Retired Money: Is the dream of Retiring Abroad still alive in the Covid era?

My latest MoneySense Retired Money column, just published, looks at the commonly held dream of many in the FIRE community (Financial Independence/Retire Early): that of geo-arbitrage and retiring outside Canada to an exotic location with a much lower cost of living. Click on the highlighted text for the full column: Has the Pandemic ended the dream of Retiring Abroad?

As I note in the piece, places like Mexico, the Far East or parts of Europe have such a relatively low cost of living that average Canadians might be able to retire early just on the strength of CPP and OAS. Add in any employer pensions and registered or unregistered savings and that would be gravy.

The column looks in particular at two locations in Mexico that are quite popular with both American and Canadian expatriates seeking nicer weather and a lower cost of living. One is Lake Chapala, the subject of a new edition of a book by regular Hub contributors Akaisha and Billy Kaderli. The book, pictured on the left, is titled The Adventurer’s Guide to Chapala Living.

“Chapala isn’t the only town/city where living in Mexico is wonderful. There are so many from which to choose,’ Akaisha told me via email, “ We believe retiring abroad is still feasible, without a doubt.”

At one point my wife and I seriously considered leaving the Land of Snow and High Taxes (aka our Home and Native Land) for Mexico. We took one trip to Chapala and nearby Ajijc, and a few years later the more inland and mountainous San Miguel de Allende, more on which below.

However, as the years went by and we neared our Findependence Day (i.e. Semi-Retirement), we concluded that there was too much crime in Mexico for our liking and that we are for the most part quite content to live in our current home in Long Branch, Ontario, just steps from Lake Ontario.

Even so, and as the MoneySense column relates in more depth, we do know a couple who actually took the plunge and sold their Toronto home to start a new life in San Miguel de Allende. Five years ago, the Hub recalled that trip and how we ran into a former Financial Post colleague of mine, Dean Cummer, and his partner.

They visited Toronto recently and I got the chance to catch up over lunch with Dean, who became one of the main sources for the MoneySense column: my editor wanted to know whether the dream of Retiring Abroad is still alive in the Covid era.

Dean felt the dream is still alive. I asked him if he would feel comfortable staying in Mexico for the rest of his life and he replied in the affirmative.

Other locations apart from Mexico

Knowing that he had researched and visited several other locations before choosing San Miguel, I also asked him where they would have settled if Mexico had not been available to them.

“At one point we were high on Nicaragua, but the political situation there has changed so much there’s no way I’d retire there now: it’s way too unstable,” Dean said, “Others we considered was the south of France: maybe not the French Riviera, which is very expensive but other parts of France. Costa Rica was also a good possibility.”

I also consulted a handful of financial advisors and bloggers about the dream in the Covid era and with reservations all thought the dream was still doable but that Healthcare and insurance need to carefully evaluated along with the target country’s Covid regimes and rules. The sources include two bloggers whose work we often republish here on the Hub: Bob Lai of Tawcan and Mark Seed of mownadvisor and Bob Li of Tawcan. Read the latter’s interesting blog on geoarbitrage.

Financial advisors see challenges

I also consulted financial advisors Matthew Ardrey and Adrian Mastracci, the latter another common Hub contributor. Mastracci, a portfolio manager with Vancouver-based Lycos Asset Management Inc., feels Covid has put the dream on hold for some. Based on his talks with clients, he says retirees are shortening trips, spending perhaps a month in Paris instead of years in a foreign location. “Nothing is easy anymore. Even for seasoned travellers, becoming a non-resident has its own peculiarities so the dream is effectively over for most.”

Wealth advisor Matthew Ardrey, of Toronto-based TriDelta Financial says financially retirement abroad will still be possible in the Covid era but believes it’s important to research eligibility rules in the new country and/or the need for health insurance.  “I still believe it is possible to retire abroad; however, due to COVID, the considerations in the decision making process have certainly multiplied.”