The Future for Retiring Gringos

There are more and more usanos considering expatriation as the way they can deal with living on their US-based retirement income. Our primary interest on this site is, of course, how Nicaragua may (or may not) be a reasonable choice.

If you are one of these folks, it seems unrealistic to just assume there will not be changes back home in your retirement income. Beyond the fall in real value of the US dollar and many other fiat currencies, there really is the future of what you saw as stable retirement benefits to consider.

An article in TruthOut paints a realistic look at what is happening without the typical fact de-regulation so common of what politicians have to say about the situation.

Since the recession began in 2008, according to U.S. General Accountability Office (GAO), 35 states have cut pensions for many of the country’s 27 million teachers, police and other public employees.

Furthermore, GAO’s March 2012 report says that nationwide, one in four state and local government employees cannot fall back on Social Security, because many states opted to stay out of the national retirement program.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Always Look on the Bright Side of Life :)

I've heard of a couple of quick "surveys" here and there where people favor reducing retirement benefits for those already retired. Which may happen. Which would be ugly for many.

Personally speaking, I quit my last job when I decided I'd rather die than keep working there. If things get bad enough, I can walk in front of a train. The only really bad part is that the nearby trains don't really go fast enough, but the tracks are an easy walk from where I live.

That is Plan B. Still on the shelf.

I do hear a lot of people raving about rich bloodsucking gummint employees. I've been there, and for the same reasons as other gummint employees: you make a lot less than private companies pay but you get decent benefits, plus a reliable retirement as compensation for being tortured every single goddam day.

Yes, compensation.

On one of my last jobs I sat next to someone making over $200,000 a year, doing the same thing I was. And not nearly as well.

I was making $43,000, thereabouts. Management loved contractors like him because, being expensive, and from the outside, they were obviously experts (or they wouldn't have been paid so much, doncha see) and yet they retained that spicy and oh-so-titillating dismissability, and could be used as cover for any kind of real incompetence on the part of management.

Which came and went in waves.

The U.S. Post Office, just to be clear, is not a wet dream of mine.

But.

Congress, during the last administration, mandated that the Post Office cover retired employee health benefits for 75 years into the future, and do it within a 10-year period. (I.e., pepare for people who have not even been born yet, and who may never actually work there.)

Which means that the Post Office would now be making a nice profit if not for that nutso requirement. Which requires it to pump $5 billion a year uphill into the big dark money tank.

But (another but), when the Post Office fails there will be billions and billions of dollars in benefits that will never have to be paid, and which can be conveniently raided, since the money can't, you know, just sit there. Which means, in turn, that all of us who use this service (like, also, UPS, FedEx, and DHL, as well as many other companies) are now paying money that will be shoveled out to future political operatives. For our own good. They will say.

So the real plan is to return to what the U.S. used to be. To what made it. To slaves and immigrants. (And since most of us aren't immigrants, by definition...)

First, kill all the unions. (Unions are also not a wet dream of mine, but serve as a check and balance. And no one ever says "labor unions", to distinguish what they are. No one ever says "management unions", which exist, or "owner unions", which also exist. And once you see that there are several kinds of unions you have to admit that it's a good idea. Managers have to work together. Owners have to work together. So labor is special somehow and exactly each employee must always, everywhere, be dealt with one-on-one? Eh? Nope.)

For those jealous of whut them hi-paying unioneers are making, and who want to give them a sharp jerk, hey. That is when the trapdoor opens and everyone falls. That is when the U.S. goes to global pricing for labor. Most people (something like 60% or 80%, or so) live on US$4 or less a day.

Being USanos and therefore better than anyone else, we will be allowed $5, or maybe $6 a day if we show proper obedience and gratitude.

And that's where that is going. It is going to get much, much worse before it can get better.

And those who plan on retiring on a reliable pension for 25 to 40 years, no. A lot of that will be clawed back. Many will receive a form letter containing a large black zero. And that will be it.

Working for one company for decades and then retiring and living in dignity and with enough money to do it did happen, but it was only for some, for a brief while. It is a dream that people believe is reality, like the dream that cutting lawns, shining shoes, keeping your nose clean and thereby, after working hard enough for long enough, you rise through the ranks and become filthy rich.

Which is the Herman Cain Plan: All children are above average and everyone who works hard will be in the top 1%.

Remember that as John Cleese said, what makes life so howlingly funny is that no matter who you are or what you do, you end up six feet under. Forgotten.

If life is uncertain, and it is, eat dessert first, and at least think about a Plan B.

We hope you never need it, but if you have it and know how to operate it, it is at least one last thing that you have complete control of.

No matter what else.


No Sniveling!

me too

Among other things , I worked for the govmint. I was paid much more than I would get in the private sector and had an unbelievable string of juicy benefits. The trade off, working under incredibly bad conditions and having to work twice as hard to compensate for the corrupt and inept management (i.e., sandinismo is nothing new to me!).

Pensions will be cut for all retirees and payments to all who are owned money by govmint and companies--it`s just that the numbers won`t change, we will all just be paid in inflated dollars that won`t buy much. The perfect fix.

Then comes the 401k bomb--if the average person saves enough to live for the average lifespan (they won`t save that much, but that is another issue), what does that really mean? It means that the half that live to the average lifespan will do well. The half that live past the average lifespan will run out of money. Do the math. How many greeters does Walmart need?

Another crunch-- early retirements from private, govmint, SS plans claim to be based on actuarial tables that say that there is no net loss to the institution for having early retirements at reduced benefits. No problem for the plan, but the retiree is in the same position as above--those that live long will run out of money.

Another crunch-- many people in the US have their retirement tied up in taxable plans such as regular IRA and 401k`s. Ok, so you got a tax break when you put the money in at a high tax rate and will pay the taxes at a lower tax rate when you retire. Well, this is not nec. so. For one, if you take money out of these plans for any reason, whether for emergency or to build a house in C.A or whatever, you get bumped into a higher tax rate! So you study the tax tables and only take out so much per year, but net net the tax man is controlling your money and your life. And get enough pensions, etc. in one year, and then your social security is taxable! Even dying isn`t the perfect fix--if your heirs want to cash out your IRA they get to pay the taxes at their currrent tax rate! Take a look at the Roth plans, both IRA and 401K, but the current generation of retrrees is generally in the old plans.

Don`t worry, be happy. The downsizing of the American , not to mention those whining Greeks, people will be in stages. Keep cool, mind your money, and you shouldn`t lose everything at once.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

The future for retiring gringos

Hi, I just submitted my papers for pensione status here. I have only $611.00 per month, but that seems more than adequate here, if things stay somewhere close to the same. My concern is the system of disbursement of COLA increases. The usual approach is to value a cross section of goods and compare the prices to the preceding year, then establish a percent increase based on the median S.S. income. That way, a two per cent increase would give me $12.00 more per month, and a person receiving $1800.00 per month $36.00. I believe that a much fairer approach would be to give everyone $24.00. That way, the gap between high and low remains the same, and the bottom does not get pushed down further every year. RWC

Those Cheaper States

I've looked at the cheaper areas of the U.S., have lived in some. If you own a home you'll need to pay taxes, insurance, and maintenance. While a cheap home in Nicaragua is perfectly respectable, in the U.S. a cheap home means you better have a thick skin about people's opinions. And a cheap home most likely will have costly repair issues. In a urban or suburban setting a cheap home may mean violent crime and drug issues. Rent in cities, even in those cheap States, means paying through the nose in nicer areas and still not that cheap in not so nice areas. You won't find $150 house rentals. Living out in the country means having a car, which will eat up any savings over living in the city. And even then most U.S. cities don't have adequate public transportation. The ones that do tend to be expensive cities. Then there's cold weather to deal with. Lack of fresh produce in many places. The U.S. is great if you have adequate income. A grind if you don't.

A cheap house here may also have repair issues

They're just not as costly. My neighbors and I have both put in our own work on the place -- they probably did more plumbing repairs than I have.

Basically, what you're saying was why I decided to come here. Two years July 29th.

I think you'd find that living in the cheapest houses wasn't quite as respectable as living in the better houses, but until you're fluent in Spanish, you won't know.

Far too many people are stupidly sentimental about living in the rural areas. Living in the country won't get you away from drugs -- a woman who moved her son to rural VA to get him away from drugs (among other reasons) lost him when he and his friends were doing amphetamines and speeding -- crashed the car, all died.

You still have to pay taxes here if you own property, and there's a charge for renewing your residency permit every five years if you go that route.

Rebecca Brown

I agree with you, house

I agree with you, house maintenance and taxes are everywhere. It'll just cost you more in the States. I've delivered in a number of rural areas in the States. I've run into plenty of meth heads and most likely meth labs. Most people are good people though. You'd be surprised, maybe not, by the number of Toyota Prius owners I see in the country. Got to deal with the high cost of fuel somehow and there's no local bus running into town.

The "Romance versus Reality" of living cheaply....

Vantexan, be ready for it to get "old" from time to time.

It does for me know and again and I really did live a minimalist life for the two years before coming down here. There's a difference in knowing its all there and having the mad money to do it if you get the urge, than being here and dividing every month by 28, 30 or 31 and maybe not having anymore than a daily survival rate.

Rebecca sounds like she has had her fair share of having to face life on life's terms before she got here. She (like me) lives centrally, rents cheaply and walks. I agree that "country living", especially in a new country has its own problems and can cost more than expected but may work for some. Internet is a Godsend for retired folk, hours of cheap amusement live or to be downloaded on a device for later. It offers a feeling of being connected...but you gotta be connected!!

Of course, the same does apply if one is retiring in the States on a low income, except that there are more safety nets if push comes to shove.

Let Me Introduce Myself :)

When I was 12 I worked 35 hrs a week for $1 hr pulling weeds in a large plant nursery in the Florida summer sun. Have been working ever since. I've worked for FedEx in -70F windchill factor in Kansas, in tropical storms in Mississippi, in 125F in Arizona. Have spent the last 3 years unloading thousands of pounds of freight M-F, even a month after my angioplasty. After my parents divorce we lived in 2 rooms of an unfinished house for 3 years before my dad got custody. Worked 30-35hrs a week while in high school while many kids were partying. Haved lived in a 26' travel trailer for 11 years and have lived in 3 places on the Mexican border. And for good measure have done the big city thing too, having worked in downtown Seattle and in the NYC metro area. Your advice is excellent for someone not familiar with hardship but I think I'm ready to take on anything except maybe the worst parts of India. And if you are familiar with McAllen, TX/Rio Grande Valley, you know how hot and humid it is. Used to walk 3 miles each way to work for about a year. Have walked and biked in many areas, but that one was the most extreme. I expect after taxes my monthly income will be close to $1000, and I intend to save as much as possible for Christmas trips home. I'm ready, just waiting for my pension. And there's a real possibility FedEx may offer a buyout for couriers this year or the next. I'd get my full pension, should bump me up an extra $200 a month. Just have to be patient.

Then you'll be fine.

When I first came down, the best offer I got was my own room and bathroom, 4 hours of Spanish - 5 days a week, a daily breakfast and all the practice I could take... for $360 a month. I wish I had done that for 6 months or as long as it took. The deal probably hasn't changed much.

Govmint employees

have been riding the fat hog for a long time, so some minor cutbacks in their pension plans is not such a big deal. Frinstance, right after I retired with a normal retirement age of 60, my pension plan changed the normal retirement age to 62. Not the end of the world, and still better than what most private sector people are looking at. SEIU won´t scream too much--they are busy trying to recruit illegal aliens.

The real kicker for retirees, whether they are living in the first world or elsewhere, is the inflation bomb--you will get your check like clockwork every month, it will just be worth less . Same same social security. It will not go away, the govmint and corporations will just lessen their liabilities by paying in inflated dollars--or inflated Euros, as the case may be. Except Congress and ex-presidents--have your seen their bennies? A tad more than Social Security!

Starting a business or running a PRODUCTIVE farm may not be my idea of retirement, but it is something people should consider in anticipation of the inflation bomb. Zero debt and a frugal lifestyle will help , too.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

...

Pensioners from the developed world whose benefits have built-in cost-of-living adjustments should not assume that the COLA increases will protect them from inflation in Nicaragua. The real-world inflation rate here is much higher than up north.

For example, the cost of piedra de mano, one the cheapest cuts of beef, has doubled in less than 2 years.

In addition, there is a risk that the Nicaraguan government will implement a sharp increase in the minimum monthly pension amount that people need to receive in order for them to qualify for pensioner status (which by the way I think would be a very good idea).

I agree with Billy that people who retire here on out-of-country pensions should get started as soon as possible to find a way to make money to supplement their pension benefits. They only need to earn a modest amount to cover off the risk of Nicaragua's high inflation rate.

Nicaragua considered raising it to $1,000 a month

...but that would have put it in competition with Costa Rica and with USAnos who own houses in Mexico ($1200 a month if you don't own a house, less if you do). Nicaragua knows its market far better than the gringos who want to make money fast on retirees.

I suspect that the US will be happy to keep us up with inflation to a certain extent as it's cheaper to keep us here than it would be to have us back in the US applying for supplemental SS, food stamps, and all that. They've outsourced retirees.

Rebecca Brown

Us govmint and corps

couldn`t care where we live. They are locked in to pension plans at a given rate and how we spend it is out biz. The only thing about us living abroad is that we are not physically present to lobby, etc. Only inflated dollars will make their burden less.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

On the other hand

energy is another big player. In temperate climates, rising energy costs mean much more in your total budget than in a place where your space heating requirements are zero. Yes, cooking gas, the minimal electricity you may use and transportation costs can increase but that is small potatoes compared to space heating costs for Minnesota or Boston.

Another common difference is that here most people own where they live, in the US most people are paying the finance company. Right now, with effective interest rates below zero (that is, less than inflation) paying the finance company is a good thing but that could change.

There are lots of variables -- many people don't even consider until they have lived here or somewhere else in the tropics. I am working on some ideas that will offer more generic help (that is, not Nicaragua-specific) for people considering expatriation. Hopefully, I will at least have the structure in place in the next couple of months.

Medical

Retiring overseas is impediment for those who have free Medicare. My handyman lives in trailer park and pays probably $300 total for his living expenses-is a double wide he financed maybe 10k. He is happy on his $1300 a month SS and he does his odd jobs for extra money. He had a hip replacement and will soon need a knee replacement all courtesy of Medicare.

Point is you can live cheaply in USA too. You don't have to move out of the country. You can buy a used double wide and rent a 4-5 acre lot (or Buy) in the mountains Tennessee, Kentucky for cheap and have a Walmart and Home Depot less than 20 miles away. I have even seen lots for sale with streams rushing water so you can use that for energy as well. Another guy I know bought 4 acres in Lake Placid, FL and put a double wide on it-less than 40K-his closest neighbor is probably quarter mile away.

As gringos we have options to move around and is true most Americans don't use or consider retiring to other countries. The purchasing power parity of countries changes (ppp) over time vis-à-vis the US dollar. Costa Rica was great 20 years ago-no more. Im told right now Argentina is great value. South Asia has great value for Americans.

No doubt there will be a big squeeze going forward in terms of wealth and pensions. One example would be the postal service-what a loser as they are bleeding 2 billion a month and so many IOUs. I told my guy don't even bother coming unless there is a package-burning diesel fuel to deliver junk mail. Also when I go to the Post Office-I see those jobs as $9.00-$10.00 an hour jobs in the private sector. One old lady is moving around boxes and tidying the common area I see often-She is making probably 60k a year! Plus she will get 3/4 of that when she retires plus the SS she credited before she began working for the government. (Probably $400 a month)

This cannot be sustained. One thing is that in 40 years the baby boomers die off so past that equilibrium begins to take shape. But before that say 15 years from now to 35 years from now there will be serious inequities of older Americans. Those with pensions and those without.

As bad as the future looks for us gringos Nicaraguans have far worse future. There is more unskilled labor as a percentage of the labor force than any country I have been to. When you look at the wages people make $150 a month etc. for respectable jobs, Teachers, Fire, Police I don't know how they do it. A cell phone bill from Claro is at least $40 a month. I also see this systemic underemployment as a huge danger for the future of Nicaragua say 15 years from now. Ortega is keeping a lid on it for now but at some point another dictator or another go round with democracy you could have some serious unrest as half the country is under 22 years old.

Have to hit the send button but one thing about Charles Darwin and this idea that your going to be some 75-80 year old guy in Nicaragua with your walker making your way to the market or bus stop. You will be robbed! 50s and 60s less likely. This comes up because my friends sister in Nicaragua is 17 and very pretty was robbed of her $10 cell phone-The thug broke her nose which I am told did not heal correctly. This occurred in broad daylight-socked her in the nose, she dropped phone, he picked it up and ran away.

You're kinda off base on the USPS wage scales

Average is $45K and that is for all levels. A number of rural PO's are staffed by one person, and the private sector would not deliver mail to all locations.

The problem with low-balling the help in a P.O. or something similar is that folks tend to supplement their incomes by stealing. It happens in the USPS occasionally (I was on a Federal Grand Jury that indicted a PO employee who was stealing coins from envelopes kids mailed to a toy or comic book place in NYC), but more stuff of mine went missing through private enterprise (UPS a couple of times either stealing or lying about a delivery attempt; airlines with luggage -- don't fly out of NYC airports with checked luggage and anything valuable in it. I brought a monitor here in checked luggage from Dulles.

UPS people actually make out quite well -- union scale all over the US.

The poorest people here have prepaid phones that receive calls even if they don't have credit on them. So, you pick up C$10 or C$20 on triples or quadruples day, and make a phone call. Prepago is brutally expensive if you actually use the phone, but not if you simply use it so people can get in touch with you. I also think the lowest postpago phone service is something like $9 a month for phone lines and less than I'm paying by a bit for the cheapest cell phone service. My phone bill under a contract, with a small internet useage surchange on top of the base phone bill, and not the cheapest phone service, is C$538.30, a little over $23. I have an 18 month contract. Base rate without the add-ons is C$351.00 plus IVA. My data add on is C$70.05, which probably isn't one of the things most Nicaraguan would add to their phones (takes a more expensive phone, I think). Messages may be a forced add-on -- C$46.42, or they just figured I wouldn't fuss, so a bit over $2 extra that I never use up. My US phonebill with Verizon was almost double that and without internet. So, while phones cost more than what Nicaraguans make for basic service compared to what phones cost in the US compared to what people make, it's not as much as what a US phone would cost.

My impression of poverty in the US is that it's much nastier than being here on $600 a month or so. I'd consider a double wide trailer out in the boonies to be quite nasty. Crime in poor parts of the US is at least comparable to crime here in town. I wouldn't live out in the campo alone if someone paid me. It's for real farmers, crazies and anti-social people. Even my neighbors who have a finca spend more time in town.

We've got an expat on a walker here -- yes, he's been robbed once in several years of living here. I suspect that some of this depends really on how well you get along with your neighbors. That said, it's entirely possible that I'd go back to the US in my older old age. I'll probably get anywhere from $12 a year extra to I don't know how much for the re-issued ebooks. If that ever is significant money, I might move to Managua or Mexico, or hire someone to help take care of me.

Somewhere, I've read that predictions of the future more reflect the predictor than anything that manifestly happens. An Ayn Rand freak of my acquaintance in Virginia thought that in 20 years, the economy would collapse totally and the roving urban hordes would be a huge threat. Last I heard, he'd bought property in a black neighborhood in Richmond, VA, because it was cheap. He made that prediction in 1979 -- it's well over 20 years now and the economy hasn't really collapsed in such a way that the urban population has boiled out of the city to loot the country side. Funny thing was that an ultra leftist of my acquaintance was making the same predictions, but with the idea that this collapse would put the left in power. Both were crazy.

Human societies, even small ones, have tremendous inertia built in. Nothing good or bad happens fast. The parts of Europe that did cave art were also the parts of Europe that were the core areas of European art in the 18th Century. Nicaragua is still an indigenous culture (or cultures) assimilating Europeans and European technology, along with enough of the genetic material to give them better immunity to diseases.

Rebecca Brown