Dateline: Kuala Lumpur, Malaysia
I came across an interesting discussion recently. Someone was asking where they could go and “live like a king” for the rest of their life on a million dollars.
This is a common thing to fantasize about. People want to accumulate a pile of money, then go and live off that money for the rest of their lives. It’s an interesting question for us at Nomad Capitalist because it really goes to the heart of what we believe.
Go where you’re treated best.
Where I am in Singapore right now, a gin and tonic is $20. I enjoy coming here, but it isn’t a place I really want to be full time. Singapore isn’t a place where someone is going to be able to retire with a million in the bank. Some countries are going to be better than others when it comes to retirement.
So, where do you go?
If you have that million dollars and you never want to work again, how do you keep that up for the rest of your life? And just how far can you make that million stretch overseas?
This article will cover how you can better understand where you want to go and why, as well as different ways you can make the dream of living like a king into a reality.
Plan How You Want to Retire Early
Before you start planning how you want to live like a king, you need to have a good understanding of what your end goal is.
We see people all the time who jump at the chance to try something new and end up in situations that create more problems than they solve. Instead of assessing what they want to do and creating a plan to achieve it, they dive into the shiny, one-size-fits-all solutions they find on the internet.
Knowing your end goal is critical for successfully retiring the way you want.
What are you trying to accomplish?
Why are you doing this?
How does each piece fit together?
Be accountable to yourself. Write down your goals and plan what you need to do — down to the most minute details — to achieve them. Know the exact costs, necessary legal work, specific timeline, everything you can before you make the jump.
Having this information and a detailed plan will keep you from making mistakes that will cut into the million you plan to live off.
Here are two of the main reasons you may want to retire early:
1. You Want Time to Live an Abundant Life
However they’ve come into their millions – inheritance, business, investments, etc. – there are some people who just get tired of the chase and want time to actually enjoy life.
You may be tired of the US government and all the rules and regulations and high prices.
You may be tired of scrimping and saving and sacrificing for your business and now is the time to cash in.
Years ago, this was me.
I had started and sold several businesses in the US and my latest business was doing well and I wanted to eventually grow it to become the number one company in the country in its industry.
But I got to a point where I said, “I’m tired of being here.”
There were many reasons behind my decision to leave, but that was when I sold my last business in the US and really began looking for ways to go where I was treated best.
Maybe now is the time for you to do the same.
If you want the time to relax and be happy, do some nice things, help some people out, and enjoy life, early retirement overseas may be the right choice for you too.
2. You Want Time to Figure Out Your Next Move
When I first moved overseas, I approached it as an early retirement. But then Nomad Capitalist happened and I couldn’t be happier with where I’ve taken my life and the business I’ve built.
But Nomad Capitalist never would have happened without my early retirement.
If you’re anything like me, even if you enjoy an early retirement for a time, you’ll probably end up jumping back in because of all the business opportunities you’ll find.
Like Tim Ferris talks about, you should have numerous mini-retirements throughout your life. You can build up a significant sum so you can afford to sit back and relax for a year or two without touching the principal, affording yourself the time to figure out your next move.
For example, retirement could open the way to doing property deals offshore. I’ve almost doubled my money with some of the property deals I’ve done.
There is also the possibility of starting a passive income business. I have done this and enable myself to live more off of passive income.
But I also want to expand into other areas and grow more businesses. There are so many wide-open business opportunities overseas in so many different countries. Early retirement will give you the time you need to find the places and opportunities that are the right fit for you.
That’s where you can start to grow.
But how do you actually plan your early retirement? How much money do you need to retire and where does that money go? Below, we’ll cover the most important issues to address before you make the jump.
Buy a Retirement Home, Don’t Rent
The first thing to consider when planning your retirement is peeling off a part of that million dollars to buy a house that you could own. Preferably in a country with very low or no property taxes and no other dues that are going to cause you and your finances ongoing stress.
In the US, some homeowners are paying five-figure sums every year to live in modest homes in places like New York and Southern California. This, right alongside high real estate prices and a very expensive cost of living. Owning property in the wrong place can drastically cut into that million that you’ve put away.
If you’ve ever thought about moving from one city or state to another in an attempt to lower your property taxes, it shouldn’t be a huge leap for you to understand how valuable owning foreign real estate can be.
If you can find property in some of the faster-growing safe-haven jurisdictions, you’ll be able to find better yields and appreciation potential along with much lower property taxes.
Renting might seem like a good way to avoid property taxes, but it won’t help you to lower your overall costs.
In the past, I’ve recommended Cambodia as a place to go and retire like a king for the rest of your life. You aren’t going to achieve that by renting. Over the last couple of years, the price of real estate has tripled there and so has rent.
Instead, find a place where you can buy a house for a part of that million dollars. There are places where $100,000 can get you a nice quasi-penthouse apartment with a hot tub on the roof. That might not be everyone’s version of living like a king, but buying your own home in a country with low property taxes will cut down on your living expenses dramatically.
Be sure to read this article about property taxes to get a better understanding of how to design your retirement strategy around them.
Retiring with a Residence Permit
The next big thing to consider when figuring out where to retire is where you can get a long-term residence permit that could eventually lead to citizenship. The last thing you want is to work out a strategy where you can live in a country cheaply, only for the government to kick you out ten years from now.
When that happens, you’ll be back at square one looking for a new place to retire. And finding one is going to eat into your ability to live like a king on that million dollars.
There’s a lot of research that will need to go into planning where you should get your second residence, including figuring out the criteria of what makes a country a good option in your situation.
But once you know what you’re looking for, there are all kinds of potential places where you can live like a king.
If you’re already planning on buying real estate in your new retirement home, there are a number of countries that offer residency and even immediate citizenship to people who invest in real estate. A $100,000 investment in Georgia or a $70,000 investment in Malaysia can help you pick up a residency that you can use to further build out your retirement strategy.
If you’re a fan of South America, Guatemala and Ecuador both have residency programs that allow pensioners with a qualifying amount of monthly income to get and renew a residence permit very easily.
Geoarbitrage, Interest, and Early Retirement
Next, you’ll want to look for a place that ideally doesn’t use the US dollar or the Euro as the local currency. There are two reasons for this.
The first is that it gives you the opportunity to invest in falling currencies. Falling over failing is an important distinction. Trying to catch a knife by investing in a failing currency will leave you worse off than you started.
However, moving assets in an overvalued fiat currency into an undervalued fiat currency is a way to take advantage of falling currencies as a kind of arbitrage.
The second reason is that, while the USD and Euro may be more stable, countries that use them tend to have much higher prices.
There is a huge difference in the cost of living between Montenegro and Serbia. I only spend my summers in Montenegro because they use the Euro. Serbia, on the other hand, doesn’t use one of these more stable currencies and is one of the cheapest places I’ve been.
The main idea to focus on when you’re planning your retirement is to reduce your currency risk by holding onto a stable currency, but do all your spending in a less stable currency.
The other thing to keep in mind is how banks can help you extend the lifetime of the million you bring into retirement.
As an example, let’s say you decide to go to Georgia where you can move your money into a bank with a high interest rate. The money that you bring into the country and convert into Georgian Lari is going to be earning you 9.5% in interest.
This is going to greatly reduce the risk of holding onto and spending Lari.
A safe, stable investment like that can be a great way for you to collect income each year. By putting the $800,000 you didn’t spend on real estate into one of these bank accounts, you’ll be earning almost 10% each year in interest. Every year, you’ll have close to $80,000 that you can use to extend how long that original million lasts.
$80,000 might not seem like a king’s wages, but you’re going to get much more mileage out of it than you would by keeping your money in a US bank account with only a 2.5% interest rate.
The Best Places to Retire Early
As to where exactly you can live like a king, there are two areas that stick out as possibilities: Eastern Europe and South America.
Asia is a contender with countries like Thailand being decent options, but with how these countries are growing and changing it looks like they’ll only become more expensive as time goes on. You don’t know how long retirement is going to be, so planning for a sustainable financial future is important.
I also have a friend who has mentioned the potential of Nigeria in Africa. That could be an option worth exploring. There are plenty of places in Nigeria where you could retire for much less than a million, but the country probably has a very small audience when it comes to interested retirees.
Instead, we’re going to focus on Eastern Europe and South America.
Retiring in South America
The two big countries that make for the most interesting opportunities are Colombia and Paraguay. There are other options, but these two stand out as the most affordable places where you could live a really nice lifestyle.
Colombia has an incredibly vibrant culture and a rich variety of great food. The cities of Bogota, Medellín, Cali, and Santa Marta are all well-equipped when it comes to infrastructure. Rush hour traffic is often a terribly stressful experience, but public transport can get you just about anywhere you need to be.
These four cities also have very affordable real estate. In the past, the Wall Street Journal has named Cali and Medellín two of the top three cities in South America for their real estate cost per meter. Those prices have gone up since, but with the help of a local real estate agent, you’ll be able to find good costs.
Colombia has had safety issues, but cities like Medellín have taken great strides to improve the safety of its residents. While crime hasn’t been completely eradicated, there has been some serious progress. From 1991 to 2010 the homicide rate has decreased by almost 80%
Colombia offers a very affordable up-scale lifestyle with an array of first-world amenities and infrastructure. You can read more about Colombia in this article.
Paraguay has similar advantages. Although it has a reputation as one of South America’s poorest countries, Paraguay has seen some incredible growth over the last decade. Because of a stable currency (as far as South American currencies go) it’s been reported that Paraguay has the second-highest ROI for South American private sectors.
Residency is easy to obtain and hold onto and Paraguay uses a flat rate of 10% for its taxes. Which is about it as far as taxes go. No inheritance or estate tax, no net worth tax, no capital gains tax, and no stamp duty.
The big problem with going to South America is the amount of exposure these countries get to the US and Canada. There are a few elements in that relationship that could contribute to making retirement a little harder.
Retiring in Eastern Europe
Living in Europe is the stuff of dreams for many people. The entire continent is filled with stunning architecture, countless museums, and all kinds of cultural and historic sites. Traveling around Europe will get you everything from Mediterranean beaches to Alpine skiing.
There’s a diversity there that, if you do it right, can allow you to retire just the way you want at a very affordable price.
The best countries to look into are in post-Soviet Eastern Europe. It’s not the first place people think to look, but countries like Hungary, Serbia, Georgia, Armenia, and Albania have more to offer than people assume.
Budapest, Hungary is hands down the most beautiful city in Europe. It sits at the edge of the European Union both geographically and in regard to cost of living. Food, real estate, and taxes in the incredible city are all much lower than you’ll find anywhere else on the continent.
Belgrade, Serbia is probably one of the most underrated capitals in Europe and I find myself going back for more every time. There’s a perfect balance in the city of entertainment, culture, great living conditions, and an affordable cost of living that will help you stretch that retirement budget for a very long time.
A favorite of mine that needs to be included on this list is Tbilisi in Georgia. If you don’t have plans to visit Georgia, you need to think about changing those plans. An attitude of openness to foreigners combined with low and simple taxation makes it a great choice for retirement. Tbilisi itself has a historic core with all the amenities of a modern city, making it easy to retire like a king.
If living like a king is what you’re looking to do, all of these countries have access to very cheap luxury goods. Wine, cigars, tobacco, and excellent food are easy to come by. Eastern Europe is probably the easiest place to live if you plan on going all out.
Having a residence permit will give you decent interest in your bank account and allow you to live a European lifestyle without feeling like you’re paying for it.
Retire Like a King
We support the idea of finding a place where you can retire and “live like a king.” In today’s world of competition and opportunity, it only makes sense to go where you’re treated best.
Everything considered – real estate, second residency, currency, investments, lifestyle, all of it – Eastern Europe is the place to go for retirement.
It’ll be harder to get homesick. You’ll have everything you could need. Property values are affordable and won’t completely destroy your retirement fund before you’ve even left home. You’ll have a social circle, dating, food, wine, any of the trappings of living like a king or queen.
However, to have all these things you have to be precise in your planning.
Your housing needs to be dialed in so that you can minimize ongoing costs. You need to create a strategy that allows you to benefit from high-interest banks and falling currencies. You’ll need to make sure that the country you plan to do this all in is still going to want you to stay in five or ten years.
But when you string all of this together into a holistic working plan, you’ll be able to retire where you’re treated best and live like a king.