Living in a new country can be a daily adventure – if you are mentally prepared to embrace your new way of life and home. Every day will be different, with ‘new’ food, locals, traditions and public holidays to navigate. It will be demanding, but exciting, interesting and, depending on your chosen destination, the language will certainly be a top challenge.
What makes moving so stressful?
The reality is that there are many issues that can make a mountain. There is no one cause of stress when it comes to moving countries. In short, change is stressful, or as the medics call it distress instead of eustress (or beneficial stress).
The adjustment chapter for expats
Again, it cannot be emphasised enough, be mentally prepared. Within 12 months, maybe sooner, you will be into your new routine. Half asleep, you will soon know how to find the “loo”, the bakery and where to service your car. The trick is to engage with the expat community – particularly if you are not working or do not have the opportunity to meet other parents at “school”. Your new country should offer the sports, culture, and hobbies you enjoy or always wanted to get into.
These are factors in choosing a destination that may help to relieve some stress:
- A first world country
Let us assume that most people who are considering moving countries are leaving an emerging country for a better quality of life. That starts with choosing a developed or mature country that follows typically the western way of life. A democracy and economy that is stable and provides personal security. Where the rule of law is enforced against offenders and corruption is controlled. Modern-day life unfortunately wherever you go includes an element of corruption.
The golden visa programmes being offered by first world countries like Spain, Ireland and Cyprus are your way into a first world country. For an investment in the country, typically property, permanent residency is obtained.
The minimum investment for Cyprus would be €300 000, Spain €500 000 and Ireland €1 million, plus Vat for Cyprus of 5% for a first-time purchaser otherwise 19%; 21.5% for Spain; and 13.5% for Ireland. Once five years of physical residency is acquired in Cyprus, one gets citizenship in year seven. In Ireland, one gets citizenship after year eight and in Spain after 10 years.
For “mature” expats this is not crucial. For children and students, the best possible gift a parent can give is EU citizenship as it opens up a future and career paths.
Proof of no criminal record is required in most/all countries.
- Earning hard currency income, passive income or a combination
Life expectancy for healthy and physically active individuals is edging towards the nineties. This is great if you have the quality of life – which is largely dependent on financial freedom.
Most only plan their finances to age 65 and thereafter outlive their retirement cash and income – instead of planning for the 20 to 30 years of income that is needed. With the rand self-destructing, the situation is exacerbated as most goods and services are imported and affected as imports are in hard currency prices.
This means if you require R50 000pm after tax to live on today, then at an inflation rate of 6% the purchasing power of your income will halve every 12 years. When you turn 89 (retiring at 65) you will probably be homeless and eating dog food. Don’t believe me? Put another way, today you need R50 000 to maintain your lifestyle; tomorrow you’d have to live on R12 500pm. Can you do that?
Not scared yet? Most of what you consume in an emerging country like South Africa is imported. “No, I live a simple life!” Think again, take the cost of bread: the biggest input cost is transport (read fuel, which is imported and paid for in US dollars). The price of bread is up over 400% over the last 15 years. This means if you take an average of 5% rand depreciation, then every 6.55 years your money halves in purchasing power (using the Rule of 72). Can you live on R6 250 pm (Rule of 72) today? If so, how do you think this will change in 20 years’ time?
The solution is to work, semi-retire or retire if you are financially independent in a first-world hard currency country such as those in Europe, using the euro, with a low inflation rate. EU Europe is the largest economic bloc in the world, with 500 million consumers. This provides economic stability which supports/props up its hard currency, the euro. The rand has depreciated by over 7% in US dollar terms over 40 years.
The fourth industrial revolution enables you to relocate, continue your career, or change careers. The traditional retirement model of 65 is history for most. Earning passive income in euro, US dollars or sterling, with a proven hard currency asset class like property, where rentals adjust with inflation, or working and getting paid in a hard currency, or a combination of both is paramount to maintain your lifestyle standards.
Ensure your chosen country provides quality and affordable healthcare.
- After-tax returns count
Earning hard currency is the start. What you bank after tax is what counts. Ensure there is an equilibrium between social services provided by your new country and the tax you pay for these services. Countries vary widely in tax attitudes.
The lowest rate available for corporates in the EU is 12.5%, in Ireland and Cyprus.
Personal income tax in Ireland starts at 20% and the next band is 40%. Cyprus has zero tax up to €19 500 per taxpayer, topping out at 35%.
There are no inheritance taxes in Cyprus while Ireland is 33% above the threshold. This is not applicable to spouses.
Relocate, Semi-Retire or Retire in the EU
So, for the next 20 to 30 years, whether you’re working by choice or necessity, about to retire or are retired, you have choices. But I recommend emigrating to first world countries with a hard currency and reasonable taxes. It’s all about peace of mind in our Autumn years.
How do you cope with moving to another country?
Here are some tips that Google provides:
- Research the culture of your new country …
- Learn the language basics …
- Accept that you might feel homesick …
- Create a familiar and comforting space …
- Get out and explore …
- Eat local delicacies …
- Go out and socialise …
- Prepare yourself mentally