Given all of the craziness going on in the Western world right now, it is not surprising to see that interest in emigrating away from formerly prosperous hellholes to greener pastures is rising rapidly. LRFotS Randale6 has another question for me, about how much it actually costs every year to move overseas and stay there:
Related to my previous query how much money would I need squared away in stock market investments to live comfortably overseas somewhere such as Latin America, southeast Asia (assuming the area ever opens back up, the fear porn is strong) or parts of eastern Europe (if Linh Dinh’s writings are anything to go by Albania looks heavenly).
By comfortable I don’t mean the latest and greatest tech, servants at my beck and call or the best infrastructure in the world. I just want to be able to live decently, have a family and wake up every morning by telling the sun to fuck off.
This is a pretty tricky question to answer, actually, as there are a number of confounding variables involved. But it’s not hard to form an initial estimate.
Before I proceed, I have to issue the usual set of disclaimers, because this is the sort of area where you can get into a LOT of trouble if you take (or give) bad advice.
I am not an investment, tax, legal, or accounting professional. I am not certified to give advice on these subjects, in any way. All I can do is speak (well, write) from my own experiences. I am not making any buy, sell, or hold recommendations about specific STONKS or any other assets here. I absolutely do not advise you to break the law, whether that be related to taxes or immigration.
You take my advice at your own risk. If things go tits-up for you when you try what I’m talking about here, it ain’t my fault, because what worked for ME may well not work for YOU.
Always seek out professional, licensed, competent advice when dealing with legal, tax, or investment matters. Never go by what some fly-by-night operator of some website full of alcohol-fulled rants and tumbleweeds has to say about ANYTHING. Always do your own research about local requirements and regulations before you embark on any venture.
Basically, do due diligence, dude.
Right – that’s the boilerplate stuff out of the way. Now let’s get on with the important stuff. And, yes, what I’m going to write below is designed to help you to do the due diligence…. dude.
The Handy-Dandy Cost of Living Calculator
The very first tool that you need is a CoL calculator, to give you a rough idea of how expensive or cheap a location is, compared to where you are living now.
Expatistan has one of my favourite such tools. They have several, actually, some of which are pretty useful:
- City-based cost of living index calculator;
- Country cost of living index calculator;
- City-based comparisons of cost of living;
- Country-based comparisons of cost of living;
- Salary requirements calculator – though this is something you have to pay for, and I don’t think it’s worth the cost;
For these examples, we’ll be looking at the cost of living comparisons between different cities, because those costs can vary dramatically between different cities of various countries (rather obviously).
If you didn’t buy my Limitless Living course, that I did with Kyle Trouble back in 2020, then this is your lucky day, because I’m about to share some of the things that I put into that course, right here, for free.
Here are the comparative costs between Moscow and several big Western cities, to give you an idea of how expensive the capital city of Russia is, relative to them:
On average, therefore, Moscow is about 60% or so cheaper than the biggest US cities.
Now, this isn’t a terribly fair comparison. The cost of living In LA or New York F***ing Shitty is BONKERS. Having lived in and around NYFC for over a decade, I can tell you that, when you add up everything, including sales and income taxes, a $100K income there feels like less than $50K – because it effectively IS.
So let’s take a much more normal sort of case.
Going from Jackson
The median earnings of male workers in 2020 amounted to roughly US$50K. That’s MEDIAN, not average, earnings – I’m using the median because places like Washington, D.C. and NYFC massively distort the picture.
According to this data, Jackson, MI, has a median individual income of about US$45K, pre-tax, per year. Since Randale6 mentioned Latin America, let’s take a look at the cost of living in Cancun, Mexico – which is supposed to be actually a really nice and safe place, from what I’ve heard.
As the site says, its data are not complete, but if you can make do with US$50K or so in a place like Jackson – which, insofar as I understand such things, ain’t exactly a hotbed of cosmopolitan living – you can get away with US$32K a year in Cancun.
That comes to US$2,600 a month – again, PRE-TAX, and that’s a VERY important qualification – that you will need in order to maintain a median standard of living.
You can repeat that exercise for any city you have in mind, using your own personal city as a baseline. If we stick with Jackson as our benchmark:
- Rio de Janeiro: 40% cheaper
- Bogota: 50% cheaper
- Tbilisi: 58% cheaper
- Hanoi: 48% cheaper
- Odessa: 59% cheaper
- Rostov-on-Don: 60% cheaper
Solve for X
Well, that’s all fine and dandy, but what does that actually mean in terms of how much you need to have invested?
This is, again, VERY hard to do, because it is essentially a series of forecasts. An entire retirement-planning industry exists to come up with complex mathematical solutions to this problem. It’s not something that anyone can answer straight away.
In order to come anywhere close to an answer, you need to have the following information, at minimum:
- How much you have saved, in cash, right now;
- How much you expect to withdraw each month;
- Your expected domestic inflation rate;
- Your expected rate of return on investments;
- How long you plan to withdraw funds (i.e., how long you think you’ll live off of accumulated savings);
That’s just the bare minimum. It gets MUCH more complicated than that. But here is one starting point – enter in whatever applies to you, and hit the Calculate button to get an estimate.
The generally effed-up nature of the US economy makes forecasting very tricky. I fully expect serious inflation to hit within the next few years – actually, it has ALREADY hit, and we are all enjoying the, uh, “benefits” of rampant inflation right now. Mathematically, the total fiscal and monetary collapse of the USA (and other Western economies) is absolutely guaranteed. There is no way out of that black hole anymore.
This means that inflation and return estimates are going to be WILDLY out of whack, which in turn means forecasting is very hard. I reckon that inflation will probably stay at around 10% for years to come in the USA, and that means that stock market returns will probably be breakeven at best – i.e., they will not outstrip inflation, for years. The historical nominal rate of return on the STONK market has been about 10-12%, which gets you to a roughly 7% real rate of return.
But that was before the over-credentialed, over-educated idjits of the Modern Monetary Theory school of economically and historically illiterate whackadoodles took over just about every mainstream economics department in the country. Today… who knows what could happen, other than imminent collapse?
With all of that said, I would say that US$400K in savings, for anyone under 40, is your likely target if you want to retire to somewhere in Southeast Asia, Latin America, or Eastern Europe.
If you want to head overseas and you have less than that – even maybe a lot less, say around US$200K or so – then you can still manage it. You will simply have to pare down your living standards a bit, and you will need to look into the possibility of setting up your own business elsewhere to generate streams of passive income.
That is beyond the scope of this post, and I’ve already created a full course on the subject – if you want the full banana, then you’ll need to wait until I “remix and remaster” it, so to speak, and release it again. (Yes, it’s delayed. I’m working on it. Slowly.)
Eating with the Tax Collectors
Now, remember, that’s BEFORE TAXES. And taxes are a HUGE confounding variable here.
Let’s say you have $400K in savings. Unless you are very lucky, or you are Walter White, or you have gone about things a lot better than I have, you probably don’t have that in hard cash under your mattress. Instead, you have that tied up in 401(k) and stock investments in various retirement schemes.
Understand that if you withdraw that money in your 401(k), Rollover IRA, or personal stock account, no matter what you do, YOU WILL PAY TAXES ON THIS. And those taxes are steep.
The US capital gains rate bounces between 15% and 20%, depending on which group of losers is in charge – Daemoncrat, Republicuck, doesn’t matter. The early withdrawal penalties on your 401(k) are 10% before age 59.5. Dividend distributions are taxed as well, and fall into the 0%, 15%, or 20% buckets.
No matter what you do, you’re gonna get screwed by Uncle Sam. Seriously, the US government seal ought to be a giant buttplug, not an eagle.
The Illusion of Beach Bumming
That approximate target, of around $400K, is likely to keep a single man going for a long time. But it is very unlikely to be sufficient to raise a family over a lifetime. Take it from someone who knows what it’s like to date an Eastern European woman – no matter where you live, no matter how relatively modest she is in her habits and desires, and no matter how low the cost of living is there, the moment you get involved with a woman, YOU WILL PAY FOR IT.
Men generate wealth and resources. Women consume them. It’s really that simple.
More than that, though, men are, in the words of Kim du Toit, working dogs. We need a purpose in life – we have to have something to do. Sitting around on the beach all day long gets OLD, really fast.
For that reason, it is worth considering setting up your own business overseas.
Now, this is, again, where the tax-man bites. If you are a US citizen or permanent resident – if you have that coveted blue passport or green card – then you are on the hook for income and capital gains taxes, no matter where you live. You have to pay the difference between your local tax rates and the applicable US rate for your income.
(The US, by the way, is one of just TWO countries anywhere in the WORLD that taxes its overseas citizens and PRs for the, uh, “privilege” of being under US sovereignty. The other one is Eritrea, an African shithole that is, oddly enough, majority Christian. That tells you quite a lot, really, about the nature of the
Pox Pax Americana.)
Now, if you live in high-tax, socialist, Euzi-run, milquetoast cucked-out locations in Europe, then you’re fine (Freaked-out, Insecure, Neurotic, and Emotional), because tax rates in those countries START at 40% and get higher from there.
But, if you move to a low-tax country in Asia, or to Latin America, where taxes are viewed less as an extremely unpleasant obligation, and more of an irritant to be avoided wherever possible, then you’ve got a big problem.
This is where the Foreign Earned Income Exclusion comes in. You can deduct foreign earned income up to US$112K, as of 2022. This is very useful if you want to avoid dealing with the massive headache of double taxation between the US and elsewhere – I highly recommend taking a look into it if you are thinking of setting up an overseas business.
Conclusion – Freedom Ain’t Free
There is a lot of additional scope for exploration here. I haven’t even begun to touch on how to build a passive-income portfolio, or how to use modern financial innovations like cryptocurrencies (and now stablecoins) to lock in some of your gains from crypto trading. But the basic answer is that you’ll probably need a decent pile of money, either in cash, or squirrelled away in securities, before you can contemplate getting out of the collapsing Western world.