I recently attended a meeting where the topic of discussion was finding the right place to retire. Ideas were floating around that a lot of people cannot afford to retire in the area they live right now. The reasons are no mystery to anyone; high cost of living, low retirement income, and access to medical doctors and hospitals. Majority of the attendees resorted to the idea that they would be better to retire outside of their immediate areas, perhaps away from metropolitan areas, even outside of US.
Although the idea may be tempting, it behooves us to think of some precautionary ideas before we get too excited.
How long do you have to retire? If you see yourself retiring in distant future; say 10 years or longer, think of the changes in political climate as living parameters are changing fast all over the world. The expectations you may now have, will not necessary be there for you when it is time to retire. Interestingly, social interactions change with the changes in society. What changes do you see coming and are you comfortably able to predict the direction of changes? Are you able to cope with those changes?
What is happening with the market? Property values in foreign countries are similarly affected by many factors just like US. With respect to investment in foreign countries, there are added conditions that we should be aware of. A couple of these factors as they relate to us are the Currency and our status, being a foreigner there. The currency value (of where you think you would like to retire) may drastically fluctuate and it may not be as strong as US dollar. This may not only impact the affordability but also the daily living cost and housing. It is important to study the properties values versus other factors such as currency fluctuation, and political and social changes. We can cope with the changes much easier when we invest in US, or the place we live. It is imperative to familiarize yourself with the rules and regulations such as ownership of real estate by foreigners, types of ownership, etc. prior to investing in other countries.
How will you spend your time during the retirement? Some people expect to keep an active lifestyle during the retirement age either by working, traveling and socializing, or a combination of both. Do you think it may be possible to do all that in retirement age without family and friends around? Don’t count on taking long distance trips as some may have limitations physically. It may also become much more difficult to find jobs for pay. Many people consider volunteer jobs. Will that be what you are looking for? And the last point to remember for discussion purposes, how close will you be to your trusted medical care and doctors?
It is certainly important to plan for a worry free retirement. There may be a better solution than buying the retirement home many years before retirement. Rather than purchasing the home now, plan on investing in real estate in which you can realize cash flow and appreciation, in your immediate area. With the money you will make, you will be ready to purchase your desired retirement home in a desirable location when the time is right.