If you are well aware of the retirement crisis in the first world or worried about your own retirement, then you have come to the right place. In an earlier post, we saw how a simple decision to rent, while giving you the opportunity to be globally mobile, can help accelerate your journey towards financial independence. Once you learn to move and thrive in your new role for work in a new place, you will not worry about doing the same in retirement to enjoy a higher quality of life.
Retiring abroad can save you money. But do you think you can suddenly pack up and move to an exotic lower cost country for retirement? Forget the off-beat places like Cambodia or Ecuador, even well-worn countries like Thailand or Mexico with a large expat population are not easy to live in if you have never ventured outside your home territory. Most people who live and work in one state or province (or even one country) all their lives cannot suddenly decide to move to a developing country to stretch their golden years. This is such an impractical thought and yet, that’s what a number of people who never even moved for a job are deluding themselves with, perhaps inspired by the alluring beach pictures like this one.
Cultural shock can be difficult even for younger people to handle, do you think you can do that in your 50’s and 60’s if you have never lived abroad? In case you think your travel abroad for work has prepared you to deal with culture shock, you have no idea. As a multi-year expat, this is what I have learned. The 1-2 week international trips in luxurious hotels paid for by your employer don’t count as cultural immersion abroad. They certainly don’t prepare you for a long retirement abroad. Retiring abroad can work well, if done right. There is a better way to prepare yourself for this exciting and affordable adventure.
If you have an opportunity to move to a different country while working, please consider it seriously or find such an opportunity at least once in your career. Aside from the income boost, this will test your ability to adapt to a different culture. Adaptability to new cultures and situations is easier when you are younger. Unless you live for at least a year in another country, you cannot claim to have adapted to its culture or count on your ability to retire there in the future. The developing world is complex, changing and at times, unforgiving place even for natives, so the idea that a western retiree without strong roots will retire happily in a low cost country is simply a pipe dream. It is not enough to research that the place has decent medical facilities – that’s important but that’s something you will use only rarely. Your everyday comfort with the cultural immersion, daily hassles and also, the natives’ perceptions about you and your lifestyle are key factors that will make or break your retirement in your dream destination. Retiring to another country to save money (‘geographical arbitrage’ in corporatespeak) can give you a better retirement than possible in your home country, but this is no walk in the park.
For those who can make the transition when they are relatively young and as part of their work experience, the rewards can be great. I have an American friend who works and lives in Bangalore, known as India’s Silicon Valley. Now, Bangalore is no paradise but it is a large city with a sizable expat population, good weather year-around, reasonable amenities and an international airport. He recently sent me this picture of the house he plans to rent.
This is a 4-bedroom, 3-bath single family house of 2100 sq. ft. living space, offering both patio and street parking, small garden area, and an open terrace, in a relatively quiet, presumably upscale, neighborhood. Guess what the rent is? $500 a month. Bangalore is considered a relatively expensive Indian city, so if you venture into smaller towns in India, similar houses can be rented for $200-300 a month. India doesn’t offer a retirement visa like Malaysia, Panama, Thailand, Ecuador and other countries, but you can stay for 3-6 months in tourist visa and come back again next year for similar length of stay. If you can prove you have Indian ancestry, India gives you a ‘permanent residency’ visa for indefinite stay in the country.
Now picture this for a moment. You haven’t lived in India but maybe visited there for work occasionally. The longest period you stayed there, let’s say, was 3 months of backpacking as a young carefree student. You have fond memories from those days.
Do you think you are now prepared to relocate based on just the low rent/cost of living? Can you deal with frequent power cuts, rationed water supply, street dogs, tropical insects/mosquitos, disturbances from peddlers, potholed roads, red-tape and generally sub-par civic infrastructure? The house pictured above could be from any developing country, which has similar issues. On the other hand, you would consider relocating for retirement if you had lived in that country for a considerable time in the past because the above issues wouldn’t faze you the second time. So, this international work opportunity, should your employer provide, is rare and you should grab with both hands.
Yes, the American retirement crisis is real and it would help immensely if you can retire on, say, $2000 a month rather than twice or thrice that figure in your comfortable home town. But be careful what you bargain for. Living in a developing country with far less conveniences than what you are used to is the daily price you pay for this affordable retirement. Being prepared for it in an Excel spreadsheet is one thing, living there for years is a completely different matter. The world offers some amazing places to explore and live your retirement years, but we need an open mind for the adventure and for the real, immersive cultural experience – no spreadsheet or internet rental listings can prepare you for that. Doing this while working is the smarter way to prepare. Enjoy your own 10! journey.
Raman Venkatesh is the founder of Ten Factorial Rocks. Raman is a ‘Gen X’ corporate executive in his mid 40’s. In addition to having a Ph.D. in engineering, he has worked in almost all continents of the world. Ten Factorial Rocks (TFR) was created to chronicle his journey towards retirement while sharing his views on the absurdities and pitfalls along the way. The name was taken from the mathematical function 10! (ten factorial) which is equal to 10 x 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = 3,628,800.
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