there is reason for concern.
This isn’t to say that a lot of folks haven’t done it successfully, but I’ve met a considerable number who appear to be in denial or simply have no choice now but to ride out their decision, because they can’t afford to move back to the U.S.
The folks who have been burned — holy crap, do they have stories to tell. One of the best places to start if you are even considering this is Live and Invest Overseas, but it tends to be long on the promise and short on problems. However, you can learn a lot from it, and I recommend its seminars as place to start.
I’ll share some insights based on my experiences. Then, with the temperatures going up, I’m going to bring back my favorite summer time product of the week: the ChiliPad.
One of the things we just don’t get in the U.S. is corruption. OK, we have corruption — but compared to some parts of Asia, Latin America and Eastern Europe, we don’t have corruption at all. Basically, corruption works like a tax paid directly to the person doing the work, but it also can ensure you a specific outcome in a trial.
People who grow up in corruption-riddled environments have a distinct advantage — and those who don’t are at a huge disadvantage. If you aren’t comfortable with the concept of a bribe, you likely should avoid countries that have high scores on the corruption index, as well as countries that aren’t on it. (I’ve been told the worst countries refuse to do the paperwork needed to get a score.)
Corruption tends to spread from governments to contractors, making it clear you need to do a great job of looking into the backgrounds of anyone you hire to build or work on your dream home.
Folks have written and told me that when firms want you to invest in their project they fly you out during good weather and take great care to navigate you around problems. However, before you move there, you should take a self-guided tour during the off season to see if you can stand the bad well enough to enjoy the good.
You might find that your paradise turns into a mud pit, with submerged roads, huge potholes, iffy power and communications, and primitive mail service. (Basically, you have to have your mail boxed up in the U.S. and then bulk-shipped to the closest town or city, where you pick it up). In exchange for living in many of these really attractive tropical areas, you’ll have to forget Amazon, FedEx, UPS, and many other services you’ve come to depend on.
If there’s a huge storm, you may have to go without power, water or communications for some time. That is tough when you are young, but it could be deadly when you are old. My wife and I did find a helicopter medical service that wasn’t prohibitively expensive, but getting to a doctor can be a huge problem in many places.
In emerging countries, build quality can be really bad, which we first discovered in Panama. The nearly US$2 million house we looked at in Panama was a joke. (We later found out that if you lived there, the price was substantially less.) It had no insulation, the stainless steel was of very low quality — already rusting after 60 days — and there weren’t even adequate vapor barriers, which for a house right on the ocean is a huge problem.
When I asked the builder about this stuff, I was told that you generally have to have a full time staff of up to three people just to keep the house clean and prevent it from falling apart — and that was one of the better homes we viewed.
Granted, you can find builders that will build to U.S. specs, but the workers aren’t really used to it. If you aren’t really careful, the end result can be an ugly blend of concepts.
Much of South and Central America uses the French legal system, which does cut court costs significantly. However, it also is based on the concept that the contract is king and needs to be enforced literally.
For instance, a typical term in a sales contract is that the property returns to the seller if you miss any provision of the contract. Let’s say the seller doesn’t get a payment on time. Even if it is the last payment, the seller can take the property back and return none of your money. That isn’t how things work in the U.S., but if you don’t like using attorneys, or your attorney is either incompetent or corrupt, you’ll likely find that the French system really sucks.
So, make sure you understand the legal system that’s in place — or at least have some trustworthy person who does understand it read all your documents before you start signing.
One of the common scams in many countries apparently is to bring buyers out to a property and show grandiose plans of a massive buildout with the pitch that you can buy into the dream for a few dollars a month. Some countries seem to be riddled with failed projects that started out with that promise.
The property you are buying is worth a small fraction of the price unless the infrastructure is in place — but the money you are paying goes to day-to-day operations, for the most part, and whatever is built is built really cheaply — and typically falls apart in a few years. This is so the owners of the project get the highest possible income, and when all the land in a project is sold, they move on — leaving the poor buyers with an unfinished and poorly built mess and no money to fix it.
All projects aren’t like that — but you want to make sure the infrastructure (canals, recreation facilities, roads, power/water, etc.) are all in before you buy, or that there is some trusted company (major chain hotel) that can’t walk away as a core tenant. If you can’t physically see it, then play it as if it isn’t there. If you can see it, have someone you trust take a look to see if it was built to last, or just built to look good.
Safeguard Your Marriage
What got my wife and I started down this path was seeing our neighbors buy a huge residential complex in Brazil for $500K — it included a massive central house, three guest houses and a beach cabana. It seemed amazing, and living costs apparently were very low.
However, that couple effectively has separated. The husband couldn’t take the changes, and his health deteriorated badly. Given the massive staff they had to hire to maintain the place, it turned out that it wasn’t much cheaper either — and money problems can stress any relationship.
Since then, I’ve heard story after story of folks going to live overseas and the marriage not surviving the move. Typically it is the wife who goes back to the states, but both parties really need to be sold on the idea.
You may have to learn a new language. Living in another country without learning the language puts you at a massive disadvantage — and if you add to that your advancing age, your retirement could turn into a nightmare.
Either find a country that speaks English, or commit yourself to learning the language of the country you are moving to. This one thing can make the difference between a disaster and a more acceptable solution.
This is one of those things that isn’t easy to get to at all. Apparently, to make sure people buy in, some countries actively quash crime statistics and reports. Once people buy, they don’t want the stories to spread, because they are afraid they won’t be able to find a buyer for their house when they flee the country.
In many places, the police are a joke. (They basically use your house for a party after you are robbed.) Crime can be a monthly or weekly occurrence. Americans really have no concept of how bad it can be.
That was one of the things that freaked out my old neighbor after he moved to Brazil. Folks in secure gated compounds would get jumped as they were entering the compound, and then tied up, gagged and robbed.
The worst case was a call I got from a woman who, now single, was recovering from a personal disaster. She’d moved in with her husband to what was to be their dream retirement home, only to experience near-weekly burglaries. She and her neighbors regularly bought PCs from guys walking on the beach, because they typically had been stolen from one of them the night before.
One night, the woman’s husband — who had been sleeping on the couch on the first floor (not a good sign) — was awakened to a machete-wielding burglar. The husband, buck naked, chased the guy out of the house into the jungle (he didn’t catch the burglar).
The wife freaked and moved back to Canada, and her husband stayed in order to sell the house. The following week the wife got a call informing her that her husband had died from a heart attack and had been cremated. She was asked what she wanted to do with the ashes. A native then took illegal title to the house. By the time the woman got everything sorted out, her life savings were gone. She had to go back to work in her 70s in order to keep a roof over her head.
This is just one of the stories about folks who have moved abroad from Canada and the U.S., only to find themselves the targets of beatings, robberies and even rapes. So you want a gated community with decent armed security if you are even thinking of moving to many of the relatively undeveloped countries — or some of the crime-ridden developed ones.
If most of the folks I’ve spoken with had known at the beginning of their misadventure what they eventually learned, they clearly wouldn’t have considered living outside of the U.S. — or at least not in in any emerging country.
My wife and I ended up buying a nice place in Bend, Oregon, which we have been modernizing. Shortly we’ll be putting our San Jose home on the market (if you want a big house with a great view in San Jose, ping me). Our final lesson was that it is great to visit paradise, but when you aren’t surrounded by the security of a resort, heaven suddenly can become indistinguishable from hell. Your life savings, your marriage, and maybe even your life may be the cost of trying to live in a false paradise.
One other thing: Before buying in any new country (or even parts of the U.S.), it generally is wise to rent and live there for a year first. That way, if you don’t like it, your exposure is relatively minor. This is the most common advice experts give, which most folks seem to ignore at their peril.
There is one product that I come to love every summer, because my wife likes it toasty at night and I like it cool. This is not uncommon with couples, and it leads to either a sweaty husband or a freezing wife. The ChiliPad circulates chilled or warm water under you while you sleep — adjustable side to side — and the end result is my side of the bed is nice and cool, and hers is warm.
Because this is water, I’m not worried about the electrical fields that concern folks who use traditionally heated electric pads or blankets. Those products just give heat — they don’t pull heat off your body like the ChiliPad does.
This product comes in a full range of sizes, and there’s even a custom matrass with a ChiliPad built in. We’ve tried both the pad and the mattress. While the pad gives you a better selection of mattress choices, we prefer the mattress over the pad, because the pad can shift in use.
This product has been a life saver, and it was one of the first things we got for our new house in Bend. As a result, the Chilipad is my product of the week.