Finally, we’re nearing the end of the Financial Uproar retirement series, the literal best series in the history of time. And none of you read it. It’s like you guys are trying to suck.
There’s no better time to start than the present. It works for cleaning out the cat’s litter box and it works for going back and seeing where you should retire in Canada and the U.S.
Just in case those destinations aren’t enough for you, let’s expand the search around the world before we mercifully take this series out behind the barn and put a bullet into it. Like before, we’re going to examine things like proximity to airports, living costs, the affordability of housing, climate, medical care, and so on. We’ll focus a little less on taxes this time around based on the assumption that taxes are almost universally cheaper in the developing world than they are here.
Let’s get the party started.
Don’t run into this guy. Sean Penn I mean. His friend seems nice.
According to estimates I found after Googling for a few minutes (RESEARCH FOR THE WIN), Mexico has close to a million U.S. expats living there. And surprisingly, not all of them are shot up in the drug-related shootings I assume happen every 14 seconds.
This has led to the rise of communities (mostly close to the U.S. border) which are teeming with Americans. Puerto Vallarta is probably the most popular destination. Thousands of expats spend serious time there, with thousands more popping in on vacations to enjoy the beach.
As long as you’re willing to stay away from the beach, real estate isn’t terribly expensive. Puerto Vallarta is a popular medical tourism spot, so you’re not going to get leeches attached to your wounds. The airport has plenty of flights to the U.S. and Canada, and most of the locals speak English.
There are a few downfalls. Drug violence is common, although not usually in the types of cities expats call home. Corruption is also rampant.
Okay, I may be biased here on account of spending so much time there, but South Korea is a decent place for Canadians looking to retire.
Stuff is relatively inexpensive, and housing is reasonable. The climate is better than in Canada, especially if you spend time in the southern part of the country close to the ocean. They have a young population who (mostly) speak English. Medical care is every bit as good as you’d get here, and paying out of pocket for services was reasonable enough I almost didn’t bother with travel insurance when I went over there.
Plus, Canadians can stay for up to six months without leaving the country. In fact, if you travel to Jeju Island, a small autonomous island just south of the mainland, you can buy yourself a South Korean residency permit for an investment of 500 million Korean Won, worth about $575,000 Cdn. today.
We all know the reason why many people want to retire in Thailand, and that’s hookers. Here at Financial Uproar, we will not squash your hooker-related dreams. We’ll just remind you that, for the love of God, wear a rubber. Maybe even two.
But there’s more to it than that. We’ll start with the two main downfalls to retiring in the country, the government bureaucracy and the political instability. Thailand has coups more often than I change my underpants. And good luck if you have to deal with the government for anything. And if the last year is any indication, 100% of all flights either going to or from the country end up crashing.
There’s also the issue with real estate. The country will allow you to own real estate, but it restricts new developments so foreigners can only own a certain amount. It’s still cheap, but often a white guy will end up spending much more than his Thai neighbor for equivalent places. And you don’t have an many rights as an owner than a native would.
Thailand has a special program for retirees that will let you stay in the country if you can prove you have 800,000 Thai Baht in a bank account in the country and 65,000 Baht per month in income. This works out to $31,000 in deposits and $2,500 in monthly income in Canadian Dollars, which I’d hope most retirees can pull off.
Don’t laugh guys. Cuba is on the verge of really turning things around. I can feel it. Plus, they recently got a very generous gift from some nice American visitors.
We won’t spend much time on Costa Rica, since it seems like everybody wants to retire there.
Two of Costa Rica’s major industries are tourism and catering to expat retirees. So the country is gradually evolved from the typical Central American place to something that more resembles the U.S. but further south. This also means U.S. type prices, which takes away a big advantage to retiring in Costa Rica. You’re not saving as much money as 15 years ago, that’s for sure.
Like with Thailand, it’s at least easy to get the proper visa. All you need to prove is a pension of more than $1,000 per month and you’re in. If you’re a little younger, you’ll need to either prove an income of $2,500 per month or make a deposit of $60,000 into a Costa Rican bank. Again, these aren’t hard to accomplish.
Honduras saw the number of expats heading down to Costa Rica and decided they wanted in on that sweet action. So they pretty much copied them.
The big advantage is cost. Costa Rica is so popular the country has started to get expensive. Honduras offers many of the same perks for lower costs. You can easily own real estate with no restrictions, and Honduras has pretty much the same visa requirements as its neighbor. If you stick to the Roatan area, you’ll find plenty of people who speak English.
Final thoughts on retirement
To be honest, I don’t really get this whole thing where you move somewhere to retire. If you’ve spent your adult years somewhere, why leave just for the sake of leaving? You’ll abandon your friends, family, and favorite branch of Subway. As far as I’m concerned, you do that kind of stuff when you’re young.
There is one big benefit, and that’s getting away from winter. I can understand why you’d want to do that. So instead of moving somewhere for good, just take a nice three month vacation. You can even switch it up each year. You won’t have to dick around with visas. And then when you come back, you’ll miss your friends. And even if you’re only going to Thailand for the hookers, you can still do that on an extended vacation. Just don’t marry some Thai girl.
It’s part two of the retirement series here at the Financial Uproar blogenin, looking at places to retire in the United States. Part one took a look at the best places to retire in Canada. Part three, coming next week, will look at the best locations around the world to wrap up living.
Because sometimes, even Canadians gotta retire in the United States. TAKE IT
TOBY KEITH BROOKS AND DUN.
Oh, don’t act so shocked country fans. Like Toby Keith and these guys aren’t all the same person. It’s the ultimate long con.
Like with the retiring in Canada post, let’s take a look at some places in the U.S. which might be nice for a Canadian to call home when finally eschewing work for good. We have to factor in things like the cost of real estate, the overall cost of living, access to medical facilities, climate, availability of airports, taxes, and so on.
Many Canadians don’t actually retire in the states. They split their time between Canada in the spring, summer, and early fall, while spending winter somewhere much warmer. As long as they don’t approach 180 days in the States, it’s fine from an immigration point of view. You’d just be a visitor. So we won’t spend a lot of time talking about potential retirement destinations in Duluth, Minnesota, even if the price of housing is reasonable and the people are as non-threatening as vanilla flavored ice cream.
We’ll start things off with a couple destinations in the western part of the U.S., and then follow it up with locations a little more east. After that you’ll go home and this will be over. Oh, you’re already home. WELL SCREW YOU THEN.
Ah, the Sin City. The place where the things you do won’t follow you home. Except syphilis. That shit will follow you everywhere.
There are a number of reasons why retiring in Las Vegas is a good idea. You can rent a decent place for $1,000 (all figures USD, because obvs) or buy one for $150,000. It has a busy airport with flights all over the place. Pretty much everything you could ever want for medical care is around. And if you get bored, locals casinos have decent food and gambling specials. Or you can go to the Strip and meet all sorts of different people.
Las Vegas is basically a sauna in the summer but it is quite reasonable between November and February. It might snow once every couple years and dip below freezing once a year, but come on man. You’re Canadian. It’s time to buck up.
Las Vegas does have a sales tax of 8.1%, which is a bit on the high side. It also has a tax of 12% on hotel rooms, so make sure your retirement plans involve getting an actual house or apartment. But the state also has no state income tax, which is nice for residents. As a part-time resident it won’t be much help to you though. Sucker.
Galveston, Texas, is just down the road from Houston. The medium-sized city itself is home to about 50,000 people, with another 200,000 living close by. Where Galveston begins and Houston suburbs end is sort of up in the air. Kind of like my sexuality. I’ve said too much.
Galveston has a lot going for it. Its proximity to Houston means access to airports, medical facilities, and anything your old ass might desire. Galveston’s climate is a bit cooler than Houston’s because of its proximity to the water, and plenty of folks from Texas end up retiring there as well. So you’ll have lots of company when you tell the teens to get off your lawn.
House prices are reasonable, with the average being around $180,000. Galveston is less exposed to oil than many other cities in Texas, with tourism, shipping, and health care as the main industries. And if you don’t want to go to Houston for a check-up, Galveston has a medical college with more than 2,500 students. I’m sure at least one of them can identify that strange growth on your junk.
Texas does have a pretty high sales tax, coming in at more than 8%. Property taxes are high as well. Oh, and there is the risk of hurricanes. But other than that, it seems like a decent place in the United States to retire.
TIGER WOODS SIGHTING? PROBABLY.
You probably don’t know a damn thing about Augusta, Georgia except the annual golf tournament that gets played there. But in reality, it’s a nice medium-sized city with affordable living, good health facilities, and all sorts of neat historical buildings.
It’s downright cheap to live in Augusta. The average house price is just $115,400, and you can easily rent a decent place for $700 per month. It has a diverse economy, with medicine, higher education, and the military being the biggest employers in the area. And if you buy a house, you’ll be able to make bank renting it out for that first week in April.
Of issue is the climate. It regularly dips below freezing in December and January, but usually warms up to well above zero. The airport isn’t huge either, so you’ll be stuck connecting in somewhere like Charlotte if you want to go anywhere. And the sales tax of 8% is a little excessive.
You might be saying to yourself “Nelson, why isn’t Florida on this list? It’s pretty much retirement central.” Two reasons, mainly. One, it’s getting to be expensive. Unless you’re willing to live in parts of the state nobody really likes, you’re paying a lot. And secondly, they change an assload for property taxes for non-residents. Screw that noise.
Instead, go look at Mobile, Alabama. House prices are super cheap, with an average of just less than $120,000. Property taxes are affordable too, with an average house costing about $80 in property taxes per month. The climate is good, the airport has plenty of flights to hubs like Houston and Atlanta, and hey, you’re right on the water. Enjoy falling asleep on a beach chair old man.
Like with Augusta, Mobile has plenty of history. It also has way more culture that what you’d expect from a medium-sized city in Alabama. There are four major medical centers in the city limits, which is good news for those of us who fall down a lot. The overall economy isn’t particularly strong, but has come a long way from the slow decline of the 1960s through 1980s.
The biggest reason not to retire in Mobile is the sales tax. Alabama itself only charges a 4% tax. Mobile County charges 1.5% and Mobile charges 4.5%. Maybe you’ll want to retire somewhere around Mobile to avoid those taxes.
Oh, and imagine if you lived in a mobile home in Mobile. You’d spend your whole retirement chuckling.
And that’s about it. Anyone else have ideas of places to retire in the U.S.A.? Comment away, yo.
This is the beginning of a three part series. Next week will be part two on where to retire in Murica, and part three will look at international destinations. No, throwing your underpants at me will not make the process go any faster.
Dammit Grandpa, put a shirt on. I don’t care if it’s a beach.
Congratulations, Financial Uproar readers! Not only do you get to show up here twice(!) per week for the hottest of finance takes, but apparently you’re also about to retire. And that was even after you bought pumpkins as an investment the day before Halloween. Enjoy your 4PM dinners and hiking your pants up to your armpits. Naturally, the grandkids will never visit.
So where exactly is a good place to retire in Canada? There’s many different things a potential retiree can look at. They typically care a great deal about weather, because hey, who wants to spend their golden years with their tongue stuck to a metal pole?
But it isn’t just about the weather. Other factors are equally as important, if not moreso. Taxes are one such concern. So is access to medical care. The cost of living is also important. And so is distance to the family. At a minimum, a retiree should be close to a major enough airport to get places.
Once you factor in all those things, pickings are a little slim. But here’s a list of several cities which are pretty good choices to retire in Canada.
Medicine Hat, Alberta
I would like to point out how exceedingly nice it is for me to suggest Medicine Hat as a place to retire in Canada, especially since I have an ex-girlfriend who lives there. If you see her, punch her in the face. Or… maybe just scowl at her. PASSIVE AGGRESSIVENESS FOR THE WIN.
Alberta has some of the lowest provincial income tax rates in Canada, and is the only province without a provincial sales tax. Sure, we’re polluting the world with our dirty oil, but like hell we care about that. GO TO HELL, GREENPEACE. Overall, it’s a fairly low taxed place.
Medicine Hat also has a low cost of living. There are plenty of 2 and 3-bedroom apartments for rent in nice locations for under $1,000 per month. Rent of between $700 and $800 can be had if you’re willing to sacrifice things like a dishwasher and in-suite laundry. The average house price is $285,000, a full $160,000 less than Calgary. There are plenty of decent options on the market for around $200,000.
The Hat (as we locals [I’ve been there more than once] like to call it) also boasts a vibrant college, good hospitals, plenty of employment, and all the big city amenities you could ask for. The only real downfalls are access to an international airport and weather. The eastern part of Southern Alberta is the coldest in the winter and the warmest in the summer. And if you want to go anywhere from Medicine Hat, you’re stuck either flying or driving to Calgary.
Lethbridge is another great choice. It has many of the same benefits of The Hat, with slightly better weather and a marginally bigger airport. It might even be a little cheaper to live in, and it’s closer to Calgary too.
Related: Here are some other places you might want to live in Western Canada
Moncton, New Brunswick
Moncton has a few things really going for it. You can get a house for less than $150,000 (the average price has hovered between $150,000 and $175,000 for years now), the weather isn’t bad from a Canadian point of view, and it also serves as a transportation hub for the maritime region. You might have to connect in Toronto or Montreal, but getting from Moncton to anywhere isn’t hard.
The local economy is relatively strong, with unemployment barely above 5%. Moncton has become a commercial hub for Atlantic Canada, with many companies choosing to put offices in the city. Tourism is also big, and the proximity to ports has attracted a certain amount of manufacturing.
Moncton University is a French-language school (which means WE HATE IT SO), but hey, it exists. And the city’s two hospitals seem pretty decent, employing more than 5,000 people between the two of them. Will the nurses give you a sponge bath? Probably not.
The biggest issue with living in Moncton is the taxes. For the first $40,492 in income you’re paying 9.68%, and then it jumps up to 14.82% on the next $40,493. So if you make $81,000 in New Brunswick, you’re looking at 12.25% in provincial tax. In Alberta, you’d be paying 10% in provincial tax, plus you’d cut the 13% HST to just 5% GST, at least until that bastard Trudeau raises it again to pay for MARIJUANA FOR ALL THE TEENS.
Windsor is a great place to retire.
Kijiji is littered with decent looking apartments for less than $800 per month and the average house price is still under $200,000. Southern Ontario weather is civilized in the winter, although it gets pretty hot and humid in the summer. The airport really only offers flights to Toronto, but you’re only a half-hour drive away from Detroit’s airport, which will take you pretty much anywhere you need.
Windsor is a nice enough city, although the economy is struggling. Car manufacturing dominates the region, and many of the plants have been shut down or contracted over the past decade. This might start to change with the Canadian Dollar going down, but I wouldn’t hold my breath. Unemployment is quite high, approaching 10%. Oh, and you have Detroit right next door, which automatically makes your city crappier in comparison.
Taxes aren’t bad in Ontario. If you’re making $80,000 per year, you’re paying about 7.1% in provincial tax. You’ve got an 8% provincial sales tax on there too, but I could deal with that if I could get a 30% cut in my provincial taxes.
Niagara Falls, Ontario
Because hey, who doesn’t want to be misted on all the time?
Niagara Falls has many of the same advantages as Windsor. It’s close to a big U.S. airport (Buffalo). Real estate is reasonably priced. Taxes are low. And there’s always the opportunity to meet interesting tourists.
There are a few issues though. The population of both Niagara Falls and Windsor are falling. The economy isn’t great either, on account of fewer people showing up to see the waterfall. Although this might change with a weaker Canadian Dollar. I’m also told folks from Niagara have to go to St. Catherines for decent health care as well.
And hey, Marineland. On second thought, maybe not.
Excuse me as I repeat many of the things I’ve just said about the other two Ontario cities.
Hamilton has a relatively big airport close by, easy access to Toronto, and affordable real estate. The economy isn’t bad, and the city is becoming more popular among the kids. Parts of it are still pretty dumpy, but overall it’s heading in the right direction.
Related: I looked at living in Hamilton (and other eastern Canadian cities) before.
Wrap it up
There are other good places to retire in Canada, but I’m bored so I’ll wrap it up. Feel free to add your input in the comment section. Just don’t say Toronto or Vancouver and not expect to be mocked.
Two more and he’ll start squirting ink like an octopus.
In the world of personal finances, retirement savings, and sexy fun times, there’s a common refrain out there. You better save your ass off when you’re young, or else you’ll only have 14 nickels to rub together once you hit retirement age. You’ll be so concerned about cash that you’ll barely be able to enjoy your lightly salted meat and non-threatening television programming. Oh look Mildred! Matlock is on.
I’m not going to deny running out of money is a very legitimate retirement threat, because of course it is. Nobody wants to hit up their kids for money once they enter their golden years. Hell, even getting the average senior to sell the house and downsize is akin to pulling teeth. Which is why I think reverse mortgages are going to become all sorts of popular.
But like I touched on a couple of weeks ago when I said our upcoming retirement “crisis” was severely overstated, I think people who don’t do a whole lot of saving today will still be okay when the time comes to hang up the proverbial skates. They might work a little longer, delaying taking CPP. They might ratchet down the lifestyle expectations, especially after falling asleep in front of the TV 583 days in a row. And remember, most retirees will hardly pay any taxes and don’t have to worry about retirement anymore. I’d be jealous, but they go pee 14 times a day.
If running out of money isn’t the biggest retirement threat, what is?
If I make it through this without making six off-color jokes, you all owe me $20. This is going to be tough.
According to alzheimers.org, which I’m going to assume is a pretty good source for this stuff, the average 65 year-old has a 1 in 14 chance of getting Alzheimer’s, dementia, or some other disease of the brain. The chance of it developing doubles every 5 years, which means the average 80 year-old has a 1 in 6 chance of permanently forgetting where they put their keys.
SEE? I LASTED A PARAGRAPH.
I’m sure you all have a relative who got either increasingly stubborn or out of it as time went on. I know I sure have, and they’re annoying as all hell to deal with. “Hey, relative, do this sensible thing.” “HOW ABOUT YOU KISS MY OLD WRINKLY ASS, JIMMY.” “But, why?” “BECAUSE I SAID SO, GODDAMMIT.” (Has mini-stroke) “My name isn’t Jimmy, by the way.”
For a lot people, figuring out asset allocation, pension withdrawals, income splitting CPP benefits, and RRSP contribution room is really hard. It’s why blogs like mine exist, because like hell any of you are here for the jokes. And there hasn’t been a scantily-clad lady in weeks now. Imagine trying to figure out all that stuff while dealing with a brain you know isn’t working quite as well as it used to.
We all laugh at the stories of seniors getting swindled out of their cash by a nice representative of the Microsoft company phoning to see whether their computer is still running. But the fact is those scams work because of dementia. When your brain just isn’t working right, scams seem like reasonable things to do. Short of not letting old people talk on the phone anymore, there’s not much we can do.
Active management during retirement
I’m willing to bet that just about every active investor you will ever meet says they plan to keep picking stocks during retirement. It gives them something to do that isn’t annoy the grandkids all the time. Dividend investors are especially likely to think this way. The whole point of dividend investing is to replace one’s income. Real estate investors are just as guilty. Thousands of guys buy rental houses as retirement projects.
But once the ol’ cognitive functions start getting a little impaired, is somebody going to be good enough at analyzing a company to do so accurately? Hell, most investors can’t pick stocks very well even after getting help from smart folks on the internet. I’m not liking Grandpa’s chances at that point.
Which is why annuities are a smart choice for more people than you’d think. Yeah, I know they’re fee-ridden products that are only sold by the SPAWN OF SATAN financial advisors OF DEATH, but they have a place in many people’s retirement planning. Especially for those folks who aren’t very smart at picking investments in the first place. I’m not an expert on annuities, but I’m sure there are some lower-cost products out there.
Deferred annuities are a product you can put some money into when you’re younger, and have it not start paying out until you’re 70 or 75 years old. You can choose the annuity when you’re younger and still with it, and delaying the payout means a smaller amount of money will go farther when it’s finally payout time.
There are other options too. You could do what my parents have done, and that’s keep a relatively astute member of the family up to date on the finances, allowing that person to slowly take over major decisions as they get older.
Or you could accumulate so much money that all you need to do is put the money in GICs when it’s time to retire and live comfortably on the interest. Which is fine, assuming you’ve got so much disposable income that a 40% savings rate isn’t a big deal. I suspect many people reading this rag can accomplish that, but it’s probably a pretty big stretch to assume the average person wants to do that. They’d rather consume now.
With people living longer than ever, dementia could be a bigger retirement threat than outliving your money. Yet, I see nobody acknowledging it as even a remote risk. The time to plan for such a thing is now, not when you’re Grandma and you aren’t allowed to have credit cards anymore because you keep telling the numbers to the nice man on the phone.
You’d think this would be common sense, but I see so many people who are constantly screwing this up.
If you talk to any financial advisor, most PF bloggers, or the bottom of my shoe, they’ll all tell you the same thing. As you get older, you should become more conservative in your investments. Most will recommend you take your age and subtract it by 100 or 110 to get the proper bond allocation. If you’re 55, then you’re looking at being between 45 and 55% in bonds. If you’re 111, you’re probably dead. Can I have your watch? Oh wait, you’re dead. (takes watch)
Of course, dividend growth investors don’t see it that way. They’re content in being close to 100% invested in stocks almost all the time, knowing that the growing dividend stream (which they’re a little sexually attracted to) will be enough to sustain their dreams of soft meat and annual trips to Arizona in their retirement. CPP will be their bond component, dammit.
And hey, that’s okay. If you’re so obsessed with dividend growth investing that you’re willing to see the strategy even through the times when the market falls 30%, then good on ya. But as we all know, many investors panic during market bottoms, crystalizing paper losses when the going gets too tough. They are the investing equivalent of Jay Cutler or a Russian hockey player, at least in Don Cherry’s erotic dreams.
It’s why I think a dividend growth strategy is unsuitable for a lot of investors, especially those people who are approaching retirement age. It’s tougher than most people think to even pick the best dividend aristocrats, and nobody wants to see a huge decline in their portfolio just a few years before they retire, even if dividends stay steady. The investor who truly doesn’t care about the amount every time they log in is few and far between.
But after saying all that, maybe there’s an argument that both dividend growth investors and traditional portfolios of 50-50 stocks and bonds are both doing it wrong as someone approaches retirement age.
The case for going 100% bonds
No, that’s not a typo. There’s an interesting argument to be made that an investor should approach a 100% bond allocation as they hit retirement age.
Essentially, the strategy goes like this. You plan to retire at 65, and you’re currently pushing 55. Your retirement portfolio is 65% stocks and 35% bonds, with most of the stocks of the blue chip variety because you want to be more conservative as you age. So far, it looks to be a pretty standard portfolio.
But instead of gradually moving to a more 50/50 weighting, you start exchanging your stocks for bonds pretty aggressively with the goal to get to a 90-100% bond portfolio by the time you hit 65.
Here’s the thought process for the strategy. The last thing you want is to suffer through the second coming of 2008-09 right when it’s time to retire. And since nobody can predict when the next crash will be, you should be proactive and reduce risk on your own. Protecting cash right at retirement age is paramount. If the crash happens right when you turn 65, you might be forced to delay your retirement, stretch for yield, or hit up your kids for gas money.
Of course, most people can’t survive a long retirement on a 100% bond portfolio, especially in today’s interest rate world. What you’d do is start to move back into equities after you retire, eventually getting back to something like a 50/50 split again. The thought process is once you’ve locked in your nest egg at 65, you can afford to take on more risk because you plan to live another 20-30 years. At that point, the risk goes from a market crash at the wrong time to running out of cash before you keel over from neglect because the damn grandkids never come to visit.
That’s the whole strategy. It certainly has its merits, although I can see the logic in having a 50/50 split around retirement time as well.