John T. Reed's Review of How to Retire Overseas by Kathleen Peddicord

Copyright 2012 by John T. Reed

When I review a book, I often have to tell you what the title should have been to be more accurate. Such is the case here.

The book is not about how to retire overseas. Its subtitle is the more accurate title: “Everything You Need to Know to Live Well (for less) Abroad.”

For example, the book probably spends about as much time discussing having school-age children overseas as it does retirement.

I liked the book a lot in general. It told me of many important things I did not expect.

I have no plans to retire overseas, or to retire period. I am one of those guys who loves what he does and it happens to be writing which is not a job that you get aged out of very often. I review this book because I am interested in possibly using foreign countries as a temporary refuge in the case of US hyperinflation.

Peddicord is also a writer, as is her husband, but they seem to be involved with it as a business with offices and employees and such. I just work alone out of my home office. See my book How to Write, Publish, and Sell Your Own How-To Book.

Three things about Peddicord’s book really bugged me though.

1. safety

2. bribes

3. Air pollution

‘Safe’

I used to own apartment buildings. My resident managers were instructed very firmly that the word “safe” was never to pass their lips when talking to a tenant, prospective tenant, or anyone else about our building or its neighborhood. See my book How to Manage Residential Property for Maximum Cash Flow and Resale Value, 6th edition for more on that sort of thing.

Peddicord, on the other hand, essentially says that all the various towns that she recommends, most of which are in third-world countries, are safe. I have only been to three of the 14 countries she writes about, and only one of the cities—Paris. So she would know better than I. However, she recommends, for example, Morelia Mexico. The U.S. State Department issued a travel alert on Mexico on 2/8/12. Peddicord’s book is copyrighted 2012. It is hard to be sanguine about the safety of anywhere in Mexico and Morelia is not on the tip of some crime-free peninsula. It is not far from Guadalajara. I recently researched safety there in a follow-up article I did in my hard copy newsletter Real Estate Investor’s Monthly about the large American expat community there. It was “stay off the roads at night,” etc. from the State Department.

I do not claim to have superior expertise to Peddicord by a long shot, but I think you should do your own, up-to-date, safety evaluation by following some of her other good advice: check the State Department and the on-line expat discussion groups for the area in question. Maybe set up a daily Google Alert for phrases like “Morelia crime” and “Morelia violence.”

Baksheesh

My wife is all American, a descendant of a signer of the Declaration of Independence named Francis Lewis and eligible to be a Daughter of the American Revolution on both sides of her parents. (Through my father, I am a cousin of James Madison and descendant of Revolutionary War soldiers.)

However, my wife was born in Indonesia and grew up there and in Taiwan and Ethiopia. Her father was an expat working as an accountant first for oil companies in Indonesia then for the USAID in underdeveloped countries. She could not wait to get away from that life. Her father said she could not go back to the U.S. until she entered college, so she studied real hard by correspondence through the University of Nebraska, got a G.E.D. at age 16 and entered college at that age: Drexel University in Philadelphia, her father’s alma mater and near my mom’s home.

Peddicord was born and raised in the U.S., but wanted to live overseas. And she and her husband and daughter moved to Ireland, then Paris, then Panama where they still live. Their son was born in Ireland, which he considers home. Her daughter considers Paris home.

That’s fine, but as the differing responses of my wife and Peddicord show, it ain’t for everyone. Peddicord acknowledges that, but her book is not the place to get the other side of that issue.

Other than vacation tourism travel, the only time I lived overseas was during my tour in Vietnam as an Army officer. GIs have different favorite songs in each of our wars. Without question, our favorite songs in Vietnam were We Gotta Get Out of this Place and Leaving on a Jet Plane. Nuff said.

Peddicord does not recommend Vietnam, but she does recommend Chiang Mai, Thailand and Kuala Lumpur, Malaysia. Chiang Mai is at the same latitude as Vietnam; Kuala Lumpur is closer to the equator. One of the problems with Vietnam was awful heat, humidity, and monsoon rains. No doubt many things are better in that part of the world since 1970, but climate ain’t one of them.

Also, Vietnam was appallingly poor and the people seemed like Martians to us—almost all wearing the same clothes like a uniform—pajamas and flip flops. They ignored traffic laws, put like 70 people in and on top of busses designed for 40, ate smelly fish oil, etc., etc. Travel writers say you have to love all this stuff and respect and learn from the ways people in other countries do things.

Bullshit! I just evaluate it the way I do anything else. I like the metro in Paris, and all their great walking areas. I do not like those things because travel writers told me to. I like them because they are well-designed and well-run. Vietnam was just a disaster. It reminded me mostly of the gravel pit dump where my family had to take our trash once a week when we lived in rural Delaware—except nobody lived there. In Vietnam, 20,000 people would have lived in the gravel pit using scrap aluminum can metal for the walls and roofs of their hovels. Not nailed to the studs of the hovel; the aluminum can metal would be the entire wall!

I love Hawaii. I took a cruise to a number of Caribbean islands. VI and St. Martin were nice. But the others were just bad neighborhoods with palm trees. I call ’em as I sees ’em. Writers like Rick Steves and Peddicord can admonish me to try really hard to like every place I travel to, but I just react naturally without any preconceived bias for or against the place. They are biased in favor.

Bribes

Anyway, my wife said everything in those goofy countries was done by baksheesh—bribes. I have never heard otherwise. Yet the words bribe and baksheesh never appear in Peddicord’s book.

When selecting countries in which to put my savings accounts to get them away from impending U.S. hyperinflation and U.S. government confiscation of foreign currencies, I look in part at the Transparency International corruption ratings. My recommended currency countries are Australia—8.8 on the TI ranking where 10 is the best; Canada; 8.7; New Zealand, 9.5; and Switzerland, 8.8. The U.S. is 7.1. The countries Peddicord recommends are Argentina, 3; Belize, no data; Croatia, 4; Dominican Republic, 2.6; Ecuador, 2.7; France, 7; Ireland, 7.5; Italy, 3.9; Malaysia, 4.3; Mexico, 3; Nicaragua, 2.5; Panama, 3.3; Thailand, 3.4; Uruguay, 7.

I am guessing that Peddicord has nothing to say about bribery and corruption—and repeatedly refers you to expat web sites for the country in question—because the lives in the belly of the beast (Panama 3.3), travels to many other bellies of various other beasts, and has to watch what she says. She apparently hopes you will learn what you need to know from expats who have less at stake than she does.

But to me, you cannot write a book that mainly recommends living full-time in third-world countries with lousy TI ratings without mentioning it.

She is also big on local lawyers. I expect that’s mainly for the right reasons, but also because they take care of the bribes and include them in their fee so the righteous Americans can, like the piano player in the whorehouse, claim they do not know what’s going on upstairs. “Deniability” as they call it in the U.S. government.

Air pollution

I visited the traveling exhibit “Bodies” in 2006 in Manhattan. Weird but very educational. Essentially, it was a collection of dead Chinese apparently from the Beijing area. They were sliced vertically, horizontally, you name it.

One exhibit showed the lungs of a smoker and a non-smoker. the smoker’s lungs were so bad you wondered how he could live long enough for them to get that bad—a couple of mangled, oversized, charcoal briquets. But the lungs of the non-smoker, and apparently a resident of famously polluted Beijing, were the second ugliest piece of human meat in the whole exhibit. If human lungs were sold as meat in a cannibal butcher store, no cutomer would accept the Beijing non-smoker’s lungs.

Here are some cities with their World Health Organization scores on airborne particulate matter. 20 or less is what WHO recommends:

Santiago, Chile 71
Valparaiso, Chile 43
Auckland, New Zealand 15
Vancouver, Canada 12
Sydney, Australia 12
Los Angeles, CA 25
NYC 21
Buenos Aires (means “good airs” in Spanish), Argetnina 38
Rio de Janeiro, Brazil 64
Montevideo, Uruguay 39
Singapore 29
Kuala Lumpur 49

So looking at Peddicord’s bargain places to live and these scores reminds me of the old saying, “You get what you pay for.”

The Mañana Factor

I am apparently like Peddicord’s husband. He writes about international real estate investment. I write about U.S. real estate investment among other subjects. Also, she has a chapter about the Mañana Factor. It is basically about people in other countries being late slobs—where late means days or months not just minutes or hours. She sort of excuses it with a “when in Rome” acceptance. But she notes that her husband angrily condemns it as simply not respecting value of other people’s time. You go, guy.

I’ll go farther than that. I have a personal code:

• Tell the truth.

• Keep your promises.

• Treat other people the way you want to be treated.

That is the way I try to behave and it is what I demand from others. If you don’t live up to those principles, I will have little or nothing to do with you.

One of the things that surprised me in her book is that the says the Mañana Factor is the rule almost everywhere outside of the U.S. with a few exceptions like Paris—where it used to take a year or more to get a phone installed. She says the Irish do it too and they joke about not having as great a sense of urgency as the mañana-spouting Latinos. She says they might show up a day or a week or a month late and offer no explanation and sort of give you a blank look if you try to get one.

Lovely.

Peddicord’s husband says it’s a lack of respect for others’ time. I call it a lack of character. In addition to not keeping their promises, they seem to lie a lot in many of these countries as well. See the TI corruption ratings above. May Rick Steves and Kathleen Peddicord forgive me for not being interested in “When in lying, baksheesh, late slob land, be a lying, bribe-paying, late slob.”

The good parts of Peddicord’s book are where she tells of the various obscure laws, common practices, and nuances of living overseas. She is quite open about problems she had with her daughter—who REALLY did not want to leave the U.S. to move to Ireland at age 9, or to leave Paris after living there.

She writes persuasively about a near universal sort of international homesickness she calls “panic.” Apparently, almost every American who decides to move overseas gets very depressed about it at a certain point. As with home sickness, you’ll get over it, if you deal with it and make the necessary adjustments. In Peddicord’s case, it was depression in the Irish winter which she ultimately figured out was caused by the incessant dreary weather.

I’m a big weather guy. I cannot understand how people can live other than here in California or places like it. I sometimes put the top down on my convertible in January and February. We rarely have perceptible humidity. In San Francisco in an expensive high rise, we had no screens on our windows. When I asked how you keep the bugs out, the manager asked, “What bugs?” Indeed, there are no bugs on the 14th floor of a high rise on Russian Hill in San Francisco. On many, maybe most, days, there is not a cloud in the sky. We are, after all, out West where the skies are not cloudy all day.

Some of the places Peddicord writes about like high altitude Cuenca, Ecuador and El Valle de Anton, Panama have great weather. But many of the other places are absolutely awful. That is a matter of taste and she covers it.

The head of Ecuador recently made the news offering asylum to Julian Assange in the Ecuadorian embassy in London. He also defaulted on Ecuador’s $ billion national debt in 2008. Here is a comment about Ecuador’s president from Wikipedia:

In June 2009, Correa joined the Chavez-backed Bolivarian Alternative for the Americas (ALBA), together with Cuba, Nicaragua, Bolivia and other countries. Correa considers Chavez a personal friend and also has said that "there is really no one that is a more admiring Hugo Chavez fan than me. I am the hugest fan personally and professionally, I think he is a great politician."

I do not understand how Peddicord can recommend such a country to American retirees without at least mentioning these things..

Some of the places she recommends have extreme bad weather, namely hurricanes, and earthquakes. We have earthquakes in California. They do not bother me other than I always make sure where we live is in a structure designed to withstand earthquakes and on the highest rated soil—generally high ground. We lived on Russian Hill in San Francisco, on top of an unnamed hill in Moraga, and on the side of Mount Diablo in our current home. In some poorly run country, you may not be able to find correctly-built buildings or find a reliable earthquake geological map. In the U.S., the US Geodetic Survey produces them.

When I lived in Wildwood, NJ, a barrier island off the coast of New Jersey, we lived through a number of hurricanes. I came close to getting killed in two of them. Nowadays, people who live in places like that move inland when a hurricane comes, at least in the U.S. You should check out whether the residents of the country you are considering have these kinds of warnings and generally leave. There is also the issue of can you leave. To do that, you need transportation and if you do not have a car that you can drive and a road that will be open when you leave, you probably should not live in a hurricane or tsunami area at all.

My wife has no use for third-world countries having been there and done that for about 15 years in her youth.

Going native versus walled American expat community

Peddicord is not as ideological as Rick Steves about accepting native ways and discusses going native versus living in an American expat community. In the military and in my wife’s experience as a kid, the Americans living overseas live in walled American communities. Many decry that. I lived in such an Army base in Vietnam. No freaking way I would have wanted to live in the Vietnamese community. And there are reasons why American soldiers and civilians stationed overseas usually live in walled compounds. I suspect my approach would be to explore the local city and environs—why be there at all if you don’t—but I would spend my time where I most enjoyed it and I would not be surprised if that were in the walled American expat community. I get the impression Peddicord has done it both ways and makes no apologies for enjoying the company of fellow Americans overseas.

I must also say that you could spend all your time in the American expat community if your reasons for being there are simply things like cost of living or tax law. If you have little interest in the local language, culture, why not just enjoy the climate, low costs, or whatever you came for among fellow Americans. Peddicord is rather big on experiencing the country.

Check it out first in person

Peddicord says you can research countries in books and on the Internet and all that, but you just have to go there in person to make a choice. She cannot explain why but it’s just the way it is. I agree. And I agree with her admonition to rent before you buy. I give that same advice to Americans contemplating a move within the U.S.

Cheap and not so cheap

Although the book generally emphasizes cheap living overseas, it really offers a range of total monthly living costs for all expenses with a low of $650 in Chiang Mai, Thailand to a high of $4,015 in Buenos Aires, Argentina. I think it really covers low and medium costs. You would need another book for high-priced living overseas.

Beach

As I said, I lived in Wildwood in Southern New Jersey. It was a beach and boardwalk resort in the summer months. We lived there year-round. The beach and boardwalk were still there in the off-season, but closed except for walking. Our relatives from the big city—Philadelphia—always told us how lucky we were to live in Wildwood. We shrugged our shoulders. I felt deprived of mountains. Southern New Jersey was flat as a pool table. Now I live 625 feet up on the side of a 4,000-foot mountain called Mt. Diablo. My two younger brothers live at 5,000 feet in Fort Collins, CO.

So I find beaches boring. There is little shade. The salt air and blowing sand get old. Peddicord acknowledges the latter two. But she has a photo of a tropical mountainous beach on her cover. I think people like the idea of beaches more than the actual beach. It may just be the image of expensiveness than makes it desirable. There is something to the sunset or the moon on the ocean and the audio/visual of the waves crashing on the shore. Nice place to visit, but I wouldn’t want to live there. Been there, done that.

Permission to stay there

Peddicord’s book is about all sorts of durations of stays from prolonged tourism to permanent residence. In the U.S., if you want to live somewhere, you just go there and buy or rent a house or apartment. If you have been a foreign tourist, you may have gotten the impression that it is the same because you just get on a plane and go to the other country—no paperwork.

Roughly speaking, that is a tourist visa, which is automatic upon arrival, says you can be a tourist for 90 days. (For Australia, you have to get it on-line in advance for $20 or some such.) I do not mean to say the laws are the same in every country. Peddicord discusses the laws in each country she writes about.

Again roughly, if you want to stay more than 90 days, you typically have to apply for and get written permission. The rules vary from country to country. Peddicord says have a local lawyer who specializes in it handle the application. Some countries are eager for retirees—Malaysia and Panama for example. You need to look into the details and Peddicord covers them for the fourteen cities. How welcome you are varies by country as well as your age, wealth, income, and so forth.

The main point is you cannot just go to whatever country you want and stay as long as you want, but you can get permission to live temporarily or longer, including permanently, in many countries.

Mountains

When I lived back east, weather was a regional, seasonal thing. But I have now lived most of my life in California. Out West, weather is mainly a relationship-to-water-altitude thing. My wife and I got caught in a snowstorm on Tioga Pass in Yosemite National Park on Memorial Day weekend! Our windshield wipers froze.

Anyway, most of Peddicord’s recommended cities are closer to the equator than Americans are used to. So she recommends a number of high-altitude cities. Altitude reduces temperatures, although it increases exposure to sun-caused injuries like skin cancer. Altitude also bothers some people. My brother and I were on the South Rim of the Grand Canyon last November. We were not bothered by the altitude, except when returning uphill from the bottom of the Grand Canyon carrying loaded backpacks. So make sure you check out living in such a place—including with your dermatologist—before you commit to it.

School-age children

Peddicord has a lot of discussion about school-age children, although it was a bit inconsistent. In Paris, she seemed not to like sending your kid to an American or British school, but in Panama she seemed unwilling to do anything else. I see the logic of wanting to get the full Paris experience by going to a French school full of French kids. But why doesn’t that also apply to going to a Panamanian school full of Panamanian kids? I’m guessing because public schools in Panama stink. Good to know. But what about top-notch Panamanian schools where well-to-do Panamanians send their kids? Maybe they send them to the American, British, Canadian, French schools in Panama City. So I guess the rule is, when in Rome, send your kids to the same schools that well-to-do Romans send theirs.

Starting a business

Peddicord has some very important info on starting a business. For one thing, certain businesses, like retail in Panama, are illegal for foreigners. “That’s unconstitutional!” you say. Yes, but it’s also Panama. They are not under the U.S. Constitution.

She says hiring an employee in Europe is suicidal, akin to adopting a rescue teenager from a reform school who never grows up and leaves home. My words, not hers. But she was pretty emphatic about never hiring an employee there. No wonder they have chronic double-digit unemployment.

Non-U.S. countries also often have a sort of attitude of not only is the employer always wrong, he or she is an exploitatious, rapacious capitalist pig who is lucky we have not put him or her to death for making a profit. With regard to renting an apartment, she says most other countries also have that attitude about landlords.

She seems to recommend laptop, out-of-your-house businesses, if any, for expats.

She says you will see many business opportunities in foreign countries, because the U.S. is full of business that have not yet come to other parts of the world, like self-storage facilities. In some cases, you can succeed introducing those businesses to the foreign country in question—mostly in Latin America and the British Commonwealth Asian countries I get reading between her lines.

With the exception of Paris, she seems to say that most other countries are pretty screwed-up in terms of reliable utilities, etc. I did not notice any such thing in my limited travels to London; Vancouver and Montreal, Canada; Germany, or Sydney; but I did in places like Rome, Vietnam, China. To state it in American vernacular, the standard for most things in most parts of the world, even in places like Ireland, seems to be half-assed, or lower.

In Argentina, officially they switch to daylight savings time in the spring, but many people do not like it so they do not. In the land of Mañana, which hour it is seems like a silly thing to worry about. But it cause precisely the sorts of problems you would expect with transportation schedules and the like.

Some countries do not like street addresses—like Ireland. Stores are not open in evenings and on weekends let alone 24-7. In siesta countries, they are not even open in the early afternoon.

In other words, when you leave the U.S., you will be surprised at how often you feel like you left the planet or went back in time to the 1950s in the U.S. That was actually my comment about Australia when I went there on R&R in 1970. I felt like I had gone back in time to the American of 20 years before: 1950. When a college classmate of mine came back from two years in Australia in the Army, his first U.S. stop was my house in California. We went to the supermarket. He expressed astonishment at all the different kinds of every product. Dozens of different toothpastes, corn flakes, and so on. That was in the early 1980s.

All the more reason to visit these places in advance before you commit to any plans to move there.

Health care

She describes health care as cheaper than in the U.S. and of equal or better quality in places like Paris. Other places have good quality and still others are unacceptable quality. She recommends international health insurance, if you are not too old for it. The cutoff seems to be 63 for much of it. And policies that transport you to civilization for medical care if you need it.

Basically, you need to make sure you can get fast emergency care and that you can afford to be transported to places with excellent elective care. In view of the Golden Hour theory of emergency care, I do not see how you can live in primitive areas where the only acceptable care is more than an hour away. That applies within the U.S., too. For example, I think the Grand Canyon has inadequately soon medical care for heat stroke.

Language

Some of Peddicord’s countries speak English, although she cautions that there is English and there is English. English spoken in other countries where English is the official language, like Ireland, Belize, Singapore, is not American English. Peddicord’s father went looking for solder when in Ireland. After four hardware stores, he found that they all had it and even spelled it the same, but they do not pronounce it the same as Americans. I heard an India civil engineer on TV recently pronounce passenger as puh SEN jer. Is that English? No. Are there more people on planent earth who say it that way than the correct way? Probably. Still wrong. But I must admit that we Americans do not agree with the English people, the inventors of English, on how to pronounce some words like laboratory. We Americans say “LAB er ra TOR ee”. British say“ luh BOR uh TREE”. So which is right? Our version because the British version ignores too much of the spelling of the word. They are big on ignoring over there—canging r to h when it is at the back of a syllable and putting an R in place of an h at the end of words like Amercia which they pronounce Americur. But I digress. The main point is that you speak American/Canadian English. In Britain and other English-speaking conutries, they speak different versions of English—so different that you will often have trouble understanding each other.

Also, American English is full of colloquialisms like “Yeah, right,” a sarcastic expression of disbelief, that do not translate into, say, Belizean English. And no doubt the same is true in the opposite direction. She says that in some countries where the official language is English, an American must speak slowly and use basic words to be understood, not slang or references to American culture.

Unfortunately, although there are classes you can take to learn foreign languages, they are few, if any, courses on how to speak and understand non-American English. English is typically the official language of various Caribbean countries. I have been to some and my reaction to the notion that the official language of, say, St. Lucia, is English is yeah, right.

Learning a foreign language is a part-time job, a major project, time-consuming, and expensive in terms of both taking formal classes and the amounts of money you lose as a result of not speaking it in a country where you must. Do not just assume you will “pick up” the language in question when you get there no problem. Peddicord recommends taking a total immersion course in it—typically several weeks in duration and costly, when you first arrive. In poorer countries, it appears that the main foreign language instructors for the Americans are their local maids and cooks.

Going back to the U.S.

Peddicord discusses the ease of visiting the U.S. from each city she recommends. I would not have thought that was so important, but I see the logic and defer to her greater experience with it.

Tax laws

Peddicord discusses taxes at length. Pretty complex. Pretty important.

I am a tax expert. My first self-published book was Aggressive Tax Avoidance for Real Estate Investors. It is now in its 19th edition and has sold over 100,000 copies.

Basically, with regard to overseas, American have to pay tax to the IRS on income no mater where they live in the world. The vast majority of countries let their citizens not pay tax when they temporarily live outside the country.

But it is more complex than that. For example, Americans do not have to pay Social Security (FICA) tax when they are living outside the country. Plus, there is a Foreign Earned Income Exclusion and a Foreign Tax Credit. Their purpose is to prevent you from paying tax to both the US IRS and a foreign IRS at the same time on about the first $93,000 of your overseas income. You need to talk to a U.S. accountant who specializes in that stuff, not a regular accountant.

Then there are the taxes in the foreign country you want to live in. They can be horrible. Peddicord says never let yourself come under the French tax laws. But in other cases, eager for U.S. retirees or businessmen, the foreign countries are quite nice. For example, retirees pay no property taxes in some countries. She has a chapter on the special benefits for foreign retirees in Panama, Belize, and Malaysia. You have to check with a local lawyer in the country in question, but Peddicord does a pretty good job of summarizing the local taxes in the countries she recommends.

You need to be concerned with income tax (if you have income—many retirees do not), wealth taxes (sort of non-existent in the U.S.), sales taxes (just figure the cost of living—no need to separate out the sales tax portion of it), property tax (on homes like here), property transfer taxes (can be large), and capital gains tax (zero in some countries, lower than U.S. rate in others).

A college classmate of mine is a big time international guy. He actually renounced his American citizenship. He is currently a Canadian citizen as a result of a program they had to encourage wealthy investors to emigrate there. And he is looking for additional passports to acquire.

He says when you enter a country, they sort of look at you like a wandering cow in the old West. If you are branded, that is, you are paying taxes to another country, they will not bother you for taxes. But if you are unbranded, they will brand you as their own and tax you. In other words, you cannot tell them you are perpetual traveler who pays no taxes anywhere because you keep moving. You must have some tax home country where you pay taxes. Of course, if you generate income in the country you are visiting, every country will generally want a tax on that.

Foreign currency

My interest in her book stems from my recent interest in foreign currency, which is caused by our impending federal bankruptcy and the resulting hyperinflation. Basically, the U.S. government will in about four years probably be unable to borrow money (sell government bonds) because we will be too risky for the market. Four years is when our debt-to-GDP ratio equals the debt-to-GDP ratio of Greece when they had to get bailouts. America will get no bail out because our debt is too big. At that point, the federal government will either cut spending by about 50%—I pause for the audience laughter to subside—or “print” the money to keep the Social Security checks going out.

They will choose “printing” which will cause hyperinflation. Hyperinflation means, in short, that the U.S. dollar and all dollar-denominated assets will become worthless. My main solution to that is to put savings account money into foreign currencies in foreign countries. It has to be in foreign countries because the U.S. government will almost certainly force all foreign currency within the U.S. to be converted to U.S. dollars forcibly and at below-market rates. That is, they will force you to convert your foreign currency that is in the U.S. into U.S. dollars and they will give you fewer U.S. dollars for your foreign currency than you could get on the world market.

How does this relate to retiring overseas? Peddicord makes no mention of foreign currency in her book. Two of the countries she recommends currently use the U.S. dollar as the official currency of their country, namely Ecuador and Panama. I say currently because when the U.S. hyperinflates, those two countries will abandon the U.S. dollar overnight.

So where does that leave you if you live in that country?

Trying to live off your hard assets and what foreign currency you happen to have. I would not recommend the currencies of any of the countries Peddicord recommends. Ireland, Italy, and France use the euro. Need I say more? If I start naming the others, you will be chuckling. I mean how much of your life savings do you want to invest into the baht? The kuna?

I recommend four currencies based on the debt-to-GDP ratios, TI corruption ratings, Heritage Economic Freedom Index: the Australian dollar, the Canadian dollar, the New Zealand dollar, and the Swiss franc. (See my headline news articles for multiple articles on all that.) That is where my money now is, not in the U.S. dollar. No matter what country you live in, you should do the same. However, I expect to spend those currencies in those countries on vacation while the U.S. federal politicians are flailing around trying to hold power when there is not enough money to buy votes like usual.

If you are in one of Peddicord’s countries, using currency from the four countries I recommend will cause you to incur a currency conversion cost. So will moving U.S. dollars into those countries now. On the other hand, if you just leave your money in U.S. dollars, and the U.S. gets hyperinflation, you will find yourself a long way from home with no money to pay your local costs in the foreign country and no money to get back home to the U.S.—not that you would want to during hyperinflation.

One of the ways you get a residency permit as a retired person is to show you have a pension of at least $1,500 to $2,000 or so depending upon the country. If the U.S. dollar hyperinflates, expect them to revise that minimum upward. Do not expect the U.S. government or other pension payer to revise it upward fast enough to keep up with the country in question. In other words, when hyperinflation hits the U.S., expect your pensionado permit to be revoked unless you can prove some other source of income that has the purchasing power that $1,500 to $2,000 used to have.

You might be somewhat better off to have some money in the local currency, but none of the countries Peddicord recommends even comes close to being recommend to other than residents of those countries. You probably should put some money into the currency where you live, but keep a close eye on the monetary policies of that country and be ready to bail out fast.

Some will say in those countries you should have gold. Read my web article on the disadvantages of gold before you do that. So when there is a worldwide financial crisis you want to be flashing gold around in some third-world country? Where you gonna keep it? In your local Banco de Banana Republico safe deposit box. After you go there to take some out, you will find yourself at the front door of the bank ready to leave. A gringo who is known to pay gold for stuff just visited his safe deposit box at the bank and is now about to leave the bank—all by himself.

Buena suerte con esto, Señor.

I suggest you find some relatively liquid hard assets like old local coins containing real silver that people recognize without having to hire an assayer. Barter items like soap, tobacco products, liquor, wine, razors, etc. I discuss such things at greater length in my book How to Protect Your Life Savings From Hyperinflation & Depression.

I reiterate that I would expect the local currency would be okay for a little while after the U.S. dollar goes bad, but over the long run, I don’t think you can rely long-term on currencies you never heard of until you moved there, especially when there is a worldwide financial crisis due to financial crises in Europe and the U.S.

Germs, insects

Another topic I was surprised Peddicord did not cover was foreign germs. My wife went to China in March 2012 with a group of about two dozen Americans. By the end of the three-week trip, they were almost all as sick as dogs. She said the bus coughing got ridiculous as each week passed. She was quite sick for about a month after she got home. Some sort of bronchial infection. And yes she and the others got all their vaccinations before the trip.

A friend went to the Mosquito Coast in 2012. That is on the east coast of Nicaragua, one of Peddicord’s recommended countries to live. (In particular, she recommended Leon on the west side of Nicaragua.) My friend said he had never been bothered by mosquitoes in his life so he did not apply mosquito repellent. The mosquitoes on the Mosquito Coast ate him alive and injected him with many mosquito larvae. In other words, they planted their eggs inside his skin as a place for them to grow until their birth.

So when it comes to germs and insects, Americans traveling abroad often have a “I don’t think we’re in Kansas anymore, Toto” moment. During my year of living in a tropical paradise, I was awakened from sleep on a number of occasions by rats fighting several feet away from me and by the noise of huge cockroaches rattling along the wood wall next to my head. That tropical paradise was Vietnam. I took my malaria pills every day. Most soldiers there were too cool for that. Many got malaria as a result— a lifelong disease.

Drinking the water is not a good idea in many countries. Hell, my freshman football players once told me the other team had poisoned them at an away game. We took a cooler with some ice on the bus but got it filled by the opposing team’s trainer. She laughed when I told her what the players said. “You guys get your water from EBMUD. That comes from the Hetch Hetchy reservoir in Yosemite National Park. We get ours here in the Sacramento delta from wells. It doesn’t taste anywhere near as good as yours. Sorry. But it’s not poison. It’s what our students drink every day.”

So in light of that within America experience, consider what water you will get from the tap in one of these countries where everything is, as I said above, half-assed. Peddicord recommends drinking bottled water everywhere outside the U.S., even in Paris because she says their water tastes funny from chemicals used to treat it.

Your immune system is adapted to the United States if you were born and raised here and have American ancestors. If you move to another country that not in Western Europe, you’d better check out the germs and vermin you will have to deal with.

Bank accounts

According to Peddicord, opening a bank account is difficult in many countries. She said it’s like applying for a job and you have to go through multiple interviews and provide many documents as if you were applying for a security clearance. And that bouncing a check or not having enough in the account when an automatic debit comes in may well cause them to close the account and not let you open another for years.

I have accounts in Australia, Canada, and New Zealand. Canada was almost effortless. I had to go there and show a passport and drivers license. Australia and New Zealand required a little more like a bank statement and statements of purpose, but nothing like Peddicord describes. Don’t know what that’s all about. Certainly contrasts with the U.S. where banks have been bugging me to open accounts since I was in elementary school and I used to get unsolicited credit cards in the mail.

Also, she say you have pay a lot of bills in person or by automatic debit.

Car and driver’s license

In the U.S. and Canada, we take a car for granted. Not so in other countries. For one thing, she says in some countries, you would need a car and driver because the way they drive is too insane for Americans. I have seen such, even in Paris on occasion. Germans have no speed limits and drive at 100 miles an hour I have heard.

In some places, like Paris, you simply do not need a car and like many New Yorkers, you would probably not want one because of the great expense and rare use.

Some countries, like Ireland, Japan, Australia, Hong Kong, New Zealand, Malaysia, India, Pakistan, South Africa and a bunch of countries around it, Bahamas, Jamaica, Cayman Islands, a number of other Caribbean Islands, Guyana, Suriname, Indonesia, Thailand, New Guinea and a bunch of South Pacific Islands drive on the left side of the road and have the drivers side of the car on the right. That will take some getting used to and shipping your US car there may not be much fun once it arrives.

Peddicord summarizes the pertinent rules and regulations.

Buying real estate

Buying real estate seems to range from different to you gotta be kidding me. For example, she says there are virtually no multiple listing services outside the U.S. Each company has a couple of listings and you go from one to the other to see all the listings. That is the way investment property works here. Foreigners (that’s you when you are outside of the U.S.) are prohibited by local law from owning real estate in many places. You need a local partner or some convoluted bank trust or the like to buy.

You say you need financing? Ha! Even in places like Canada and New Zealand the maximum mortgage term is something like three to seven years. When I mentioned our 30-year fixed-rate mortgages at 4.125% to my Canadian banker, he was astonished. I think there is only one other country that has mortgages like the U.S.

In Latin America, not only are virtually all homes purchased with cash, they use U.S. dollars to do so, not local currency!

Electronic devices

A lot of electronic devices that work in America do not work in foreign countries. Some are simply not compatible with the local standards and never will be. Others need adaptors or modifications to work. Check it out before you commit.

Job?

Generally, you can tour, retire, invest, or start some businesses in a foreign country. Getting a job, however, is not something that is usually allowed. Indeed, many countries will stop you at the border or airport and send you back where you came from if you say you are there to look for a job. You are an illegal alien if you are there to look for work. So forget about it.

What is not inside the U.S.?

It sounds like you have to get something specific that you really want or really need to justify retiring overseas. And I would only do that after making sure there was nowhere in the U.S. that gave me that. Arguably, we have the world’s largest country. By geographic area, we rank fourth after Russia, Canada, and China. But Russia and Canada are largely frozen. So is Alaska. China is similar in latitude but no Chinese city is on Peddicord’s list. Hong Kong maybe okay, but it is now part of Communist China and was stinking hot when I was there in July 1970. Given how big the U.S. is, and how varied, it is going to be hard for you to claim you could not find what you wanted somewhere in this country.

Peddicord’s Section II is titled “Looking for something specific” and has 15 subjects: cheap, luxury on a budget, beach, mountains, school, entrepreneurship, health care, weather, language, retirement, access to the U.S., tax-friendly jurisdiction, established expat community, fully wired, and special benefits for retirees.

The cheapest places in the U.S., without going into some high-crime, inner city are probably as cheap or cheaper than Thailand—especially the way Peddicord counts owning a home as being rent free. If you own a home free and clear in the U.S., that’s also rent and mortgage payment free. Millions of American live full-time in RVs. You can buy one of them used for prices in the $5,000 to $50,000 range. I saw a bus-sized one for $48,800 an an RV show recently. Don’t know what the catch was but it looked great and was huge by RV standards with multiple slide outs. And there are zillions of free places to park RVs in the U.S.

When I was stationed at Fort Gordon, GA, which is in Augusta, my roommate and I lived in a two-bedroom house trailer. We loved it. Trailers are considered substandard housing. Bull. I would much rather live in a trailer in the U.S. than a house in some country where the phones don’t work when it rains.

My parents and my brothers and I lived in an apartment above a beauty parlor on an old style main street once. I would rather live there than in a foreign country where it was hard to get repairs done or where they spoke a foreign language.

I and many of my affluent friends have bought fixers and lived in a sort of construction project for years. We enjoyed it just fine. In my youth, many houses were one-bedroom cottages with attics tall enough to stand up in and they did not use roof trusses like today so you could finish off the attic for kids’s bedrooms when the kids came along.

We lived in houses where there was no air-conditioning and the only heat was in the kitchen or dining room. Unfinished, unheated attic for a bedroom. Peddicord tries to specify a minimum comfort level. I have, and you could, go below what she depicts.

You need less than Peddicord assumes

Basically, you need a sleeping room between freezing and about 68ºF, and a climate-crontrolled to about 70ºF kitchen and family room for eating, watching TV, reading, office work, etc.

And you need a crime-free neighborhood and the ability to got to work, school, movies, restaurants, shopping.

Places I have lived and would not want to go back for more than a weekend or so include: sleeping on the ground in U.S. Army Ranger School with no tent, sleeping bag, or poncho; camping out in a tent other than perfect dry weather; in a barracks with other people sleeping nearby; in an RV or hotel room with another person without a door between sleeping areas; underground bunker (Vietnam); no indoor plumbing. But other than those, I’m fine. And probably so are you. With those limits, I’ll bet you can find all that you want more easily in the U.S. than in Peddicord’s 14 foreign cities.

You can also buy cheap houses. I wrote a two-volume book called How to Buy Real Estate for at Least 20% below Market Value. It has chapters on foreclosures, sheriff’s sales, etc. I have read about homes for sale as foreclosures and other similar situations for $25,000, $50,000, and so on in distressed areas like Florida, Nevada, Arizona. Although I had no such expectation when I read Peddicord’s book, I would now say that my book on buying for at least 20% below market value in the U.S. would enable you to live cheaper than Peddicord’s book on paying market value in third-world and other foreign countries.

The median price in Youngstown, OH was $55,400 in 2011. They have a crime problem there. But the cheapest homes in America are not in metro areas. Cheap-places-to-retire books and articles always tell about metro areas because it is easy to get statistics on them. The really cheap houses are in small rural towns or even in the area between small rural towns. Prices are set by supply and demand. So the cheapest homes are in places that were recently overbuilt—like the sand states (California, Florida, Arizona, Nevada). Also, sometimes boom towns have cheap housing when the boom ends, like a town near a closed military base. On page 189 of her book, Peddicord says you can buy a comfortable expat-standard house in Chiang Mai, Thailand, her cheapest place to retire, for as little as $100,000. Well, you can get them a lot cheaper than that in many places in the U.S. And you can get a 30-year, 3.75%, fixed-rate mortgage here. There is no mortgage that comes within a mile of that outside the U.S. We also have the H.E.C.M. mortgage which can make retirement living in the U.S. really cheap for some, and you cannot get that in any other country.

Aussmption that third world is cheaper not valid

To an extent, Peddicord seems to be encouraging the notion that third-world countries are cheaper places to live than the U.S. I would have thought that before reading her book. But after reading it, and being more familiar than most with the opportunities to buy cheap real estate in the U.S., I was surprised and disappointed with the bottom lines in her book. That’s the best you can do? Why bother to leave the U.S. then?

We got beaches—Hawaii, Maine, Florida, Gulf Coast, Malibu, Big Sur, and more. The cheapest are on fresh water, but they are still beaches.

We got mountains—Sierra, Rockies, Appalachian, Hawaii, Alaska, and more.

We got schools—including excellent public schools in good neighborhoods, selective public schools in some big cities, private schools, religious schools, you name it.

Entrepreneurship? The U.S. is one of the top places in the world to start a business, and the competitors are places like Singapore and Hong Kong, not any city on Peddicord’s list.

Health care? We have the best in the world. It costs about twice as much as it should because of government involvement and it is about to dive in quality because of the Obamacare takeover. But you do not have to move away from the U.S. to avail yourself of medical tourism to places like the hospitals built for that purpose in Thailand and India (See the 60 Minutes broadcast on that).

Weather? We may have the biggest weather variety to choose from on earth from Hawaii and Key West to Denali and Chicago and Death Valley and everything in between.

Language? We sure have plenty of English speaking places—and it’s American English not Belize English. But you can study foreign languages taught by native speakers and find expat communities of emigrants of almost every country here in this nation of immigrants. Getting 100% 24/7 immersion in a foreign language is one of the few valid reasons to move overseas.

Retirement? The U.S. probably leads the world in communities designed specifically for retirees.

Tax-friendly jurisdiction? See http://modernsurvivalblog.com/retreat-living/lowest-to-highest-taxes-by-state/. We have states with no income tax like Texas and Washington; states with no sales tax like Oregon and New Hampshire. We have states with low property taxes like Louisiana and Alabama where the average home pays $404 and $410 respectively per year. The federal U.S. income tax is the same nationwide, but it’s also about the same worldwide because Americans have to pay federal income tax no matter where they live in the world. You can take advantage of the Foreign Earned Income Exclusion and foreign tax credit to avoid paying both foreign and U.S. tax on the same income up to $93,000. But there is no U.S. federal tax advantage, for a U.S. citizen, other than avoiding Social Security tax, to living overseas.

Established expat community. That means groups of Americans living near each other. There is no way any foreign country can compete with anywhere in America on that score. If living around lots of Americans is what you seek, why leave the country?

Fully wired? Not every place in America is better wired than every place in Peddicord’s book, but you surely do not need to leave the U.S. to get good cable TV and Internet connections. Indeed, for the shows Americans want to watch, it is probably difficult to get most of them overseas.

Special benefits for retirees. America is full of special benefits for retirees. I have called seniors a group that thinks the world owes them a discount. (I turned 66 in July 2012.) I got a senior discount today on my lunch at Arby’s. I start getting Social Security this month (although I do not need to remain in the U.S. to get it). We get senior discounts on food, travel, event tickets, mass transit, you name it. Some states let seniors defer property taxes on your home until you sell the house. It is nice that some foreign countries also offer such tax breaks and some more than others and Peddicord needs to point that out. But let there be no implication that you have to leave the country to cash in on your senior status or to find low-tax or tax-free situations.

So I don’t get it. Some people assume that foreign—in third world countries must be cheaper. From reading Peddicord’s book, I surprisingly conclude they are not very cheap and maybe not cheaper than living or retiring in the U.S.

There is also another assumption in her book that I think is B.S. That is that there is something wonderful in being away from home. That far-away places with strange-sounding names are wonderful and mysterious and a great adventure and make you a better person and all that.

I first heard that when I went to West Point. A lot of my classmates were military brats. That means their father was career military and they grew up moving all over the country and the world to military bases. I have heard the adults in such families rave about how great it was for their kids, but I did not hear that from the kids. They seemed to hate it. I moved around too much, but because my father was a drunk who couldn’t hold a job, not military. I hated it.

Peddicord’s daughter hated the idea of moving to Ireland and seemed to hate Ireland when she was there. She was a bit of a brat of the normal meaning of that word. She finally decided Paris was a great place to live when they moved there but apparently wanted no part of Panama City, their third move. Their son, born in Ireland and seems to like that maybe more than the U.S.

In Peddicord’s book and online newsletter, there seems to be some underlying assumption than living overseas is obviously a really great thing to do, but no persuasive evidence or logic as to why. Many Americans suffer from Anglophilia—the notion that everything about England is wonderful. There is also Francophilia which relates to things French. Peddicord’s daughter seems to suffer from that. Peddicord herself seems to suffer from xenophilia, love of foreign countries for no reason other than they are foreign. It could also be called, “The grass is always greener on the other side of the customs checkpoint” syndrome.

Supposedly, a woman from Boston once said, “Why should I travel? I already live here.”

We lived in Boston for three years during grad school, generally enjoyed it, but were glad to leave the drivers and Taxachusetts behind. The lady should have traveled.

However, the statment from an American about his or her country would come closer to being true. “Why should I travel? I already live in America.” But I would still urge American to engage in foreign travel.

But when the questions is whether an American should move to live for extended periods in another country, I think the sentiment is correct. “Why should I move? I already live here.”

Cecil Rhodes, founder of Rhodesia and creator of the Rhodes Scholarship, said in 1902 that

To Be Born An Englishman Is To Win First Prize In God's Lottery.

Around 1919, the word “American” replaced the word “Englishman” in that sentence. At the rate we are going with deficit spending, we may lose that position yet, but Peddicord did not make the case that “The World’s 14 top [foreign] retirement havens” for Americans are listed in her book or that any of the true top 14 havens are even outside of the U.S. I think a two-column comparision of the best 14 retirement havens in the U.S. would kick the butts of her 14 foreign havens—using the same 15 criteria she selected—unless you place some high value on living in a foreign country for the sake of living in a foreign country, which is mindless.

In my article about my Grand Canyon hike with my brother I spoke at length of the propensity of many people to claim they love things that are objectively undesirable, like other than nice weather during a backpacking trip. Or lack of toilets and showers and hot food.

Peddicord recites all sorts of bad things about these countries she writes about—to her credit—then concludes living in them is wonderful on a net basis. At best, I will concede there is no accounting for taste. I love some things that others hate. Others are entitled to love things that I hate, like late slobs who speak with a foreign accent. But I think I could at least convey why I love the things that I love. It appears there are a whole lot of people who love things not because they love them because they were taught from birth that the thing in question was great and never considered maybe it was not. Examples include foreign travel, caviar, ballet, the classics, PBS, natural food, being out on a sail boat, and so on.

Peddicord did not prove her case that you would be better off living in her 14 cities than in the U.S. Other than some very specific thing that you could not possibly do in the U.S., like learning a foreign language really well, I think you would not be better off.

Maybe her market is fellow xenophiliacs, or liberal Americaphobes. And for them, no explanation, evidence, or logic is necessary. They’ve got religion. The take it on faith that foreign is better than American, or that American is worse than foreign.

As I said, my wife grew up in third-world countries. She also spent a summer in Brazil while in college. She hated living abroad and could not wait to move permanently to America which she had visited and lived in for about a year when growing up. 45 years later she is still just as adamant about that.

I have enjoyed my foreign travels. I was glad to depart for them and glad to return home from them. I did not enjoy living in Vietnam for most of a year. It is often said that New York City is a nice place to visit but I wouldn’t want to live there. (Our oldest son lived there for four years while getting a B.A. at Columbia University. He loved it. My wife lived there for several months while liquidating Frankiln National Bank. She loved it. We went there from West Point whenever we got a chance. We loved it.)

I feel the same about what was called ROW at Harvard Business School. ROW stands for Rest of World. It is a nice place to visit, but I wouldn’t want to live there—except for Canada, Australia, and New Zealand. I see places like the countries where I moved my savings as places to tour for extended periods if and when the U.S. gets all screwed up by hyperinflation and a federal government trying to use emergency socialism to “fix” it or at least give the voters the impression that they are doing all they can to fix it. I am willing to live overseas if it makes sense and Peddicord seems to think it does but my overall reaction to her book is “No sale. Thank you for temporarily curing me of a possible case of liveinAmericaphobia.”

On 8/21/12, I got Peddicord’s daily email, this one pushing Belize. That would be the same Belize that a couple of days before threatened to renounce its national debt imminently. And it would not be the first time for Belize to do that. I do not understand Peddicord’s lack of interest in such massive evidence of extremely bad character. When you move to a third-world country, you are sort of trusting them with your life and your life savings that are under their control in the form of a home that you own, bank accounts within the country, and so on. I cannot understand why people would choose to live in countries with low TI corruption ratings and demonstrated propensity to behave in irresponsible and untrustworthy ways.

Here is an email I got from a reader:

Dear Jack,

Just read your article on your book review of how to retire overseas, which I really enjoyed.

Having lived and worked in several of the countries the author has mentioned, I thought I would give my perspective.

I've lived in Paris and Monaco at different times for maybe 3 years in total from a couple of months at a time, up to one year. Paris, and all of France, is a hellhole. It's by far the worst place I have ever lived. There are Americans living there happily, but for the most part it's quite hard for Americans to fit in unless they completely embrace the culture (which is extreme leftism / socialism, extreme anti-capitalism, hating money / business, etc).

I remember the first time I visited Paris as a university student: I thought it was the greatest city I'd even seen! Really, I felt this way for maybe 10 years until I had to live there the first time. That changed everything, because as a resident you have to deal with the locals for everything like setting up your apartment to buying a car. The infrastructure on every level is poorly managed. I ended up buying a motorcycle to get to work because the train system is so bad. Their workers strike all the time, and even when they aren't on strike the trains are packed like sardines during rush hour.

Most people in a service job have a huge attitude and are completely rude to deal with, especially if you don't speak fluent french. They despise speaking english. Several of my french colleagues have actually told me they resented having to speak english in any situation.

France is a beautiful country with amazing architecture in cities and charming castles in the countryside. It can really deceive you especially as a tourist. But living there is horrible. I hated it and have promised myself (and my wife) never again. The problem is mostly the people: their culture is just too different from Americans. I personally think we have more in common with Koreans than the French. I currently live in Korea and find I have more in common with these people than many european cultures.

I have some expat colleagues living in South America: Argentina, Colombia and Brazil. They like the weather and the people, but not the government or the corruption.... or the currency. Hence, all of them bank offshore (Isle of Mann, Switzerland, etc) and keep all of their money outside of the countries they live in, and just bring money in to pay bills when needed. By the way, these countries are extremely dangerous to live in. I don't recommend living in any of them. My colleague who lives in Colombia says his friend and neighbour, a hardware shop owner, was just shot is the face and killed because one of his competitors felt he was taking his business with his lower prices and better service. That's South America. You can have it. I'll pass.

Having lived and worked in around 10 different countries now, I believe the best place in the world to live in still the USA and Canada. Americans who try to do this living overseas thing will likely be disappointed and end up coming back. There is a reason why so many people want to immigrate to the USA: living in their own country has a lower quality of life for a variety of reasons. I can say first hand this is true of most of Europe & Asia, and all of Africa and South America.

one other thing i forgot to mention: almost all of the french are openly anti-american. I'm Canadian, and when I would tell one my colleagues that they would say something like 'oh good, i thought you were american at first, thankfully you are not' or some such. I've personally experienced that attitude from many of the european cultures, but mostly the french. nice huh??

i can't imagine the americans liking living there. it's maybe the worst place in europe for them.

Rod Burley