The Global Expatriate's Guide to Investing. Hallam Andrew

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 don't scrimp. “We have a great deal of fun,” Akaisha says, “living on $30,000 a year.” In 2013, they spent roughly $3,900 on housing, $5,400 on transportation, $6,600 on food and entertainment, $6,900 on medical expenses, and the rest on miscellaneous costs.11

      The Kaderlis are the authors of The Adventurer's Guide to Early Retirement (CD-ROM, 2005). They also maintain a helpful blog, Retire Early Lifestyle, at www.retireearlylifestyle.com, where they share their stories and tips for living well on less.

      Suzan Haskins and Dan Prescher, authors of The International Living Guide to Retiring Overseas on a Budget (John Wiley & Sons, 2014), live much like the Kaderlis. Located in a small town in Ecuador, they spend roughly $25,000 a year. “We live well… We go out to lunch and dinner once a week.. we enjoy the occasional martini or scotch, and every evening with dinner we polish off a bottle of wine.” Their costs include at least one annual trip to the United States, occasional fine dining, and a worldwide health care policy that costs roughly $5,800 a year, with a $5,000 deductible.12

      Cooking Up the Road Less Traveled

      Forty-eight-year-old chef Shane Brierly desires a more upscale retirement than he could afford in his home country. The New Zealand native left Australia in 2004 to work in Dubai. He explains, “I thought it would give me an edge, giving me a more comfortable financial position than previously.”

      But instead of moving back to Australia, Shane moved to Vietnam, where he works as a chef at the Pullman Hotel in Ho Chi Minh City. Now he's planning to retire overseas. “The respect and community values in Asia really inspire me,” says Shane. “Not so many criminals, a culture of nonviolence and respect, plus awesome food.

      “Costs of living are also lower,” he adds, “and these countries are far less materialistic.” Shane's views on materialism were altered by misfortune. “But it was a blessing in disguise,” he says.

      A shipping company lost all of his household goods when he moved from Dubai to Vietnam. Initially forced to live with less, he warmed to its simplicity. “Owning a whole lot of stuff means maintaining, repairing, replacing, or running it.” He no longer buys what he doesn't need, preferring to spend his money on traveling instead. Gaining experiences, Shane explains, is more fulfilling than acquiring possessions. “The Western economy runs on unneeded goods and services, and everyone lives to consume. You need half your income just to sustain impulse buys and comfort purchases.

8

“How Much Do You Need to Retire Well?” Canadian Business. Accessed April 30, 2014. www.canadianbusiness.com/investing/how-much-do-you-need-to-retire-well/.

9

“Couples Must Budget £600,000 for Retirement,” The Telegraph, April 26, 2010. Accessed April 30, 2014. www.telegraph.co.uk/finance/personalfinance/7635532/Couples-must-budget-600000-for-retirement.html.

10

“Resources,” ASFA Retirement Standard. Accessed April 30, 2014. www.superannuation.asn.au/resources/retirement-standard.

11

Interview with Billy and Akaisha Kaderli. Telephone interview by author, February 2, 2014.