Americans Who Seek Out Retirement Homes Overseas

Three years ago, Rich Holman, an American, retired at the age of 63 to Medellín, Colombia. While a place typically associated with drug trafficking might not be on the radar screens of most retirees, Mr. Holman called the city one of the world’s best-kept secrets.

“It has the best climate, nicest people, low prices, real estate bargains, great health care,” he said, adding that he has had lots of dental and dermatological work performed at about 30 percent of the cost he would have paid in the United States.

Now that air travel and communications have grown easier — and mobility made simpler within Europe by the introduction of the euro — adventurous seniors are retiring to more far-flung destinations such as Medellín, lured by lower costs, better climates and growing colonies of like-minded retirees.

With life expectancies growing — and some pension plans diminishing — baby boomers are doing the numbers and concluding that moving overseas makes more sense than aging in place.

For those worried about finances, Latin America seems to be one of the safer bets, according to Kathleen Peddicord of Panama City, Panama, author of “How to Retire Overseas.”

She said a minimum amount for a comfortable retirement in a number of appealing places — Cuenca, Ecuador, and La Barra, Uruguay, being two examples — would be about $1,200 a month.

Mr. Holman said that if you purchased a home in Medellín, you could live quite comfortably on less than $2,000 a month.

As time goes on, retirement hot spots change along with countries’ economic and political situations.

Ms. Peddicord said she used to recommend Ireland, Thailand and Costa Rica, but no longer does. She cited the high cost of living in Ireland, the anti-foreign sentiments in Thailand, and the growing crime rates both within and outside of San José, the Costa Rican capital.

Now many retirees are more likely to be urged to consider places like Panama, Uruguay, and Argentina in Latin America – as well as France, Croatia, and Malaysia when looking around the rest of the world.

“Malaysia’s capital of Kuala Lumpur is my top pick in Asia for living the very good life on a budget,” Ms. Peddicord said. “Kuala Lumpur is an affordable choice, but Malaysia outside its capital city is one of the cheapest retirement havens on earth right now.”

Hannah Coppersmith, managing director of Pure International, a global property company in London, said there was no doubt that a growing number of European retirees are eager to retire abroad.

Although many retirees still head towards Portugal, where the cost of living is extremely low, she said that more affluent retirees were gravitating these days toward Switzerland.

“It has very good tax breaks, although the cost of living can be high,” Ms. Coppersmith said, adding that securing a visa was relatively straightforward and that many of the foreign home ownership restrictions were waived for those seeking residency.

Wherever you are fantasizing about retiring, how do you know if you can afford it?

“Sell nearly everything you own. Seriously,” Ms. Peddicord said. “Think about it this way. If you were to liquidate every asset you have, where would that leave you? What lump sum of capital would you net? Then, next step, invested, what level of yields and dividends might that capital throw off on a monthly basis? That’s how much money you have to retire.”

The other key financial consideration has to do with housing and where within a country you want to settle.

“In Panama, for example, your rent could be $1,500 a month for a two-bedroom apartment in a nice building in Panama City with a doorman and a pool,” Ms. Peddicord said, “or it could be $200 a month if you choose instead to settle in a little house near the beach in Las Tablas, a beautiful, welcoming region.”

Lee Harrison, an American who retired to Ecuador several years ago and then moved in 2006 to Uruguay, said there were a wide range of financial issues to consider before making the leap to retire abroad.

For example, he recommends that retirees maintain a bank account and credit cards in their country of origin as well as in their new country, to facilitate money transfer. He also said that retirees should investigate their home country’s system of sending pension money to retirees abroad, as well as their new destination’s ability to accept electronic bank transfers.

Retirees also should request help from a tax adviser and make certain their move doesn’t trigger the need for a new will.

“The biggest concern right now for a lot of us is the exchange rate,” Mr. Harrison said. “In Uruguay for example, the Uruguayan peso gained 31 percent on the dollar in 2009, and it gained 28 percent on the euro and even 5 percent on the super-strong Brazilian real. To put this in real-life terms, my property taxes in Punta del Este jumped from $1,360 to $1,800 in 2009.”

But Mr. Harrison emphasized that many places were still a relatively good bargain by U.S. and European standards and that retirees could avoid worries over currency fluctuations by moving to places with pegs to a reserve currency, or that use the currency itself: For U.S. retirees, Ecuador and Panama are attractive because they use the dollar.

Mr. Harrison purchased a nice home three blocks from the beach in Punta del Este for $160,000 and also a two-bedroom apartment overlooking a park in Montevideo, the Uruguayan capital, for $58,000.

“If I had to pick a favorite spot today, with the broadest appeal and lowest cost of living, I think I’d go with Ecuador,” he said. “For a reasonable cost of living and the highest standard of living, I like Uruguay and Chile.”

Health care costs are a prime consideration for retirees. Peter Ryder, an account manager at HealthCare International in London, which provides information about health insurance for those living overseas, said retirees need to investigate what medical treatment and providers are available locally, and whether any impending new pieces of legislation might affect what medical insurance plans are allowed.

“It is a matter of deciding if you want to have full medical insurance coverage, with day-to-day and emergency medical treatment covered,” Mr. Harrison, “or if you prefer to insure for emergencies and accidents only and self-fund day-to-day medical needs.”

Costs vary with age, location, and the level of benefits, but can range from $2,000 to $20,000 a year.

“Switzerland has one of the best health care systems in the world, which is a big draw,” Ms. Peddicord said. “All residents are required to take out a state-run health insurance plan, which costs about $300 a month but which is fully inclusive.”

Financial considerations aside, advisers say that when making the decision to retire abroad, most retirees find that the journey itself is the reward.

“I know lots of people who retired to one country and then decided to move again somewhere else but never back” to their home, Ms. Peddicord said. “I don’t know of anyone who has decided to move back full-time after having had a taste of living abroad.”

David Stubbs left England in 1985 and — despite promising his mother as he boarded a plane for Singapore that he would be back in two years — never returned to his home country to stay. After long career stays in Singapore, Hong Kong and California, he retired in 2004 to Costa Rica at the age of 48, still consumed by wanderlust.

Having lived overseas for most of his adult life, he said, “for me, retiring overseas was the most natural thing.”

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