Over twenty years ago I saw an article about the top places to retire overseas. This concept fascinated my wife and me. We subscribed to the International Living magazine and read stories every month about people who had retired overseas and were living the life of their dreams. Most claimed to be living these incredible lives at a fraction of the cost of living in the USA or Canada. In January of 2015, we sold everything – save for some family keepsakes and photos, retired, and left on our global retirement journey.
According to the USA Social Security Administration, over 400,000 Americans receive their Social Security Benefits overseas. This number grew by 17% from 2010 to 2015. Retiring overseas seems to be a growing trend.
There are a couple of popular ways that people retire overseas:
- Lock, stock, and barrel – I use this term to describe people that choose a country, pack all their belongings into a large shipping container, or many suitcases, and make off to their chosen country planning to spend the rest of their lives there. Most people that you read about in publications like International Living or Live and Invest Overseas chose this lifestyle.
- Nomadic or vagabonding lifestyle – I use this term to describe people who pick up and leave the USA or Canada and travel to different countries staying anywhere from a few days to a few months in each country before moving on. We started our retirement adventure using this method.
We are currently using what I call the “hub and spoke” approach to global retirement. This is a little bit different than the “lock, stock and barrel” and “nomadic” methods described above. We arrived in Bangkok in November of 2016 and will be here until at least March of 2018. We have rented a small apartment in Bangkok and every 30 days or so we take a trip to a nearby country for a few days or up to ten days. Hub and spoke is a term developed by the airline industry whereby rather than flying multiple point-to-point routes between cities, the airline concentrates flights to a hub airport. To fly between non-hub cities, you always fly through a hub airport. In our case, Bangkok is our “hub”, and we make “spoke” trips to places around Southeast Asia and China.
Each approach has advantages and drawbacks. Let’s look at things to consider.
Lock, stock and barrel method
- Easier to establish new friendships and set down roots in the new country
- Lower long-term costs – renting unfurnished or buying will almost always be less expensive than short-term, furnished rentals
- Opportunity to be totally immersed in and adopt a new culture
- Pensioner discounts and ability to participate in the national healthcare system – many countries such as Ecuador, Panama, Malaysia offer easy paths to retirement visas and offer tax breaks and other advantages to seniors
- Possible path to a second citizenship
- There may be significant start-up costs and paperwork – depending on the country, you may have to hire a facilitator to help with your visas. Documents such as birth and marriage certificates, police checks, and others must be obtained and translated and certified in the host country’s language. Depending on the country, you may have to apply from your home country, necessitating travel back and forth between your home country and new country during the application period For those choosing to move large amounts of household goods, the cost of shipping can be expensive
- Moving costs back to home country – If you end up not liking your new country, you have additional costs of moving back to your home country
- Ability to travel outside the new country may be limited due to restrictions on resident visa requirements, especially during the first couple of years of living there. You may be limited on how long you can leave your new country – for example, in Ecuador, you cannot travel outside of Ecuador for more than 90 days per year for the first two years of residency
- Practically no start-up costs – with a USA passport you get visa-free access to 156 countries. A Canadian passport gives you 154 countries. No need for long-term residency visas. If you travel like us with a carry-on suitcase and a small backpack, you are basically ready to go with your luggage and tickets to your next destination
- You get to see and experience many different countries and cultures
- Great flexibility – it is easy to change plans at almost a moment’s notice. You don’t have long-term rental contracts or property ownership tying you down.
- Difficult to make long-term friendships with locals. Learning the local language is also difficult if you switch countries that speak different languages often.
- Accommodation and food can be more expensive – Airbnb rentals are nice, but typically cost two to three times the cost per night of a similar property under a long-term rental. Cooking your own food is typically less expensive than eating out, but difficult to do in a hotel or hostel.
- Short duration stays means you just get a taste of the local culture, not enough time to become fully immersed
- Can create an unsettled feeling for some people not to have a home base
Hub and spoke method
- Start-up costs are minimal – we had to come up with two months rent worth of deposit and first month’s rent for a year lease on our small apartment in Bangkok. Most apartments in Bangkok come furnished, but you need to supply bed linens, dishes, etc. We ended up spending about $300 on an IKEA run to get supplies. There were no visa costs or other paperwork required. Take a look at our post on our apartment in Bangkok – $508 apartment in Bangkok
- Easier to develop long-term relationships and settle in – we found a great English speaking church and have joined several groups such as Internations and Meetup and have a couple of weekly get-togethers where we have developed some longer-term friendships. We have also developed a friendship with the neighbor across the hall, a Thai citizen who lived in the USA for many years.
- Lower day to day costs while in hub city – our monthly rent and utilities are inexpensive. We can spend a lot less on food by cooking at home.
- A great method to use for “country shopping.” – some people know that they want to retire overseas, but are not sure exactly where. For example, if they wanted to explore Southeast Asia as a potential retirement destination, Bangkok or Kuala Lumpur would be excellent locations to base out of to explore Thailand, Malaysia, Laos, Cambodia, Vietnam, Indonesia, Singapore, Philippines, Myanmar, etc.
- Visa situation can be complicated, requires planning and residency visa policies vary country to country. In Thailand, we get a 30-day visa exemption stamp at no cost on entry. We can extend that by 30 days by paying $57 each at a local immigration office. Every time we exit the country and reenter, we get a new 30-day exemption stamp. We know of people who have done this for decades. Some countries let you enter for up to 90 days visa-free, but you can only stay 180 days out of every 365. We got caught once on an overstay due to me not paying close enough attention to that country’s policy. The Dominican Republic’s tourist visa allows you to stay 60 days. I incorrectly thought it was 90. We were there 63 days. I kicked myself for the mistake and we paid about $50 each for our overstay fine.
- When you visit spoke destinations, you may pay “double” accommodation costs and have return travel costs to your spoke destination. Our rent does not stop on our apartment in Bangkok when we make a trip to a neighboring country. We pay rent in Bangkok AND hotel or Airbnb costs wherever we are visiting. For us right now, those costs are minimal. Our spoke destination trips are usually a week or less, often a Tuesday through Saturday. So far, we have mostly used hotel points for stays in the country we are visiting. Take a look at our post on how to accumulate a lot of hotel and airline points in a short period of time – How to accumulate 1.3 million points. Since our trips are short and we usually pack them full of activity, we don’t need fancy accommodations. When our destination does not have hotels where we can redeem our points, we stay in 3-star and 4-star hotels. In Southeast Asia, we can get great this type of accommodation for $20-40 per night most places. Airfares from Bangkok are ridiculously inexpensive. For example, we are flying to Kuala Lumpur, Malaysia next week for $63 each, return – a two-hour flight. We were debating on whether to spend $57 to extend our tourist stay by 30 days, but for $6 more, we can fly to Malaysia and accomplish the same thing. For us, a no-brainer.
At this point in time, the hub and spoke approach is working great. We are planning to switch back to the nomadic style of travel March 2018, but may pick up the hub and spoke approach in the years to come from South America or Eastern Europe.
What about you? If you were to retire overseas or live overseas as a digital nomad, what approach appeals the most to you?