The average retirement savings of American families is $95,776. At first, this sounds like a hefty sum, but there is more to the number than meets the eye. Since it’s the average retirement savings, it doesn’t reflect the fact that nearly half of American families have no retirement account savings at all, and the median — 50th percentile — family has just $5,000 saved.
Today’s show gives practical tips on how to save for your retirement, with an eye to increasing your retirement savings.
Retirement is expensive – especially in America. That’s why some Americans consider retiring abroad. While housing, health care, and other costs may be lower in other countries, there are other financial issues that arise with a move abroad.
Art Koff, MarketWatch columnist and founder of RetiredBrains.com, discusses critical questions that you should ask before retiring to another country. He also addresses how to get your Social Security, and shares great resources that retirees can use to plan their golden years.
Follow Art Koff and his work at www.retiredbrains.com
Watch Retired Brains on YouTube.Read the Transcript
Interview with Art Koff
Are you, or someone you know, planning to move abroad? Have you recently done so? Doug Goldstein, CFP®, interviews Art Koff, a well-known consultant in the field of managing business and personal affairs while living in another country. Find out the questions you need to ask before you decide to move.
Douglas Goldstein: Art Koff, founder of the website www.retiredbrains.com over 10 years ago which helps a lot of retirees, has written an article on Market Watch called Why
You Should Consider Retiring Abroad.
So you talk about Americans retiring abroad. Why are so many Americans considering doing this?
Art Koff: Primarily, there’s a significantly lower overall cost of living for approximately the same lifestyle. This includes a lower cost for housing and health care and often results in up to a 50% savings, compared with the cost of living in the United States. Also, in terms of access to quality and the expense of health care: health care in the U.S. has become outrageously expensive and in many other countries, you can get excellent healthcare for significantly less, and lastly, lifestyle. Most retirement destinations offer a lower priced, more traditional, and more relaxed lifestyle, and so to those kinds of people retiring overseas it makes a big difference.
Douglas Goldstein: Do you think that is a sign of not being patriotic if you retire overseas?
Art Koff: Not at all. Let’s be honest. Today, with the tremendous cost of living in retirement, much more than most of you will read about, people are running out of their money. They are living longer, and they need to have enough money to last into their 80s, and in many cases into their 90s.
Douglas Goldstein: You mentioned before the high cost of medical care. Aren’t there services like Medicare, Medicaid, and Obamacare that’s all designed to help people pay for their medical costs?
Art Koff: Yes and no. Again, a great deal of their costs are paid for, but in a survey that we did just a year and a half ago, we found that a couple retiring both at 65, both Medicare-eligible, would spend out of pocket on healthcare. They would spend approximately $270,000 out of pocket, but most people have no clue about it. In the survey, people thought that their costs would be around $25,000, so they really thought it would be a fraction of what the actual cost would be. If I may mention, that cost actually does not include home health care or a nursing home. That cost is just for your Medicare premiums that are taken out of Social Security and for any supplemental insurance plan, and then for anything not covered by either of those two insurance plans.
Douglas Goldstein: So what you are saying is that there are basic healthcare expenses which may be covered by their basic insurances, but when they want other things like someone in the house to help them out, they have to pay for that out of pocket?
Art Koff: Big time.
How Can People Access Their Money When They Retire Abroad?
Douglas Goldstein: There are other issues with retiring overseas. There are technical things that a lot of people worry about, like if they have their brokerage and bank accounts, or even their Social Security, how do they deal with getting that money once they move overseas?
Art Koff: You could certainly receive Social Security after you’ve moved overseas. Many people maintain a checking account in the States and have their Social Security deposited directly into their checking account in the States. Many people also have their other savings and retirement funds disbursed as needed the same way. Depending on where you might move, you might very well have accounts in those countries and have your Social Security checks and other revenue that you get from retirement savings sent directly to these overseas accounts.
Douglas Goldstein: Let’s dive into some of the issues that in fact you brought up in your article, which is if someone is thinking of living overseas or deciding where to live, what questions should they be asking when deciding where to live?
Art Koff: There’s a huge list of questions, and I’m going to run through them really quickly because I know our time is limited. But obviously geographic location and climate. Are you looking to be by the sea, by the desert, by the mountains? Do you want a large city, a small town, or a rural community? What about the language? There are some places where your language is fine, others where you need to speak their language. What about health care, what’s provided and what’s available, what’s the quality? Are you interested in the arts, the theater, symphony, ballet, or opera? Some of those are very important. Are you interested in sports or recreational venues? Do you like to ski or boat, or watch or play football? What about the lifestyle or pace of living? Many people from New York find that lifestyle away from there is too slow and they are very uncomfortable. What about the cost of living and currency conversion? What about crime? That’s become extremely important in some areas. Some people want to continue their education. What are the educational advantages of moving, and what about the ease and expense of returning to visit friends and family? You can move a long way away if you plan to come back, but it can be very expensive. What about the possibilities of natural disasters, earthquakes, tsunamis, hurricanes, volcanic eruptions? Is it suitable for pets? Some people are very attached with their pets. Lately, what about local diseases like zika? This is substantially involving people moving to Brazil and South America. What about the political climate? If you want to continue to work, what about the ability to work in a selected country if work is important to you or if maybe you need to earn a little additional money? Shopping: how important is the availability of shopping for food, clothing, staples, products, and what about political climate and work, or health care, because as you age, you need good health care. So that’s quickly running through 20 different areas that you need to consider.
How Can You Prepare For Living Overseas?
Douglas Goldstein: Do you think that based on that, someone should try to test out living overseas first. or it’s just not feasible to do that and you just have to jump in with both feet?
Art Koff: Well if you are able to take a “vacation” in an area, that would be helpful. If you are able actually to, stay for a while and rent a place and see whether the lifestyle fits your needs and all of the other things I just mentioned seem to fall into what you’d like for the next 10, 20, or maybe even 30 years. Again, you need to remember that as you get older, things change. Your physical abilities are a lot different, and so you must plan for some deterioration of your physical abilities wherever you happen to move.
Douglas Goldstein: So in line with the question about testing it out where you go, is it better when people move to try right away to decide where to live and buy a property, or should they try to rent in order to determine if they are comfortable in that town?
Art Koff: They definitely should try to rent, and one of the problems lately as far as buying is concern is there are a lot of scams. So depending on where you are moving, you really need to make sure that you are not getting scammed and end up buying something which in the long run will not work.
Douglas Goldstein: How can people learn more, follow you, and follow your work?
Art Koff: They can go to www.retiredbrains.com. If in fact they would like a copy of some of the things I just said or even a copy of the article that I wrote for Market Watch, they click on Contact Us and I will be happy then to email this information to them or they can also go, when they go to www.retiredbrains.com, to Senior Living Resources at the top of the site. If they click on that, it will take them to an area where they can actually get to the information on retiring abroad and other areas for retirement.