For Better or Worse, Many Retirees Say Bye, Bye, Miss American Pie

The year was 1981 and, in San Jose, Tom Curran was hearing rumors that the savings and loan service department in which he worked was about to be transferred to Los Angeles.

“After having lived there three years, and now being happily settled in San Jose for 14 years, I was age 49 and I dreaded the thought of having to face that rat race in Southern California again,” he recalled.

So Curran, divorced, took a somewhat unusual tour to the Central American country of Costa Rica. It was led by Modesto-based Retirement Explorations, which periodically escorts groups of Americans on personal-evaluation tours of foreign countries popular as retirement havens. “I liked what I saw in Costa Rica, and I spent $12,500 to buy a lot on a hill overlooking another San Jose--the capital city,” Curran said. “For another $24,000, I built a three-bedroom house on it.

“By then, the department’s move in California had been officially announced. I submitted my resignation and cashed out everything I owned--two pieces of property, furniture, car. I added the money from this to my severance pay, and put everything into a savings account.”

Curran said he gets by easily in Costa Rica on $600 a month, which covers his comprehensive health-care plan, automobile insurance, twice-weekly maid service, frequent restaurant meals, cable television service supplying most stateside stations, and trips to the United States to visit his daughter and son.

More Heading Abroad

Expatriating. It is a decision being reached by a lot of Americans at or near retirement age: Instead of settling for a reduced standard of living--sometimes substantially so--on diminished retirement incomes in the United States, they head abroad; in many cases to a life more luxurious than the one they had when they worked for a living.

Every silver lining, however, has its cloud. Authorities and experienced retirees mention such potential negatives as culture shock over everything from the local cuisine to driving habits to the lack of American products, loneliness (which may be only partially alleviated by moving to the “Gringo Gulch” section of one’s adopted country), security problems (barred windows aren’t uncommon in some parts of Costa Rica, for example) and political instability.

There also may be the necessity of learning a foreign language, property-ownership problems (some countries don’t allow outsiders to hold title or leave property to their heirs), being many miles and expensive airline flights away from family and friends, and below-customary standards for such services as mail, telephones and health care.

Advises John Howells, author of the book “Choose Latin America”: “Expect the unexpected.”

“There are many reasons why retired Americans are relocating aboard,” said Shirley Waldrum, senior program specialist with the American Assn. of Retired Persons, the omnipresent group that claims more than 30 million members. “Not the least of the reasons is the fact that in most of the more popular places, the pace of living is slower than what they have been used to, particularly if the newcomers had been living in an urban area.”

Opting for Earlier Retirement

Peter A. Dickinson, author of “Travel and Retirement Edens Abroad,” said from his home in Prescott, Ariz., that the trend to retirement abroad appears to have begun in the mid-1970s.

“Around that time, people began more and more to choose early retirement,” he said. “Having education, energy, and the desire to travel, they found they might be more able to do so from a permanent foreign location, where lower living expenses might permit room in the budget for seeing other places.

“As people began feeling comfortable about living in other nations,” Dickinson added, “the word spread.”

How many Americans have uprooted? Philip Covington, public affairs officer with the Consular Affairs Bureau in Washington, D. C., said an estimated 2 million U. S. citizens are living overseas, a figure that doesn’t include U. S. government workers, either military or non-military.

“As for how many of that total are retirees, we have no way of knowing,” he said. “But I would be surprised if the number isn’t at least half a million.”

Although no agency or organization specifically tracks numbers of older Americans living abroad, there are some clues:

- According to Frank Battistelli of the Social Security Administration, 163,649 Social Security retirement checks are being sent monthly to former American workers in foreign nations. As of April, the top 10 foreign countries for Americans receiving retirement Social Security checks were Canada (32,094), Mexico (20,072), Italy (19,520), West Germany (10,108), Greece (7,333), the Philippines (6,690), Portugal (4,516), Ireland (3,698), Israel (3,000) and Spain (2,917)--figures up slightly from previous years.

- However, according to Marty Scutt, a retirement travel consultant, probably at least that many people are having their checks deposited in banks in the United States while living abroad, and simply draw on them.

- To that total, of course, must be added those seniors in other lands who haven’t yet reached age 62, the earliest at which a Social Security retirement check is issued.

Dickinson said that in some cases the above figures represent numbers of older Americans who have decided to return to their roots.

“With many others, however, the moves reflect a sense of adventure, especially now that they have the time and usually the money to expand their horizons,” Dickinson said.

Canada--the country requiring perhaps the least dislocation of American sensibilities--is (judging from the number of Social Security recipients) the most popular foreign relocation destination. Among the reasons, Dickinson noted, are being nearer home, benefiting from relatively low energy costs, being eligible for an excellent national health system, living somewhat less expensively because of the favorable exchange rate, and living pretty much an American life style.

Why They Move

Jane Parker, who started Retirement Explorations about 11 years ago, said her tour group has just completed a survey of American retirees in Spain, Portugal and Costa Rica. She said the reasons they gave for making the moves were, in order of importance:

- Living in a peaceful and relaxed environment.

- Living inexpensively.

- Being in comfortable weather (Scutt noted that in many of the more favored places--such as Portugal, Spain and Costa Rica--a fireplace will do for heat, an overhead fan for air conditioning).

- Having access to good medical facilities.

On the other side of the coin, when the several hundred American retirees surveyed were asked why they had chosen to leave the United States, Parker said they gave reasons such as the increase in crime and in drug usage, traffic congestion, medical costs--”and the general attitude of young people toward their elders. In their new nations, the retirees like the idea of finding older people treated with respect.”

However, roses do have thorns.

Charles Leining and his wife, Joel, both 67 and living in Los Angeles, had heard a lot about Mexico’s San Miguel de Allende, also known as Carmel South, a cultural vortex for expatriates.

“In November of last year, we went down to see for ourselves,” he said. “We liked what we saw and heard. We found a new apartment building that was being constructed, and the owner said he would rent us one of the apartments, fully furnished, for $300 a month.

“We gave up our apartment in Los Angeles, and put our furniture in storage. My wife had to go to the Northwest on an extended business trip, but, at the end of February, I went down with the intention of getting everything set up so that we could both settle down there permanently.”

Leining, a former university administrator (at USC and the University of Redlands), said the accommodations were first- rate--”the apartment had a beamed ceiling, and outside was a lime tree I just had to shake to get as many as I wanted.”

The newcomer said that, in order to assimilate while awaiting the arrival of his wife, he plunged into activities:

“Five days a week, I taught a 90-minute English class for Mexican children at the local school, on Tuesday afternoons I played cribbage with other expatriates, on Wednesday afternoons I went to the Rotary Club meetings, for three hours on Friday afternoons I taught English to the prisoners at the jail. I joined a church, I went to art shows, I wrote a column on aging for the English-language newspaper.”

Still, he recalled, he found himself with a nebulous sense of loneliness: “I was around people, but I somehow felt lonesome, and it wasn’t just because of the absence of my wife. Eventually, I felt that even when she arrived, we would never really fit in.

“I found there were other expatriates with the same feeling. They sat around all day and just brooded.”

Leining said he began increasingly hearing complaints of how much more expensive everything is in San Miguel de Allende than it used to be. “A little 5-ounce can of shaving cream, for instance, costs $6.

Many Loved the Life

“Of course, I came across many expatriates who had lived there 10 to 20 years, and loved it. Some said they had left their native lands because they had become disillusioned. In effect, they were saying the hell with everything.”

By the end of May, however, Leining made a decision, called up his wife, and said, “Let’s go back to L.A.”: “I don’t mean to put down Mexico, but it just wouldn’t have been for us. My wife agreed.”

Leining is staying in Los Angeles with his daughter, his wife is due in town soon, and they plan to resume their retirement in the United States.

As most retirees know before they go, or quickly find out, Social Security checks will keep coming no matter how long you stay outside the United States--except if you are in Albania, Cuba, Kampuchea (formerly Cambodia), East Berlin, East Germany, North Korea or Vietnam.

Medicare, on the other hand, usually doesn’t follow the retiree. It may cover in emergency situations in Mexico and Canada, a spokesman for the program noted, but otherwise not if one is living elsewhere abroad.

And regardless of the country, the American abroad must continue to file U. S. income tax returns, according to Internal Revenue Service public affairs specialist Shirley Nakagawa. This may be in addition to filing a tax return in the new country--although for some or all of this liability one may receive a credit against U. S. income tax.

Authorities on retirement abroad recommend renting, certainly at the beginning, and possibly indefinitely. “If you buy property, and your new country starts having economic or political problems,” Dickinson said, “you may have trouble getting your money out.”

Limits on Property

And some nations put limits on real property transactions by foreigners. Fred Andresen, president of the Harbor Group Ltd., a real estate marketing firm in Corona del Mar that specializes in luxury foreign properties, mentioned Switzerland--an expensive but desirable retirement haven.

“It is illegal for non-Swiss to purchase property unless such a transaction had been authorized in advance by the canton (Swiss state). And if a foreigner does get permission to purchase, there can be no sale of it to another foreigner until the property has been owned for five years.

“However, a home in Switzerland, once permitted, is well worth the effort.”

If the destination that the retiree has in mind does permit ownership, Andresen said, that person shouldn’t sign anything before getting trustworthy local advice, such as from an attorney or real estate specialist. And tour-group founder Parker pointed out that the best bet is to pay cash and forget about trying for a mortgage, which can be difficult or impossible.

As for willing any foreign property to heirs, a matter obviously of importance to retirees, Andresen recommended checking in advance with the consulate or with a tax lawyer.

If you are headed abroad with the intention of finding work locally, forget it (unless you have sought-after skills). Many places aren’t at all interested in your permanent presence if you may become a burden on their economies.

“Most countries you might be interested in have strict regulations on outsiders working, unless your field is something like dentistry or electronics engineering,” Howells said.

“In Spain, for instance, it is very difficult for a foreigner to be allowed to hold a local job. In Costa Rica, you are allowed to stay if you apply for and obtain Pensionado status, by proving you will have a steady income from a private pension plan, investment income and Social Security.”

Spain a Magnet

Like Costa Rica, Spain’s relatively cheap living is becoming a magnet for many. The majority of Americans live in the Costa del Sol facing the Mediterranean, where Dickinson said he hears that a couple can live well on $1,400 a month. Howells quoted one expatriate: “Come on over and enjoy your retirement, but when you see medical problems coming, go home!”

As Howells relates in “Choose Mexico,” a book he co-authored with Don Merwin: “$400 a month, judiciously spent, will provide a couple with comfortable and attractive housing, meals out when you like, possibly a part-time servant, and a reasonable amount of travel.” Inflation in terms of the peso has been high, Howells said, but if retirees have kept their funds in the United States, the currency exchange rate has allowed their buying power to remain relatively stable.

Another pensioners’ paradise reportedly is Portugal. Particularly popular is the Algarve region along the southern coast. “Compared with other European countries, including Spain, Portugal has always been relatively inexpensive,” Dickinson said. Parker said she and her husband, Joe, have purchased a fully furnished house overlooking the Atlantic there for $85,000.

On the other hand, Argentina, which attracts American retirees, was rocked by food rioting last month in the wake of skyrocketing inflation. The political climate in Costa Rica has been stable so far, but there is no hiding the fact that its neighbors are Nicaragua and Panama.

For many retirees, however, the advantages outweigh any potential perils.

“The truth,” 76-year-old Walter Vela said from Montevideo, “is that my pension would be insufficient in the United States for my wife and I to maintain an acceptable standard of living such as we enjoy in Uruguay.”

Vela, a Phi Beta Kappa graduate of Swarthmore College, had been a Latin American economist for General Motors, advising GM on sales and plant locations.

“They treated me well, but as regards the pension, you mustn’t confuse General Motors with Generous Motors,” he quipped.

Amount Needed for Housing

In 1975, he and his wife, Betty, 56, decided to make Montevideo their permanent retirement headquarters. “It takes from $1,500 to $2,500 a month for an American couple to live,” Walter Vela noted. “A large house sells for from $110,000 to $300,000, a good condo goes from $80,000 to $150,000. For rentals, a two-bedroom apartment is from $600 to $1,000.”

Vela said gasoline is expensive--about $2.50 a gallon--but because of excellent public transportation, a car isn’t necessary.

“Health care is superb,” he said. “There are well-qualified physicians, and excellent hospitals, which charge around $100 a day for a semi-private room.”

As author Howells points out: “The nation’s literacy rate is an incredible 97%. Education is both free and compulsory.”

Vela, who has lived in various communities both in the United States, South America and Europe, said the towns in Uruguay are the most crime-free he has ever known. In the resort of Punta del Este, he said, “my wife and I can go for a walk in the woods at night without any worries.”

And in that community, Howells writes: “A dinner is an elegant restaurant will cost $3, and a taxi ride just about anywhere in town $1.50.”

The only significant drawback for him and his wife, Vela said, is that it is rather a long flight to see their daughter in Connecticut and son in Florida. And since English isn’t commonly spoken, Vela strongly recommended learning Spanish.

“But we have never considered retirement in the United States,” Vela said. “Life is too good here.”

From Costa Rica, Curran echoed those sentiments.

The interest his savings account generates, “plus a small pension I began receiving from my former employer when I reached 55, provides more than I need to live on.”

What does he do with his time? “As little as possible,” he replied.

“During a day I may work in my garden a little. I have orange and banana trees, and vegetables. Occasionally I go on drives around the countryside. I sometimes speak before groups of visiting Americans who are considering making the move. I watch TV and read, both in English and in Spanish. My two German shepherds keep me company.

“The cost of everything is ridiculously low. My maid works here for five hours a day, two days a week, and charges $3 each visit. Lettuce costs 5 cents a head. A meal in a first-class restaurant runs about $5. A first-run American movie is $1.50. Government-run health insurance is $20 a month. Cable television service is $10 a month.”

Do you know the way to San Jose?