No. of Recommendations: 3
<< Initially, I'd want to bring a significant amount of cash over and put it
somewhere that is not losing ground to inflation. >>
Since inflation is what's under consideration, here's how I think about it for
myself. What are the areas that inflation will affect me, whether living abroad
or in the US?
1. Housing
2. Transportation
3. Food / Clothing
4. Medical Care
5. Travel / Entertainment
In my situation, housing will be my highest expense (either directly through
renting or opportunity cost). After living here for almost two years, I decided
to purchase an apartment in a neighborhood where I wish to permanently reside.
Contrary to friends who tell me that I've made a great investment, I'm aware
that it's an indulgence. ;-) But it's an indulgence with a nice side effect:
it's a localized hedge against currency/inflation risk for my future housing
costs. Utility costs will rise with inflation, but they're minor.
Since I don't own a car here (nor desire to), my transportation costs are
virtually nil. The cost of public transportation is negligible. Uber is cheap
and I can rent a car for special trips if necessary -- though I haven't had the
need to.
Food costs can be relatively high because I eat well, but it's an expense
that I have a fair degree of control over. Similarly with clothing. Being
retired and living in a warm climate means that only luxury items will have much
affect on my budget. (Grand Seiko Snowflake, maybe?)
Medical care is much less expensive than in the US, even if I didn't have
private insurance. It's obviously one expense that will rise with inflation, but
I don't expect it to rise to US levels in my lifetime. I could argue that what I
saved in COBRA medical insurance effectively paid for my rental housing during
my first year here.
I was almost about to say that travel and entertainment is discretionary, and
technically it is, but it wouldn't be much of a retirement if you couldn't enjoy
the perks of your free time. On the other hand, once you travel outside Europe,
your euro currency hedge won't matter as much.
So I basically keep the bulk of my funds in the US, transferring them to
replenish here periodically, 2 or 3 times per year. I'm not adverse to investing
internationally, but I don't have any compelling reasons to at this stage.
I should also say that this post is from the perspective of someone who might be
on a tight budget, which I'm thankfully not. I'm not sure what kind of event it
would take to price me out of living here, but my worst case scenario would be
simply moving back to the US.
Just one person's perspective.
-Rubic
