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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire On Time, a show that answers your questions about all things retirement. My name is Mike Decker. I'm a licensed financial adviser who can even file your taxes. Now that said, please remember this is just to show I'm not giving you financial advice. Everything you hear should be considered, well, informational.
Mike:With me is my esteemed colleague, mister David Franson. David, thanks for being here.
David:Yep. Glad to be here.
Mike:David's gonna read your questions, and I'm gonna do my best to answer them. You can text your questions in right now to (913) 363-1234. That number one more time. (913) 363-1234. Let's dive in.
David:Hey, Mike. I want to retire to Mexico where the cost of living is less and the weather is great year round. What financial considerations do I need to make? Your tax situation is gonna get more complicated.
Mike:Depends on how long you're there. Maybe you're a snowbird. That might be simpler. But if you're living in Mexico, it might become more complicated. Talk to a CPA or someone that understands foreign tax, basically brackets, laws, and so on.
David:Yeah. So would you have to pay, like, taxes to Mexico, or do you would you still be on the hook here? Or Yeah. You or both? You could.
David:You All of
Mike:the above. It just depends on your setup and how long you're spending in each country and so on. So that's kind of a complicated one, but just understand your taxes could become more complicated. K. Maybe they don't.
Mike:The other side of it is you need to understand your health care risks. Medicare may not be as generous as you want when you're overseas. Now Mexico is a friendly country when it comes to it, so they I believe and double check on this depending on the time of the recording when you've heard this. I believe they'll help you stabilize things, but a comfortable stay in long term care or whatever it might be, hospice, recovery, you might be paying out of pocket or a lot of money for certain situations, and so understand the insurance policies that you're buying for your health care. Maybe you buy a policy that helps sustain you in Mexico, or maybe you buy a policy that if you become chronically or terminally ill or experience a certain amount of illness, that they ship you back to America where you're more covered.
Mike:There's a couple of ways you could kind of plan for that. If you're 65 or older, really spend some time on your options when it comes to Medicare itself, and if you're younger, really shop into the ACA, the Affordable Care Act insurance, but you may not want traditional Medicare. You may not want an advantage plan. You may want to pay more money for a supplemental plan or something that's got more extended coverage in foreign countries. The devil is in the details.
Mike:So make sure that you really understand what's going on and the health care risks that you're taking. Accidents happen. Look. I love scuba diving. Let me tell you a quick story.
Mike:Alright. First dive, we're in Cancun, Mexico with the whole family. We all just got licensed. I just got my advanced certification training, so I can now go down deeper. First dive, we're getting on the boat, doing a little check of everything, and all of a sudden, one of those tour busts, you know, the the submarine tours.
David:Oh, okay.
Mike:You know, like, we all live in the yellow submarine kind of cover art kind of vibe.
David:So that
Mike:starts to surface, and there's a guy on top of the submarine. Oh. Now you're supposed to be inside the submarine, so it caught our attention that someone was on top of a submarine laying on top of it. Yeah. It's like that's not the snorkel experience that I would expect.
Mike:And so he's not moving, so our scuba guides jump out, and other ones do as well, and they take the guy. They give him the fireman carry. They put him on here. He's obviously not breathing. Thumbs come out of his mouth.
Mike:They're doing CPR. They call the ambulance. American guy who just happened to be a part time I think it was a part time dive instructor. Just loved scuba diving, loved Mexico, and lived down there, but he was having some chest pains in the morning and thought, oh, it's fine. Whatever.
Mike:Indigestion. I drank too much last night. Whatever it was. Goes diving, has a heart attack underwater, and now he's getting shipped off to the hospital and he died. Oh.
Mike:So I guess his Poor guy. Medical costs weren't that expensive. I mean, it's still it's like, we get old anywhere we live. Yeah. Health declines anywhere you live.
Mike:So you just never forget that experience. Was And then we shipped out hoping that we didn't die in our scuba diving excursion, which was wild by the way. And it's okay to scuba dive when you're retired, by the way, just if you're having chest pains and signs of a heart attack, maybe you shouldn't do that. Yeah. But my point of the story is healthcare costs, taxes, they might get more complicated.
Mike:Social Security, as long as you stay a citizen, should continue to pay. So that's kind of an easier thing. You don't even need to be a US citizen to get your Social Security as long as you qualify and you paid in the Social Security and you remain your citizenship or your residence or your green card. You should also be able to still maintain your benefits. It is cheaper cost of living.
Mike:It's nice to have that, but just understand those aspects. Now there is currency risk you need to be aware of. Maybe have some cash in Mexican peso, and have some cash in US dollar as well, and things like that. Okay. But overall, it's very doable.
Mike:As long as you can conquer the tax situation, you understand the duration, and so on, but it's quite a fun thing to do actually. It sounds great. Just gotta prepare for it. Don't do it blindly. There's expats all over the world.
Mike:Costa Rica is another fun example. Thailand. You know, a lot of people have gone to Thailand or The Philippines. I've known people in Dominican Republic. Casa De Campo is a wonderful place to consider.
Mike:That one's a little bit more expensive. All sorts of places all over the world, but yeah, it's the ones I'm concerned about is healthcare and taxes more than anything, because the same investment strategy, the same income strategy really is gonna be roughly the same regardless if you're here somewhere else. You gotta grow your money somewhere. So that's still a conversation needs to had. It's just there's additional layers of complexity.
David:The bottom line though, doable.
Mike:Oh, yeah. Yeah. I've known many people that could not afford to retire in America, so they decided to retire abroad, and they've lived wonderful lives. Just got to do the work and put the plan together and know that things will evolve over time. That's all the time we've got for the show today.
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