NEWS/BLOG

Ride Out the Recession Abroad

Moving abroad isn’t just for retirees or individuals of retirement age. Increasingly much younger people are creating businesses and careers in foreign countries. It might be a operating a guest house in Costa Rica or a retirement home in Mexico or a farm in Brazil. It might be a business catering to expats or travelers in France or Italy or India or Thailand. We hope to feature more information on expat entrepreneurs in the coming weeks and months.

Then there are those individuals who’ve opted to take an extended vacation far from home, perhaps learning a new language or another skill or just taking stock of their lives and figuring out what their next step will be. Why go to a foreign country to do this? For those who can get away, the reasons make plenty of sense.

It can be far cheaper to pack up and make an extended stay in a country where the exchange rate works to your advantage. Your food, rent and living expenses can be a fraction of what they were. No health insurance? No problem! Mexico, Costa Rica and many other countries have government plans that cost very little and may be the answer for those who are young and in good health. Those who want more extensive coverage can enroll in an insurance plan with a private company and pay far less than premiums would be with a U.S. address.

Once you’re living the life you’d only dreamed of, you may just decide to stay on. Whatever you do, check on the visa and residency requirements to be sure you’re “legal.” And don’t burn your bridges. Just be prepared for the adventure of your life and be open to opportunities you may never have considered. The economic situation is far from healthy wherever you go, but it’s still a big, big world.

Lawyers Wanted for Jobs Abroad

Not long ago it was hard enough to transport a legal career across state lines. Now lawyers are being sought for jobs abroad in places like Hong Kong, Dubai and Abu Dhabi. An article in the business section of The New York Times, November 23, 2009, tells why this is happening and where some of the jobs are.

U.S. law firms are increasing their presence overseas. For example, the Los Angeles firm of Lathan & Watkins, has gone from five overseas offices to 14. The New York firm of Weil, Gotshal & Manges has gone from three to nine offices in foreign countries.

Hong Kong saw a 48% increase in the number of lawyers from the 250 largest U.S. law firms from 2007 to 2008. In Abu Dhabi, there was an increase of 144%. Most of the business in Abu Dhabi involves legal advice for government businesses funded by a large sovereign wealth fund.

U.S. citizens working abroad who meet certain conditions do not have to pay taxes on their first $87,600 of earned income. 

Belize: Benefits Running Out?

Belize is a tiny Caribbean nation where English is the official language since it once British Honduras. Living costs are low and there are many good reasons expats choose to live there. One reason is the QRP (Qualified Retired Persons) program, which you can take advantage of if you are at least 45 years of age and if you spend a minimum of two weeks a year in Belize.

That two week vacation could have a significant payoff. The advantages of the Belize QRP program include exemption from any Belize taxes, including income tax, capital gains tax, estate tax as well as import tax on household goods, automobiles, boats and even airplanes.

To be eligible, you must consider yourself retired. What this means is that you are not permitted to apply for a work permit or accept employment in Belize. However, you could operate an international business, an internet business or even start a business in Belize and still consider yourself retired.

There is an income requirement. You must show that you have a minimum of US$2,000 a month in income to support yourself in Belize. Or, you could just deposit US$24,000 into a Belizean bank account.

The bad news is that the program has exceeded its quota of 20,000 QRP retirees, and in a tiny country of about 275,000, this adds up to a lot of expats and a lot of lost taxes. The newly elected UPD government is threatening to end the program. No one know what’s going to happen but the issue will most likely be addressed at the first of the year by the National Assembly. Very likely, anyone admitted to Belize under the present program can keep their benefits. A new program, however, would be far less generous.

Many people will remember that when Costa Rica altered its pensionado program, retirees there weren’t “grandfathered in.” Costa Rica is still a terrific place to live, but it doesn’t offer the tax benefits for retirees that it once did.

For more information and resources for Belize, see our Belize page. 

A Second Look at Panama

Mercedes de Marchena responded to our recent posts on Costa Rica: “Panama is next door, with amazing rain forest, beaches and mountains. The people are friendly and service oriented, and they are efficient. The banking system is first class, they use the dollar as currency and health care is excellent and cheap… Maybe it is time to take a second look at this wonderful, peaceful yet very modern, up and coming place.”

Born and raised in Panama, she now travels there often to visit her mother. “We have an apartment in Panama City and love the cosmopolitan feel of the city. It has changed a lot since I lived there. The bay is being cleaned up and a new road is being built to get from the Corredor Sur into the Casco Viejo, the old colonial city. There are restaurants and nightlife, casinos and luxury hotels. Life is cheaper than in the U.S.or Europe, and the city is so lively. We usually stay there a couple of days before we travel into the interior to go where my mother lives.

“The small city where my mother has lived most of her life is called La Tablas in the Azuero Peninsula. Life there is like it was in everywhere in Panama many years ago. Everyone knows everyone, and people still sit in their verandas and visit. The colonial church dominates the central plaza, and around it are the stores and small restaurants and business. People go there at night to enjoy the coolness after the sun goes down. Life is slow and to be savored.

“Yet you’ll find everything there. Supermarkets are stocked with a wide variety of items and you can also get local produce and fruits very cheaply. You can even have seafood and fish delivered fresh to your doorstep.

“Healthcare is excellent. When my mother had a stroke a year and a half ago, and she received very good care at a large hospital. She had a therapist come to the house for months at incredible low rates ($12/hour) and now has nurse caring around the clock for about $20 a day. You can’t get that anywhere else. Everywhere in Panama, high quality health care is inexpensive.

“Financial institutions and banks work efficiently and are up to world standards. I can send money directly there from the U.S. We got a mortgage for a house we bought there without any problems. Service is superb and you can rely on these professionals.

“About 40 minutes away, there is the town of Pedasi. This even smaller town has world-class restaurants and hotels. Celebrities have discovered this wonderful place, among them, Giles St Giles , the French architect and his wife, who own “Villa Camila” and Prince Maximilian of Liechtenstein, who has a home and lands here… I could go on and on, but I think I need more space!”

Mercedes de Marchena is a free-lance writer now living in Miami after living 20 years in Curaçao, Netherlands Antilles. Read more about her life in the Caribbean at her blog, http://www.expatinthetropics.blogspot.com.  She is also
the author of a book, Such is Life in the Tropics: How Difficult Can It Be to Survive in Paradise?

For more on Panama and some reasons for choosing to live there, see http://liveabroad.com/articles/panama.html.

Canada Deports U.S. Deserter

An American soldier who fled to Canada to avoid being sent to Iraq has been deported to the U.S. where he will face charges of desertion. He had been in Canada three years and was placed in custody after being denied refugee status there. An estimated 200 members of the U.S. military are currently in Canada, but this is the first instance of deportation.

Anti-war demonstrations were held at the Vancouver-Seattle international border crossing and in front of Canada’s Federal Court in Toronto yesterday to condemn the Canadian government’s decision. An estimated 200 American army deserters have sought refugee status in Canada. Nine are facing immediate deportation orders this summer.

Canada has strict immigration requirements. Refugees are admitted, but must also meet certain requirements.

Why Outsource Medicare

You can’t take it with you, that is, you can’t take Medicare with you when you retire outside the U.S.  It stops at the border. Meanwhile, economists warn that the retirement of baby boomers threatens to be a train wreck if not a tsunami.

Professor David C. Warner at the LBJ School of Public Affairs, University of Texas, Austin, has written widely about extending Medicare to retirees in Mexico. This would be of considerable benefit to U.S. citizens who retire there, and in addition – and here’s the big selling point – it would result in considerable savings to the U.S. Government. Dr. Warner has cited cost savings to the Medicare trust as a major benefit. Some say the Medicare trust will be bankrupt by 2040.

The average Medicare beneficiary in the U.S. costs the Medicare fund about $7,500 per year. If that same person lived in Mexico, the same health care services would cost about $4,000 per year.  Dr. Warner has written books such as Getting What You Paid For:  Extending Benefits to Eligible Beneficiaries in Mexico (U.S.-Mexican Policy Reports) and others.

Overall, medical costs in the U.S. are higher than in most if not all other countries. Not only do our healthcare professionals earn more, the administrative costs of insurance companies, PPOs, HMOs, etc. add up. One reason healthcare costs in Mexico are far less is that administrative costs there are lower.

Outsourcing healthcare of some retirees to Mexico, some authorities say, is not so different from outsourcing manufacturing, tech support and call centers to foreign countries. It would eliminate a few U.S. jobs, though not many since there would still be paperwork in keeping track of payments to facilities there. Such a plan would be good for Mexico, too, resulting in an increased flow of money across the border, and in time, more and better medical facilities there.

Ireland Says “No” to Lisbon Treaty

Ireland has rejected the Lisbon Treaty, which would have consolidated the European Union’s power and streamlined its cumbersome bureaucracy. The treaty needed to be ratified by all 27 EU members.

The Lisbon Treaty was the result of painstaking negotiations. Among other things, it offered a way of adjusting to the 12 new members added since 2004. It allowed for a full-time EU president and provided for a new foreign policy chief. Also, it called for a change in voting procedures on the European Council so that fewer decisions would require unanimous votes.

Ireland is the only country to put the Lisbon Treaty to a referendum, as required by law. However, it’s no secret that people in various EU countries have no real sense of a European identity and feel remote from decisions being made in Brussels.

One instant effect of the Irish decision is that the euro fell to $1.5301 against the dollar.

Inflation Up in Costa Rica

Costa Rica will probably exceed its expected inflation rate of 9% in 2008, according to an announcement made by President Oscar Arias. Inflation there was 10.8% last year.

Inflation across Latin America has increased over the past few months as fast developing economies like India and China boost global demand for food and commodities. The economic downturn in the U.S. will probably result in slower growth in other parts of the world including Latin America.

Costa Rica’s central bank says it anticipates the economy to grow 3.8% this year, down from 6.8% in 2007.

Costa Rica Presents a Dilemma

It’s hard to talk about Costa Rica without talking about nature. Its varied landscape includes 12 different ecosystems, ranging from tropical rain forests and cloud forests to snow capped mountains. It boasts 9000 types of flowering plants, including 1200 species of orchids, some 850 species of birds and 250 species of mammals. More than 5% of all known species of plant and animal life are found in this small country, about the size of West Virginia.

Nature is what draws travelers and expats from Europe as well as North and South America here. Those who want to live amid the flora and fauna, however, face a dilemma. Should you make a home here knowing that such an action contributes to the destruction of some part of the ecosystem?

The director of sales at one development says, “If we wanted to do the right thing, we would all tear down our homes here, reforest and leave.”

The Tamarindo Preserve is one real estate development trying to have it both ways. It’s a low-density development in the seaside town of Tamarindo in the northwest of the country. A laid back community known for its turtle watching tours, Tamarindo draws visitors and foreign residents from all parts of the world. The Tamarindo Preserve calls for 235 villas and 40 condos on just 8% of a 600-acre parcel of land. Some of the proceeds from the housing will go toward protecting the wetlands and estuary that make up the rest of the parcel.

Increasingly, too, resorts and hotels here try to attract clientele by showing that they can be environmentally friendly. Although 25% of Costa Rica’s land mass is devoted to parks and reserves, the country lacks the necessary money to maintain them properly and enforce the laws to protect them. Developers can play a positive role here.

Trailing Husbands

Your spouse gets an offer of a job overseas and you get to go along. That’s what most people think of when they hear the term “trailing spouse.” But sometimes the spouse getting the job offer is the wife, not the husband. What does he call himself? Well, for some, the answer is “stud.”

Stud or rather STUDS is an acronym for “Spouses Trailing Under Duress Successfully,” a social club for stay-at-home husbands and fathers living abroad. The first chapter was founded in Brussels in 1994 and currently has 40 to 50 active members. The original members are scattered throughout the world. Some of them organized a chapter in London which now has about 40 members.

The guys meet as often as once a week to talk politics, sports, and, just maybe, child-rearing. In Brussels, they play golf and go biking. In London, they have lunches and pub walks as well as golf games.

Mostly they speak English but they welcome speakers of other languages. The Brussels club hosts an annual dinner dance for themselves and their wives. The London chapter invites wives frequently so they can meet other couples where the wife is the working spouse.

For more information, check out www.belgiumstuds.com and www.studsoflondon.com.

Living in the U.K. Just Got More Costly

“Non Domiciles” or non-doms are what U.S. expats living in the U.K. are called. Like other U.S, expats, they’re facing increased U.S. income taxes because they cannot offset their income by deducting their living cost abroad. Now they’ll have to pay an additional fees to the U.K. and these charges cannot be used to offset U.S. taxes.

Under the new law, the U.K.will charge an annual £30,000 (about $59,000) flat-rate fee on non-doms who have had this status for seven years. This includes all those living in Britain who declare that their home is in another country. The U.K. is not calling it a tax and the U.S. isn’t recognizing it as such, which is why it can’t be used as a tax credit in the U.S.

Until now, non-doms have not been taxed on their worldwide wealth, just on the money they earn in Britain or bring into the country. This has made London a mecca for the very wealthy and for high earners, who have lived here virtually tax-free, at least as far as U.K. taxes go. U.S. citizens are taxed on their worldwide income.

Many of these non-doms are investment bankers working in “the City,” London’s financial district. All in all, some 115,000 currently have non-dom status. Only about 10,000 are estimated to be from the U.S.

In today’s global economy, multimillionaires and billionaires are minted every minute. Some are from the BRIC countries - Brazil, Russia, India and China - but many are from France and Germany as well as elsewhere in Europe, Latin America and Asia. London has been a favorite destination until now, which is one reason London real estate has become so expensive.

For the richest of the rich, paying the fee won’t be a problem. However, the new rules will most likely mean that many of those with wealth will chose to live and work elsewhere. In addition, private banks will probably move their income offshore and London will cease to be the financial center it is now. It’s not just non-doms who’d like to see the new laws repealed.

Mazatlán Is Mexico for Real

Puerto Vallarta may draw the tourists, but Mazatlán, about 275 miles to the north, is increasingly attracting expats who want to experience “the real Mexico.” Between 3,500 and 7,000 U.S. expats have settled in this city of about 400,000. Some are restoring historic houses near the center of town, while others have built modern villas on the hillsides overlooking the bay. Some have their eyes on beachfront high-rises still being developed.

For some time, it has been home to U.S. and Canadian citizens trying to stretch their retirement (or pre-retirement) dollars. It’s not difficult to find other English-speaking expats for socializing or, if you speak a little Spanish, to lose yourself among the local people. While some expats worry about finding quality healthcare, some who’ve settled here claim they’ve experienced the best care ever in Mazatlán.

Though you’ll see cruise ships docked in the harbor, Mazatlán is a working city which boasts the largest port facility between Los Angeles and the Panama Canal. It is home to Latin America’s biggest fleet of commercial shrimp vessels. Excellent seafood restaurants abound.

For more, see our article, Mexico—Still a Mecca for Expats and this Los Angeles Times article Mazatlan, a Mexican Harbor for American Expatriates

Be Prepared to Be Amazed by Argentina

Some have been arguing in favor of Argentina ever since the country started making its economic come back. According to the UN 2007-2008 Human Development Report, Argentina ranks 38th in economic, health and social development. (The report placed Iceland first and the U.S. in 12th place.) A baby born in Argentina today can expect to live 74.8 years. In literacy, Argentina ranks 27th; a total of 97.2% of Argentines are literate. The average Argentine spends 16.4 years in school. Only 570 out of 1000 have a cell phone, however, this was based on data from 2005 and has surely changed in the meantime. Argentina is on a roll.

The country just turned its clocks ahead an hour in order to take advantage of the daylight hours. It recently elected a woman president, Cristina Kirchner, who had previously been the country’s first lady.

What’s not to like in Argentina? U.S. foreign policy. According to a poll by The Chicago Council on Global Affairs and WorldPublicOpinion.org,. Argentina leads the list of countries that distrust the U.S. and the U.S. role in world affairs. This is understandable, since Reagonomics and IMF recommendations are seen here as the causes of the economic crisis which reduced over half the population to living below the poverty level. The antagonism, however, doesn’t extend to the American people or American products. Argentinians love McDonalds’s and this is in a country famous for its beef! (The Buenos Aires restaurant La Brigada has the title of “best steak in the city.")

Speaking of Beueos Aires, the hot new neighborhood is Puerto Madero, flanked by La Plata River and a protected nature reserve. Formerly a port area of brick warehouses, it has been transformed into upscale residential apartments, restaurants, offices and lofts flanked by picturesque canals. From all over the city, Porteños, as people of B.A.call themselves, are seen here on weekends, strolling, riding bikes and congregating in the cafes here. Weekdays, it’s business people from nearby high-rise offices and at night, it’s diners at elegant restaurants and moviegoers. In case you’re thinking of visiting, there are also some five star hotels. If you’d rather sleep cheap, look into hotels and guesthouses in the Microcentro area and Plaza de Mayo. The streets of Peurto Maderno, you’ll notice, are named after women. The area is served by a tramway and a few buses, but is not connected to the city’s subway system

Helping People with Parks and Bike Trails

"Income equality is impossible, so what other equality is?” asked Enrique Peñalosa during recent New York stopover. “Access to green areas, a waterfront, to sports and music facilities. What we do with our cities will determine quality of life for hundreds of years.”

While serving as mayor of Bogotá, Colombia from 1998 to 2000, he instigated the transformation of this city of 6.7 million from a traffic-snarled, crime-ridden metropolis into an inclusive and clean urban area with buses, parks, bike paths and libraries. One of his first moves was to prevent cars from parking on city sidewalks, reclaiming them for pedestrians and cyclists.

While he was in office, a city bus system was built at a mere a fraction of the cost of modern subways, and a bike path 211 miles long (the longest outside of China) was created. A derelict downtown avenue became a grand pedestrian boulevard, and a slum near the presidential palace was turned into a 39.5-acre park. Crime fell 35% during this time.

His ideas are especially important as uncontrolled growth in the cities of India and China presents a grave threat to the environment. Interestingly, though, environmental concerns aren’t his motivation. His main focus has always been to improve the quality of life for large numbers of people.

Not building roads or rail services the city saved money for other uses. During his term the city built or improved 1,200 parks and added 100 nurseries, 51 schools and 14 libraries. School enrollment rose 31%. His achievements won the Stockholm Challenge prize for Bogotá and a $1 million award from the Gates Foundation for Peñalosa himself.

From 2001 to 2004 he was a visiting scholar at New York University and a fellow at the Institute for Transportation and Development Policy, a nonprofit agency. During that time, he provided advice on urban planning to such diverse cities as Hanoi, New Delhi, Jakarta, Dakar, Senegal, Guangzhou, China, and even Los Angeles.

Returning to Bogotá in 2004, he continues to work with cities where goals of sustainability, equality, quality of life and competitiveness are acknowledged. “Future competition between societies will be for quality of life,” he says. “Talented people will go to cities that are socially inclusive, pleasant and move. The 80% of Asian cities to be built by 2100 could be much better than New York or London. My mouth waters at what could be done.”

Give Where Help Is Needed

Women in Kenya are using solar cookers and have started small businesses selling them to other women. The cookers enable them to harness solar power to purify water as well as to cook food.  Their use makes clean water available to more families and eliminates the need to burn wood, which is a scarce resource. A donation of $150 trains and provides follow-up for a village group and $30 trains one family in solar cooking.

Women in Malawi are building small businesses and providing for their children through small business loans from what the women “Banki Yanga” My Bank, which serves only the poorest women. One woman, Dorothy Kanjautso received a $70 loan to buy play mats and games for her small nursery school. This amount enabled her to build a primary school in her village for 200 children. In addition, she has taken three AIDS orphans into her home, and charges no tuition to other AIDS orphans.

Many of the women who receive the loans are community leaders. They also meet regularly for support and sharing ideas. Loan repayment rates average 98%, allowing funds to be loaned out to others who continue the process of lending hope. Just $86 provides the average first loan to a Malawi woman, and 15 provides one share of a micro-loan.

Alternative Gifts International works with over 100 agencies with excellent track records. AGI allocates 90% of funds received to cooperating agencies, with just 10% used for administrative and fund-raising expenses. Other projects range from planting trees in Haiti to providing medical aid in Dafur. For more information, see www.alternativegifts.org/