PHUKET: If you have been an expat for a good portion of your adult or working life, you may be wondering whether to retire abroad or return to your home country to retire.
However, before you decide to become either a permanent expat or a returnee, you will need to take into account the following considerations:
Your Retirement Income
The cost of living “back home” may have risen so much during your time abroad that returning on your retirement income will mean a much lower standard of living.
The good news is that inflation tends to be much lower in developed countries than in the emerging markets that are popular retirement destinations, meaning the low interest rates your investments might be getting right now, and for the foreseeable future, may be enough to at least get by on without many worries.
Moreover, not returning home for some nationalities (British) can mean frozen pension incomes.
Housing Back Home
Even if you have a good retirement income, returning home to a place like San Francisco or London, where housing has gotten very expensive, may not be financially viable without a large mortgage if you did not maintain a residence in such pricey locations.
And having a mortgage as a retiree on a fixed income is usually not a smart financial move.
Tax Home Situation
Living abroad for most retirees who aren’t US citizens (and thus subject to worldwide taxation) will likely mean significantly lower taxes.
However, taxes may not matter much when making a decision if you will be on a relatively low fixed or investment income while American retirees have 50 states with 50 different tax regimes to choose from.
Cost of Retirement Visas
Returning to your home country will not require you to tie up potentially large sums of money in retirement visa deposits in non-home country currencies and pay annual expenses to maintain such visas.
Likewise, there is always the risk of retirement visa rules or requirements changing or becoming more financially onerous – forcing you to leave.
Standard of Living
If you have gotten accustomed to living in places where expats enjoy a very high standard of living (live-in domestic help), returning home will likely be much more of a culture shock. After all, it’s usually only the truly rich in developed countries that enjoy live-in domestic help – something that may become more of a necessity rather than a luxury as you get older.
The older you are, the more difficult it will be to buy affordable health insurance as there is usually an age cut-off date while government health care programs for retirees rarely cover citizens when they are living abroad.
A possible compromise might be to retire abroad in an inexpensive location close to your home country (Mexico if you are American or Canadian) so that it’s possible to easily return to your home country for a major and expensive medical emergency.
Living in places like Thailand where the weather is usually hot and humid, plus there is an annual rainy season, may become harder to bear the older you are while “winter” in the tropics may actually be relatively cold when you consider homes usually don’t have central heating of any kind.
On the other hand, if you have spent a good portion of your life abroad in warm tropical climates, you might find returning home to a northern latitude to be an even more difficult adjustment when you are older.
Family, Friends, Others
If you have been an expat for many years, you may not have many close family or friends left in your home country who can assist you in any way. That could make integrating back into your home country even more difficult as it might be hard to find a social circle of friends you can relate to as you have no doubt missed out on a lot of events and cultural or political changes while living abroad.
Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand. He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970-5795 or email: firstname.lastname@example.org.
— Don Freeman
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