5 ms·

What happens to those people if the dollar plummets in value compared to native currency?

by donw 10y ago

kcorbitt 10y ago
Invest where you think you might end up. Or just invest everywhere; as a youngish American my (very small) future retirement stash is 50% broad-market US and 50% international (Vanguard VXUS). I think this is a reasonably prudent allocation for someone who isn't totally sure where they'll end up, which describes me.
deleted 10y ago
[deleted]
tedivm 10y ago
The answer is the same to a number of circumstances- diversify your investments so you can ride through short term market fluctuations and the more long term losses give you less of a hit.
curun1r 10y ago
If you're retiring to another country, it makes sense to open a local bank account and have a fairly substantial amount denominated in the local currency. Some retirement visas even require that. That should protect you against a temporary drop in the USD. A long-term drop in the dollar means something really bad happened in the US, which would likely be bad for people retired here too. Worst case scenario, if the USD drops, you come back having spent less of your retirement nest egg than you would have if you'd retired at home. Plus, having spent a good deal of last year in Southeast Asia, the dollar would have to drop precipitously for it to become a problem. It's very easy for two people to live on under $1000/mo there. Even with ridiculously conservative investments, you only need a few hundred thousand dollars to support that kind of lifestyle. Most people who own their own houses could make that happen.
- donw 10y ago
  Mind if I ask where in in SE Asia? I'm having a hard time coming up with a place where a couple of retirees could live reasonably on less than about $2k monthly (when factoring in age-related healthcare costs). Which is still probably close to a 40% savings over living stateside -- mostly due to medical expenses, of course. I suppose a follow-on question would be do these countries also provide for assisted living, once our retirees get to that age?
  - curun1r 10y ago
    I also spent time in Malaysia, Philippines and Indonesia and all were pretty cheap, but I had Thailand in mind when I wrote my previous comment. They have a retirement visa that means you only need to do visa runs every six months. The only requirements are age (IIRC it was above 50) and a bank account in with, IIRC, around $20K in Baht. I had a medical procedure performed there for which I had been quoted close to $1500 in out of pocket costs beyond what my insurance would cover here in the US. Without insurance, it cost just over $100 there. Dunno if that kind of savings would apply to all medical care, but that's my only data point. Other costs would depend on where you chose to live. Bangkok was more expensive and one of my least favorite places I visited. $2k/mo might be hard there. The islands and south coasts are a lot nicer and $2k/mo is a pretty reasonable target. Chiang Mai was among my favorite cities I visited. $2k/mo is more than you'd need there. Rent is ~$400 and a meal for two is $2-$6. There's a reason why it has a huge expat community...the combination of pretty, comfortable and cheap is hard to beat. For obvious reasons, I can't comment on the cost of an assisted living facility.
pjc50 10y ago
This is actually the same question as "what happens if inflation?". Fundamentally it's a big problem with defined-contribution systems: what you want is a life denominated in "2040 dollars", paid for in "2017 dollars", but in the absence of a time arbitrage machine all you can do is pay in and wait. (Note that $ collapse is much less likely than local currency collapse for pretty much everything except the Swiss Franc)

What happens to those people if the dollar plummets in value compared to native currency?

by donw 10y ago

What happens to those people if the dollar plummets in value compared to native currency?

Invest where you think you might end up. Or just invest everywhere; as a youngish American my (very small) future retirement stash is 50% broad-market US and 50% international (Vanguard VXUS). I think this is a reasonably prudent allocation for someone who isn't totally sure where they'll end up, which describes me.

deleted 10y ago

[deleted]

tedivm 10y ago

The answer is the same to a number of circumstances- diversify your investments so you can ride through short term market fluctuations and the more long term losses give you less of a hit.

curun1r 10y ago

If you're retiring to another country, it makes sense to open a local bank account and have a fairly substantial amount denominated in the local currency. Some retirement visas even require that. That should protect you against a temporary drop in the USD. A long-term drop in the dollar means something really bad happened in the US, which would likely be bad for people retired here too. Worst case scenario, if the USD drops, you come back having spent less of your retirement nest egg than you would have if you'd retired at home. Plus, having spent a good deal of last year in Southeast Asia, the dollar would have to drop precipitously for it to become a problem. It's very easy for two people to live on under $1000/mo there. Even with ridiculously conservative investments, you only need a few hundred thousand dollars to support that kind of lifestyle. Most people who own their own houses could make that happen.

donw 10y ago
Mind if I ask where in in SE Asia? I'm having a hard time coming up with a place where a couple of retirees could live reasonably on less than about $2k monthly (when factoring in age-related healthcare costs). Which is still probably close to a 40% savings over living stateside -- mostly due to medical expenses, of course. I suppose a follow-on question would be do these countries also provide for assisted living, once our retirees get to that age?
- curun1r 10y ago
  I also spent time in Malaysia, Philippines and Indonesia and all were pretty cheap, but I had Thailand in mind when I wrote my previous comment. They have a retirement visa that means you only need to do visa runs every six months. The only requirements are age (IIRC it was above 50) and a bank account in with, IIRC, around $20K in Baht. I had a medical procedure performed there for which I had been quoted close to $1500 in out of pocket costs beyond what my insurance would cover here in the US. Without insurance, it cost just over $100 there. Dunno if that kind of savings would apply to all medical care, but that's my only data point. Other costs would depend on where you chose to live. Bangkok was more expensive and one of my least favorite places I visited. $2k/mo might be hard there. The islands and south coasts are a lot nicer and $2k/mo is a pretty reasonable target. Chiang Mai was among my favorite cities I visited. $2k/mo is more than you'd need there. Rent is ~$400 and a meal for two is $2-$6. There's a reason why it has a huge expat community...the combination of pretty, comfortable and cheap is hard to beat. For obvious reasons, I can't comment on the cost of an assisted living facility.

pjc50 10y ago

This is actually the same question as "what happens if inflation?". Fundamentally it's a big problem with defined-contribution systems: what you want is a life denominated in "2040 dollars", paid for in "2017 dollars", but in the absence of a time arbitrage machine all you can do is pay in and wait. (Note that $ collapse is much less likely than local currency collapse for pretty much everything except the Swiss Franc)