How to Retire in Tahiti
by Sue Stevens
Friday, November 16, 2007
provided by Morningstar.com


I gave a talk about retirement planning in Los Angeles in 2000. "Melanie," a widow who lost her husband to cancer five years earlier, was at that session and contacted me later to help her with a unique idea: She wanted to move to Tahiti and raise her son there.

Melanie had been a flight attendant for many years and had traveled the globe. "On my first trip to Moorea, French Polynesia, my mouth just dropped as I was struck by the natural beauty of the tropical vegetation and colors of the beach and lagoon; I fell in love with it immediately upon arrival and the Tahitians were exceptional, too. I went home to L.A. but became 'homesick' for Moorea. I flew back, two weeks later, with my only son Josh, who's 7 years old--he liked it, too. On my third trip, two months later, I made my decision to live there. And seven months later, I made that happen."

Caution: Do Your Research First!

Some of you may be thinking of retiring somewhere other than where you live now. When you are considering an exotic location like Tahiti or Mexico, it is especially important to do some homework first so you know what you're getting yourself into.

Melanie had the right idea when she spent time visiting the area where she wanted to relocate. She also found some books that helped her think through her decision. Particularly helpful to Melanie was The Grown-Up's Guide to Running Away from Home by Rosanne Knorr, which contained a quiz that asked some important questions including:

● Are you interested in learning more about other cultures?

● Are you willing to learn a new language?

● Are you adaptable when it comes to finding new interests and activities?

● Are you able to handle stress?

● Are you in good health?

● Do you have a sense of adventure?

"I said yes to all of the questions. ... I was on my way. I was ready to prepare myself mentally and physically for this adventure."

Melanie has advice for others who are considering this life-altering experience: "Talk to as many people as possible who have already had the experience. Make sure it's the right country for you, explore as much as possible--you'll know once you are there."

Expect a Few Bumps in the Road

I'm willing to bet that whatever your idea of paradise, you'll be in for a few unpleasant surprises. For example, when I moved to Pennsylvania to work for Vanguard, I chose to live in the beautiful rolling hills out in the country. It offered spectacular scenery, fresh air, and even a historic 200-year-old barn. I didn't know about the occasional snakes in the pool, that wells and septic systems are expensive to repair, and that bats in the barn can surprise you. I wouldn't trade the experience for anything (although I did eventually move back to the Chicago area), but there were a few hitches.

Melanie also learned a few lessons along the way. "Watch the languages if you must learn a new one. Sometimes your lack of understanding the words can mean you are taken advantage of. The hardest thing for me was getting over my intimidation when speaking French. I knew 'oui' and 'no,' but that's about it."

But for Melanie, the good far outweighed the bad. "The best experiences are waking up every day with a new adventure--whether it's small or not. As a widow, the thing I have realized is that life is short. So I strive to live for every day. I have gained more in my experiences of life from having an open mind. I love culture and people. It's always a new experience."

Finances Can Be a Little Trickier

Having worked with Melanie for the past five years, I know that it is a little more difficult to get all the financial details in order. You need a credit card company that understands the international client. You need banks that can wire funds to foreign accounts. It also helps to have family in the United States who can lend a helping hand when needed.

Melanie started with the insurance money and other assets she had accumulated with her husband. She sold her house, so she had no debt. She also has Social Security payments coming in while Josh is young.

At first, she rented a place in Tahiti. The atmosphere was more relaxed, and there was less emphasis on material things (although Tahiti is a fairly expensive place to live). Eventually Melanie decided it would be smarter to build a house and stop paying rent. That has proved to be more challenging that she originally thought. However, once completed, it will give her a more permanent place to live and some additional rental income (there will be a guest house built, too).

Melanie set up regular withdrawals from her investments. We sat down and figured out how much interest her portfolio would generate and calculated how much she could reasonably withdraw. A portion of this money was also used to pay for building her new home.

If you are thinking about retiring to an overseas location, here are a few guidelines to help you think carefully through your decision:

● Do a little investigation about the cost of living in your potential retirement location. What kind of housing will you require? Compare renting with buying. Try to itemize how much your expenses would be and then add a cushion for unexpected costs.

● Make sure you are out of debt before committing to a life overseas.

● Take a look at your portfolio and figure out how much income you can realistically draw from it. You may want to sit down with a financial advisor who can continue to work with you while you are overseas.

● Understand how you will be taxed if you are working overseas, and understand how that may affect retirement income.

● Keep in mind that you can collect Social Security overseas, but Medicare will not cover you if you live in a foreign country (with some limited exceptions).

● Don't assume that your health insurance will cover you overseas. Ask before you make a decision about relocating.

Melanie also cautions about doubters: "As I spoke of my new dream, there were skeptics. They'd say, 'No' and 'That's impossible.' It became a challenge until I could prove to these people that 'Yes, it is possible.' I have a sticker on my refrigerator that says 'LIVE YOUR DREAMS.' And I have, thanks to my great friends and family. They gave me the courage to move on and lead a fulfilling, adventurous life."

To learn more about living out your dreams, check out the following books:

● The Grown-Up's Guide to Running Away from Home
by Rosanne Knorr

● The Grown-Up's Guide to Retiring Abroad
by Rosanne Knorr

● How to Retire Happy, Wild and Free
by Ernie Zelinski

● The Joy of Not Working
by Ernie Zelinski


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