account, while describing how to make your investment purchases.
As easy, however, as this investment strategy is, some people may still prefer an advisor. I profile some well-trained, ethical guides. Once you understand their philosophy, you'll know what to look for when picking an advisor.
Many people are also concerned with the practicalities of repatriating financial assets. Although this book doesn't cover such concepts, I continue to add articles and useful links pertaining to this subject for those of different nationalities at www.andrewhallam.com.
As an expatriate, you can live better, earn more, and provide for a generous retirement. But you'll need a plan. Fortunately, you're reading it.
Chapter 1
Setting Your Bull's-Eye
When I first started investing, I wanted to retire at 40. I was 19 years old and saving like a lunatic. I won't confess the screwy things I did to pinch pennies. Instead, I want to share what I did right: the part you'll find helpful. I planned how much money I wanted to save, and why. Such planning, even more than the hyperactive saving, made my life a heck of a lot easier.
In 2014, shortly after my 44th birthday, my wife and I retired from our Singapore-based teaching jobs. That doesn't mean we live like trust-funded hedonists. Nor does it mean we'll never work again. It does mean, however, that our private parts aren't sitting in somebody else's vise. A few years back, if our boss had gone on a firing spree, sacking skinny bald guys and bilingual blondes, we would have been fine. We had enough money to survive without working.
When you're financially free, you might choose to keep working, take a long-term leave, or retire. Financial freedom provides options.
If you're not financially free today, set a target.
Begin with the following question:
If you were retired today, how much do you think you would spend each year?
For now, ignore inflation. Everything from a back wax to cornflakes will cost more in the future. But we'll make adjustments for that later. Just consider how much you would need annually if you retired today. It's silly to suggest a specific number of dollars needed by every retiree. If you're retiring in London, England, for example, costs will be higher than in Chiang Mai, Thailand.
Big spenders also require more. Five-star holiday junkies have pricier tastes than those who reserve luxury for special occasions. Some experts suggest you should budget retirement expenses totaling 70 to 80 percent of your working household income. But such cookie-cutter solutions make little sense. Even among those in the same income bracket, some people consume like gas-guzzling Mack trucks; others sip like a Smart car. Your future expenses depend on your personal needs, wants, and chosen retirement location.
To estimate future costs of living, figure out what you're spending right now. Record every penny you spend for at least six months. It's easy to do with an app on your phone, or with a pencil and notebook. Then make adjustments for predicted retirement lifestyle changes. Without a job, you won't be maintaining a professional wardrobe. Nor will you be saving for your kids’ college or your retirement. Do you plan to be somewhere cheaper or more expensive than where you currently live? In either case, make adjustments. Costs of living in the world's major cities are available at www.numbeo.com.
This isn't about keeping up with Mr. and Mrs. Jones. But if you want to know how much the typical (non-expat) retired household spends, here's a peek.
According to the University of Michigan's Health and Retirement Study, total costs for the typical American retired household were $31,365 in 2012.7
Canadian Business magazine reported that on average a Canadian retiree spent $39,400 (Canadian dollars) in 2009.8
MGM Advantage estimates that British retirement expenses averaged £23,107 per year in 2013.9
Australian households, according to the ASFA Retirement Standard Benchmark, need $32,603 (Australian dollars) for a “modest” retirement.10
Your needs depend on you: your lifestyle, your retirement location, and your financial obligations. Unfortunately, those afflicted by expatitis crave more than the average Dick or Jane.
What's This Ailment Expatitis?
Expatitis isn't a common medical term. But if you're an expatriate, chances are either you or someone you know is infected. It's easily diagnosed. Symptoms get posted on Facebook. Fortunately, it doesn't hurt – at least not in its early stages.
Unlike bronchitis, arthritis, appendicitis, or colitis, expatitis is rather pleasant. Afflicted individuals get addicted to five-star holidays, manicures, pedicures, massages, expensive dining, and entertainment. But expatitis creates delusions. It's much like drinking champagne underwater without checking your air supply.
Symptoms creep up. The better the expat's financial package, the greater the risk of contracting the condition.
I’ve been giving financial seminars to expatriates for a decade. When I ask people to estimate their retirement expenses, their needs vary. And I expect that. But here's the irony. Those reporting they need the most money are usually saving the least.
Fortunately, such spendthrifts can eke out the final laugh.
Whether you're suffering from expatitis or hoping for a more luxurious retirement than you could afford in your home country, retiring overseas offers a creative solution.
Cheating Conventional Retirement Rules
Meet Billy and Akaisha Kaderli. They live better than the typical American retiree. But they also spend less.
If you struck up a midweek conversation with them, you might peg them as early retirees. The energetic 61-year-olds share the glow of a couple freed from the rat race. But a few things make them different. They spend long-term stints (sometimes years) in low-cost countries. They also retired when they were just 38, and will mark their 25th year of retirement in 2016.
Previously, they owned a restaurant in the United States. Akaisha ran it. Billy worked at an investment firm. But in 1991, they quit. While most of their friends were acquiring large houses, new cars, and filling their homes with fine furnishings, the Kaderlis downsized. “We sold most of our possessions,” says Akaisha, “including our house and our car.” For a quarter of a century, they've lived off their investment portfolio. Today, it's worth more than it was the day they retired.
To stretch their income, they moved to Lake Chapala, Mexico. But they enjoy bouncing around, renting homes in new locations for months at a time. Some of their favorite hubs include Thailand and Guatemala. They commit to community projects, meeting people, embracing different cultures, and learning different languages. They have a mortgage-free apartment in the United States, where they stay when they visit family.
The Kaderlis have also discovered how to bask in luxury on a shoestring. Through TrustedHousesitters.com, they found a luxurious home overlooking Lake Chapala in 2013. They stayed four months without paying rent. “We may do more of that in the future,” says Akaisha, “if the right opportunity arises.”
Their living costs may be low, but the Kaderlis
“How Much Do You Need to Retire Well?”
“Couples Must Budget £600,000 for Retirement,”
“Resources,” ASFA Retirement Standard. Accessed April 30, 2014. www.superannuation.asn.au/resources/retirement-standard.
