Should you retire overseas?
In last week’s article I alluded to the fact that a measurable number of Bermuda residents are opting to retire overseas, so it seems only appropriate that I follow this with a few thoughts regarding this subject.
I will say up front that I am not a certified financial planner, so if you are looking for help crunching the numbers once you have read this, please consult an expert. And please, whatever you do, don’t start that conversation with “well Robin says!”
Let me start with two basic questions. Firstly, can you afford to retire in Bermuda, and secondly, (regardless of whether you answered yes or no to the first question) are you sure?
Would it surprise you to learn that a recent study done by the US financial research firm Hearts and Wallets revealed that there is an alarming difference between what employed people aged 53 to 64 believe retirement life will cost and the actual cost.
As you might expect, most people did anticipate that healthcare costs would increase, but most people underestimated the cost of food and housing because their intended plans to downsize when they retired did not take place.
The many reasons for this include: being unable to sell the house they have been living in (or being unable to sell it for enough money to make a move feasible), fear of change or losing independence, needing to retain a large dwelling to house adult children who are unable to earn enough to live on their own, and being unable to face leaving friends, family and a familiar way of life behind.
Another statistic that I found indicated that single retirees in the US are spending an average of 55 per cent of their monthly income on housing alone. If the stories that I have heard are accurate, in Bermuda this figure is even higher for some people. And let’s not forget that even if you own your home, land tax, insurance, roof painting and repairs are very costly on this island and these are expenses that will never decrease — and then there is the whole issue of maintenance.
At the age of 65 you may well be brave enough to go up on your roof, or fit enough (some might say crazy enough) to mow the lawn in August; but how about when you are 75 or 85? How will you accomplish these tasks then?
It’s fine to joke and say that if the roof comes off the corner of your house in a hurricane for example, that you will just close the door to that room and turn it into a swimming pool, but do you really want that to be your reality?
Make no mistake, I am not trying to scare anyone, but burying your head in the sand regarding these issues just won’t do either. What I am suggesting is that you really think about ALL aspects of life that are coming your way and their associated costs; not just the grandparenting, cookie baking, fishing and sleeping in that everyone so looks forward to, and be as realistic as possible regarding what retirement in Bermuda will cost you.
I am also suggesting that you take a really hard look at your spending habits now and see what you can cut back on to save more, particularly during your last 10 working years. Having a little extra money in the bank never hurt anyone and if it turns out that you really don’t need it down the road you can always help send the grandkids to school.
If, however, after doing the math, it really does seem unlikely that you can afford to live your current lifestyle in Bermuda once you retire, then realise that where there is a will there is most likely a way. You do not necessarily have to pack up and leave, but you will have to weigh the pros and cons regarding the standard of living that you can actually afford here, against the lure of a fancier lifestyle overseas and make sure that you have thoroughly investigated every idea that comes to you before making a decision.
• Robin Trimingham is an author and thought leader in the field of retirement who specialises in helping corporate groups and individuals understand and prepare for a new life beyond work. Contact her at www.olderhoodgroup.com, 538-8937 or firstname.lastname@example.org
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