How to Retire Oversees with ExpatFIRE
Retiring early is a dream that many of us share. The idea of not having to work until you’re in your 60s or 70s is naturally appealing to most people. But achieving financial independence retire early (FIRE) is not always easy, especially if you’re from a country with a high cost of living.
This is where ExpatFIRE comes in.
ExpatFIRE means pursuing financial independence in a country other than your home country. This strategy has become increasingly popular among those seeking to retire early or achieve financial independence sooner rather than later.
One of the biggest benefits of ExpatFIRE is that it can help you achieve your financial goals faster. For example, if you’re Freedom Number is $1,000,000 in the US then you can probably get by with half that in a country with a lower cost of living. Plus, ff you work remotely you can also move their first to lower your living expenses, start saving more and reach FIRE even faster.
Some of the best countries for ExpatFIRE are Mexico, Thailand, Portugal, Panama, Costa Rica and Taiwan. They all have a cost of living is significantly lower than in the US or Europe, which means that you can live a comfortable life on a much smaller budget. This can be particularly helpful if you’re trying to save a large percentage of your income every month to reach your FIRE goals.
What is ExpatFIRE?
ExpatFIRE basically means pursing FIRE (Financial Independence Retire Early) in another country besides your home country.
One of the benefits of retiring abroad is that you are generally moving from a country with a high cost of living to one with a lower cost of living. This means that you can reach Financial Independence much earlier or enjoy a much higher standard of living while spending the same amount every month.
Problems with ExpatFIRE
While pursuing ExpatFIRE can be an attractive option for many people seeking to retire early or achieve financial independence sooner, there are several potential problems to consider. One of the biggest challenges with ExpatFIRE is that it may require a significant lifestyle change, as you may need to adapt to a new culture, language, and way of life. Additionally, ExpatFIRE can be challenging from a legal and financial perspective, as you may need to navigate complex tax and visa regulations. Some countries may require that you pay taxes in both your home country and the country where you are living, which can be costly and time-consuming to manage. Finally, health insurance can also be a major issue, as you may not be eligible for healthcare benefits in the country where you are living or may face high premiums for private health insurance.
Another challenge is the potential lack of social support. Moving to a new country where you don’t know anyone can be isolating and lonely. It may be difficult to find people who share your interests or speak your language, and this can make it hard to build a support network. Additionally, depending on where you choose to live, you may face discrimination or prejudice due to your race, nationality, or language.
Finally, it’s important to consider the potential impact of living abroad on your mental health. Living in a foreign country can be stressful, and dealing with language barriers, cultural differences, and other challenges can take a toll on your mental health. It’s important to be aware of the potential challenges and to have a plan in place for addressing any mental health issues that may arise.
If you’ve already saved up a decent amount for retirement but want to increase your standard of living, then ExpatFIRE might be an option for you. Imagine moving from New York City where the average rent is $3,250 for a studio apartment to a place like Chiang Mai Thailand where you can rent a luxury apartment with a gym, swimming pool and sauna for less than $600.00 a month!
By using geo-arbitrage you’re able to take your modest FIRE Budget from your home country and live a baller life style in a low cost country, all while spending the same amount every month.
Another benefit of ExpatFIRE is that it can expose you to new cultures, experiences and languages. Living in a different country can be a challenging but rewarding experience that can help you grow as a person. It can also help you develop new skills and perspectives that you can use to improve your life and career.
Of course, there are also challenges associated with ExpatFIRE, such as language barriers, cultural differences, the need to navigate complex tax and visa regulations and health insurance. But with careful planning and preparation, these challenges can be overcome.
You can get by quite easily in most countries by only speaking English. But if you’re planning on staying in the country for a while, then learning at least the basics will serve you well and open up many other doors and opportunities for you.
Unless you plan on eating Subway and hanging out at Starbucks every day, you will run into some cultural differences which might be frustrating to you at first.
For example, in Taiwan (where I have been living on and off for the past 10 years) it is common for the food to be brought out at separate times for people sitting at the same table. So if you are sitting at a table with 4 of your friends, the first two might get their Beef Noodle Soup牛肉麵 after 5 minutes while your Fried Rice 炒飯 takes an extra 10 minutes to come. This is just how it is and it’s best to just embrace the differences and go with the flow.
Visas are another challenge and expense to deal with when living abroad. Every country is going to be different and while some countries will let you stay for 90 days without a visa (like Taiwan), others make you get a visa before you come (like Vietnam).
If you’re just starting out then I would recommend planning your travel around your visa runs. For example, if you get a 60 day visa from Thailand, then once it is up, you can travel to another country to see how you like it there. You can do this to test out ExpatFIRE and if you find a place you want to settle down in, then you can pursue Permanent Residency.
Paying Taxes Abroad
The general rule of thumb is, if you have a formal job or become a resident of a country then you will need to pay taxes there. As far as paying taxes in your home country, this will depend on your income and country. I’m from the US so I file taxes every year and can declare the Foreign Earned Income Exclusion which means that I don’t pay federal tax on the first $108,000 that I earn.
ExpatFIRE Health Insurance
Health Insurance is going to be a lot cheaper in another country than in the US. If you are just starting out then getting travel insurance from a company like Safety Wings is the way to go. If you decide that you want to stay in a country long term then you can see what kind of health insurance they offer. I am part of the National Health Insurance plan in Taiwan and I pay less than $30 a month for decent health care while being able to see the doctor or dentist for about $5.00.
There are also private health care plans if you’re worried about the type of care you’re going to get and depending on your income and residency status, it might be worth it for you to keep a health insurance plan in your home country.
Pros and Cons
Lower cost of living:
Many expatriate destinations offer a lower cost of living than one’s home country, which can make it easier to achieve financial independence and retire early.
Living and working in a foreign country can be a valuable and rewarding experience that exposes you to different cultures and perspectives.
Depending on the country you choose to live in, there may be tax benefits for expatriates that can help you save money.
Being financially independent and retired early gives you the flexibility to travel and pursue other interests without the constraints of a traditional job.
Living and working in a foreign country can provide unique networking opportunities and connections that may be valuable in the future.
Living in a foreign country can be challenging and it can take time to adjust to a new culture and way of life.
If you move to a country where you don’t speak the language, it can be difficult to communicate with others and navigate daily life.
Lack of social support:
Moving away from friends and family can be difficult and it can be challenging to build a social support network in a new country.
Legal and financial complexities:
Depending on the country you choose to live in, there may be legal and financial complexities that can be difficult to navigate, such as obtaining visas and managing finances in a foreign currency.
Living and working in a foreign country can be uncertain, and there may be challenges such as political instability, natural disasters, or health risks that can impact your well-being and financial situation.
ExpatFIRE in Taiwan
I’ve been living in Taiwan on and off for the past 10 years and classify myself somewhere between Lean Fire and Barista Fire. I’ve been using the 4% Rule on about $500,000 which comes out to be about $1,666 USD/month.
I first came to Taiwan to teach English but then got involved in e-commerce and ran an online business for 7 years before selling it in early 2022. I currently have permanent residency here as well as National Health Insurance.
Monthly Expenses in USD:
Rent – $580.00
Bills – $65.00
National Health Insurance – $26.00
Cell Phone – $15.00
Food & Fun – $750.00
Misc. and Travel – $200.00/month (about $2,400/year)
Final thoughts about ExpatFIRE in Taiwan:
I was lucky to find Taiwan early in my traveling life and it has made a great second home for the past decade. The people are friendly, the country is ridiculously safe, the infrastructure is good, amazing food, there are beautiful mountains for hiking and nice beaches for relaxing.
The stock market fell about 20% in 2022 and I have been putting money from the sale of my business into it all the way down. I still have more cash on the sidelines to put in if it continues to fall but it has been hard to watch it go down and really puts the 4% Rule to the test.
I think that it will work out in the long run but dealing with short term volatility has been challenging. It has also made me realize that I don’t want to be dependent on something that I can’t control and has made me look into other ways to generate income.
This experience has also taught me that a job or business is not something that just brings us money but also a sense of purpose. I worked hard to build a business and that was a big part of my identity for over 7 years. And although I don’t regret selling my business, I do miss having the clear direction and sense of purpose having a meaning job or business can give.