How to escape America

As I said before, Escape America is part of my long term plan for my retirement. I have already worked for years on my own plan but I'm also happy to share some interesting thoughts and stories about this theme from others. Here is the one I just saw that I hope you can enjoy as well.

"Geo-Arbitrage": A Simple Strategy for a High-Quality Retirement

Jeff D. Opdyke · October 6, 2021 ·

Today, I play the role of thief. 

I am stealing a word: geo-arbitrage. 

It's a great word. I saw it in a story in Next Advisor, some kind of personal-finance website tied to Time magazine. Never heard of the site before. But it popped up in my newsfeed with a story about a guy who moved his family to the Carolinas from New York so that he could save more money and retire early. 

But even in the Carolinas, where he was saving 20% of his income, his American life was still too costly for him to retire by age 59. 

So, he devised a new plan: Move to Panama and retire by age 54. 

He calls it "geo-arbitrage"—leaving the U.S. and retiring abroad as a way to achieve financial independence because U.S. dollars stretch much further than they do at home. 

I like that word, that concept. It's perfect, really. 

By now, you know my spiel: America, for all its greatness, is an expensive place to live your life. Even small-town America is an expensive proposition, largely because of healthcare, insurance, transportation, and food costs.  

I've used this example before, but it's such a fine example I'm going to use it again. The cost of living in Valencia, Spain, right along the Mediterranean shores, is less than Biloxi, Mississippi, on the Gulf of Mexico. Not knocking Biloxi—spent many a summer's day on the beach there; had family in nearby Gulfport. 

But Valencia has more than 2,000 years of history. It's littered with ancient, cobblestone streets, alfresco cafés, and an Old Town that sweats ambiance. Beautiful apartments in the heart of the city—meaning no need to waste cash on a car—rent for $900 to $1,200 per month. The food and wine is ridiculous in its quality and taste, and even more ridiculous for its cost relative to the U.S. 

Healthcare is high-quality in Spain, and the cost is peanuts compared to what we're accustomed to in America. And if you're a retired expat with a residence card in Spain, healthcare is free. 

Honestly, examples like that are all over the world. Uruguay, Portugal, Panama, Greece, France, Italy, Costa Rica, Mexico, Thailand…I could go on. 

We Americans are in the catbird seat globally. We earn Uncle Sam's Monopoly money, and because the U.S. is so very expensive, we earn a comparatively large amount of Monopoly money relative to what it costs to live elsewhere in the world.  

That is the geo-arbitrage. 

You take lots of dollars, and you turn them into a far-greater standard of living somewhere else. 

In doing so, you're not only stretching your dollars farther, you're reducing—maybe eliminating—whatever financial fears you harbor about running out of cash in retirement. 

Literally, there are beautiful places in the world where even an average Social Security check will cover all or most of your monthly living expenses.  

That's another angle on this geo-arbitrage idea: You're turning a permanent stream of income—Social Security—into a lifestyle that Social Security alone could never afford anywhere inside the U.S. 

You likely already know this is my plan. 

Having lived in Prague now for three years, and having grown accustomed to a much simpler, safer, cheaper, and more-relaxed European pace of life, I really can't see myself returning to the motherland in retirement. My quality of life would plunge simply because my costs would explode higher. 

For every place in the U.S. I think I might like to retire (the mountains of eastern Tennessee, Washington's Kitsap Peninsula, the forests of Maine or New Hampshire) there are doppelgängers I've found in Europe that are wallet-pleasingly less expensive.  

And because I (hopefully) will have a Czech/EU passport in just over two years, I'll own the continent. I'll be able to trade whatever destination I settle on for winters in southern Portugal or maybe on a Greek island…and I'll not have to pay the beachfront prices I'd be hit with in the coastal U.S. 

Wherever you are in life's journey, think about this geo-arbitrage idea. 

It's a way to live a far richer retirement than you might otherwise think is possible.