Advisors typically seek to improve their clients’ financial well-being by increasing their wealth, but a less common approach that can potentially have as big an impact is to reduce their expenses.
In the college finance realm, for example, a few elite advisors are doing more than helping their clients fund 529 college savings accounts; they are also poring over financial aid differences among colleges that can cut tuition by $5,000 a year. That’s $20,000 over four years multiplied by the number of children the parent is supporting.
Now imagine saving your client not tens of thousands of dollars, but hundreds of thousands of dollars — not by choosing a lower-cost college but rather by helping them choose a more affordable country in which to retire.
See also: 6 steps to an overseas retirement plan
That is now possible as the international retirement trend gathers steam, and indeed authors Suzan Haskins and Dan Prescher, in their newly released book “The International Living Guide to Retiring Overseas on a Budget,” affirm it is possible to live quite comfortably on just $25,000 a year.
“If you can get better weather, great health care, enjoy a different culture and immediately cut your cost of living in half, that’s like an arbitrage play. Your standard of living more than doubles overnight,” says Prescher, who with Haskins, his wife, spoke with ThinkAdvisor from their home in Cotacachi, Ecuador.
The Omaha transplants don’t miss Nebraska’s freezing winters or brutally hot summers, which used to generate $500-a-month utility bills. Today their utilities run about $30 a month, including water.
Property taxes on their 1,100 square foot condo total just “52 and change” a year. Gasoline costs less than $1.50 a gallon, but because public transportation is “ridiculously cheap” and taxis and buses “ubiquitous,” the couple doesn’t own a car, saving further on insurance and maintenance.
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“We actually walk everywhere [amid] cobblestone streets and Spanish colonial architecture,” Haskins says, but they shell out the $2 it costs to take a two-hour ride to the Ecuadorian capital, Quito, when they want to attend the symphony, view an art exhibit or visit a specialist doctor.
“We’ve never paid more than $10 for a taxi, and that was to go to the provincial capital,” a 30-minute ride away, Prescher says.
The couple work as writers for International Living magazine, and just interviewed a couple aged 68 paying just $350 a month for health care in Mexico. Their insurance policy, they say, has far better coverage than their policy in the U.S., where they were paying $1,200 a month 10 years ago — coverage they estimate might be $2,000 today.
But beyond professional experience interviewing expats and their current living situation, Prescher and Haskins draw on more than 12 years of experience living in two places in Ecuador (Quito as well as Cotacachi); three in Mexico (Lake Chapala, San Miguel de Allende; and Merida); and half a year each in Panama City, Panama, and San Juan del Sur, Nicaragua — and have therefore charted a path for others.
“It used to be a pretty exotic idea, but in the last five or 10 years, with the internet, it’s a mainstream idea now,” says Prescher. “Not everybody will do it; it’s for people with a sense of adventure, people with a tolerance for novelty … You have to be willing to leave your comfort zone.”
But going outside your comfort zone need not be quite so uncomfortable.
“Most people retiring are of a certain age and want things to be easier,” says Haskins. “There are places in Mexico or Costa Rica that are just a short flight back to home.” She adds that options even include English-language destinations (Belize) or places that use the U.S. dollar as currency (Panama, Ecuador).
“We suggest you ruthlessly profile yourselves,” Prescher says.
For those attracted to the benefits of international living — its lower cost and adventure — the self-profiling should include an awareness of potential difficulties.