Consider Offshore Retiring And Investing

Consider Offshore Retiring And Investing

As Baby Boomers retire in droves, many are downsizing their homes to reduce their expenses to free up money to enjoy things like traveling, recreational activities, and spending time with family. Many are moving into manufactured homes, apartments and other affordable options.

 
With 2020 in the rearview mirror and the pandemic has altered our way of life, impending retirees are reassessing their needs and priorities as retirement approaches. With social distancing ingrained in our psyches and our actions, many retirees seek an alternative to close quarters senior housing or apartment living.
 
One alternative that is gaining popularity is retiring offshore – in the Caribbean. The Caribbean?
 
The Caribbean doesn’t even cross many potential retirees’ thoughts regarding potential retirement destinations because they assume it’s too expensive. That’s because only expensive destinations like the Bahamas, Barbados, Antigua and Barbuda, Saint Barthelemy, Curacao, and the British Virgin Islands come to mind.
 
What many retirees don’t realize is that the Caribbean region is vast – including more affordable countries in Central America that are still part of the Caribbean community of countries. Some of these countries include Costa Rica, Panama, and Belize, where the dollar will go further because the cost of living is lower – making for a higher quality of life.
 
Many Central American countries have significant retirement incentive programs for qualified retirees. Between the benefits of those programs and the relatively lower costs of living for things like medical care, transportation, utilities, and many goods and services, the quality of life to the living cost ratio drastically improves for many retirees.
 
According to nextavenue.org, 53% of ex-pat retirees living abroad in Central America were “much happier” than before they relocated.
 
The top four reasons given for this happiness were:
 

  • The Cost Of Living Is Less.
  • They’re Less Stressed Than Before.
  • They Have More Opportunities To Give Back.
  • They Love The Simpler Life.

 
So why downsize to an apartment, mobile home, or senior community when you can spend retirement in a bungalow on the beach in the Caribbean with far lower living expenses?
 
With the stock market trading at record highs recently, many experts are screaming “bubble!” The market is bound for a correction. It’s a fact of life. The stock market has regained everything it lost in March of 2020 in the early days of the pandemic, but just as quickly as those paper profits were gained, they could just as easily vanish – just as they did during the Financial Crisis of 2008.
 
Instead of a traditional retirement plan, many future retirees are taking a different approach. They’re acquiring their beach house years in advance and earning income from that property as they inch towards retirement.
 
Their future retirement home is now an investment property backed by a tangible asset. Unlike the stock market, where gains and assets can be wiped out in a day, this is less likely with an illiquid asset like real estate that has historically and reliably appreciated over time.
 
Real estate may dip – as it did in 2020 – but historically, real estate has proven to be resilient and has consistently appreciated over time.
 
Why not consider offshore alternatives for your next investment allocation?  
 
Here are some of the major benefits:
 
Diversification.  The next market crash will wipe out non-diversified portfolios. Just ask those who lost more than half their retirements less than a decade ago or those who saw their portfolios shrink more than 30% from the COVID-induced downturn last March.
 
Real estate is a hard asset that doesn’t just get wiped out overnight. It may dip, but the long-term has proven its resiliency. By adding offshore real estate to a portfolio, investors can diversify across asset types, markets, and even currencies. That’s because not all world economies are perfectly correlated.
 
Take 2020, for example:  In the second quarter, when national economies were most devastated by COVID, some countries fared better than others. While the UK saw its GDP shrink by more than 21% on one end of the spectrum, countries like Taiwan, Finland, Lithuania, and South Korea only saw dips in their GDP of less than 5%.
 
Diversifying across different jurisdictions mitigates losses in markets highly correlated to global downturns with less correlated economies.
 
Access.  In Central America and parts of the Caribbean, property ownership opens up doors to residency, allows you to open local bank accounts, invest in a business or corporation, and exercise other residents’ rights and privileges.
 
Establishing accounts and a relationship with an international bank in a desired offshore location can be invaluable. A good international bank can provide information about tourism trends, the types of loans that might be available, and comment on the feasibility of investment properties or future retirement homes in a particular location. They also offer asset protection because, in most cases, they have no legal obligations to disclose or even report account holder information to foreign authorities.
 
Asset Protection.  Investing offshore moves your wealth and assets out of the reach of many seeking deep pockets. Offshore assets don’t show up in commercial asset searches used by attorneys, creditors, and law enforcement.
 
Also, foreign real estate is one of two assets exempt from foreign assets reporting on IRS form 8938. Precious metals are the other exempt asset.
 
More Room For Appreciation.  Growth in emerging markets will, over time, outpace growth in developed economies of the U.S., Japan, Europe, etc., where populations are getting older and with plateaued population growth. Emerging markets like those in Central America have young, fast-growing populations who are underserved, lacking the consumer goods we take for granted. Offshore investing in those areas promises to deliver higher growth while acting as a hedge against volatility elsewhere.
 
Why Belize?
 
Stable Government.  Diversification is meaningless if the country in which you’re investing is prone to economic and political upheaval. That’s why Belize is gaining a lot of attention from foreign investors.
 
A member of the British Commonwealth, Belize’s legal system is based on British common law. As a result, Belize has a stable, democratic government, the economy in Belize is stable and balanced.
 
The offshore financial services industry in Belize is also highly regarded and well regulated. With stable political and financial systems, investors can rest assured that their investments won’t be disrupted by political or economic upheaval.
 
With a stable government and financial systems, Belize is poised for growth and, with its stability, will be able to handle that growth.
 
Residency.  In Belize, foreigners purchasing land or property are afforded the same rights as Belize citizens regarding property ownership. Additionally, there are no capital gains or inheritance taxes in Belize.
 
Belize has also implemented a program that allows foreign Qualified Retired Persons to make an application for long-term residency in Belize and, if accepted, to live in Belize completely tax-free for life. The simple qualifying process as a Qualified Retired Person exempts retirees from the payment of all taxes and levies on all income or receipts that accrue from a source outside of Belize (whether income is from work performed or an investment).

 

Booming Tourism and Economy.  Before the pandemic, Belize was gathering momentum economically – backed by strong tourism indicators.
 
In 2019, Belize saw record tourism increases, with a more than 2% increase in overnight arrivals.
 

 
Despite the dip in 2020, Belize tourism is expected to rebound by the second half of 2021.  The reasons for optimism for a Belize tourism rebound include:
 

  • First, Philip S.W. Goldson International Airport (BZE) opened in early October for international flights to and from Belize.
  • Second, American Airlines has made international flights much easier with at-home testing before boarding your flights. In fact, they just continued their direct flights between Los Angeles and Belize City.
  • Third, the rollout of the COVID-19 vaccine will only improve travel.

 
Now is the Time to Act.  With its real estate market tied to tourism, the lull in the real estate growth pre-pandemic presents tremendous opportunities for investors looking to participate in the post-pandemic bounce fueled by the expected tourism rebound.
 
Even before the pandemic, the Belize real estate market was far from maturing – with values and opportunities still to be found. That is why now is the ideal time to strike while the market is poised for an upswing.
 
By investing in real estate in popular offshore destinations like Belize, you can protect your portfolio from market volatility, protect your finances with a tangible asset, and secure your future lifestyle all in one.
 
Fortune favors the bold, and fortune will favor those willing to look offshore for their next investment allocation.

About The Author

John Turley
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