BIG Financial Question for Everyone

[STEPHEN VAN OSDELL]

For responses to this question, I’d like to hear from anyone and everyone who might have an opinion on it. Let’s say that a couple (husband 64, wife 45) have about $200K saved up total. Yes, this is enough to purchase a residence in Ecuador with a little bit left over. Husband would be getting about $2600/month in social security and a small pension (from a company he worked for 11 years). That is it. Wife would have to quit career job (making $60K) to follow husband.

Here are the decision points:

1. What if Social Security went belly up and payments ceased? (This could happen if the US economy collapses).

2. If husband (in excellent health for age i.e. not even taking any prescription meds) dies, wife is left alone in Ecuador with no Social Security income until she reaches at least 63 or 64. Also, her blood relatives (brothers and mother) are in Ukraine, but her son and 2 step sons would still be in USA (probably).

I just would like to hear opinions from folks (like a sort of survey) to see if you think we should just forget about moving to Ecuador because it is too risky or if you think we are no different from problems others have faced. All opinions welcomed.

Thanks in advance.

[SUZAN HASKINS]

If SS goes belly up and you are living in the States, what then? You’ll be living on wife’s income? I don’t think you’ve given enough detail here. i.e. do you have a mortgage, car payments and other debt in the States? And honestly, even knowing your financial situation won’t be enough for me or anyone else on this board to give you advice. This has to be a decision the two of you make together. You don’t say how your wife feels about leaving her career (and children) at such a young age. That’s an important part of the equation. But here is another idea: if you are worried about losing your SS income, don’t buy a property in Ecuador. Instead, put your 200k into come kind of investment account. Rent a house or apartment and keep your 200k nest egg as your emergency fund.

[STEPHEN VAN OSDELL]

My wife is very open to the move and we are planning to visit Ecuador this coming January or February. If we leave here and move, we would liquidate everything here. We have a house that we can sell and come away with about $30K (it isn’t paid for). So, if we moved to Ecuador, we would have the $200K and be debt free. Put is this way, if we had a million in the bank, we’d both already be there! My wife would agree. My wife has just one son here who just finished college in chemical engineering and he already has a job in Texas. IF we stay in Ohio, we won’t see much of him anyway. I have 2 older kids that come visit maybe twice a year. They all said they would be excited to come visit us in Ecuador more than just sitting at home in Ohio. My wife says she would not ever really want to move back to Ukraine as there would be nothing there for her job wise and her brothers are scattered to other cities. Her mother (who is 64) is the biggest question mark? But we only see her about every 2 years.

I don’t mind sharing our financial situation if it helps us make the right informed decision. I’m not asking anyone else to share their situation, but I’m mainly wondering how many people move to Ecuador depending mostly on their social security? (meaning if it stopped, they wouldn’t be able to provide decent food and shelter). If we stay in US with my wife working, my life as I see it will be either continuing to work until to ‘drop’, or just sitting at home being bored death and with great wonderlust. I went through 2 bad divorces with children which wiped me out twice is why I don’t have more saved up. We both basically started life over when we got married in 2002 and started over from not much and with me still paying $1000/month child support.

So, Susan raises a good question – what happens here with inflation/devalued dollar is SS goes belly up anyway? Yes, I’d have to work as long as I could and then depend on my wife and children in some way.

I’m just being realistic and wondering if people considering moving down there need to really have a big nestegg before doing it, OR are there others who plan to live on mostly social security also? I’m not sure how much my $200K invested could bring in a month, but I don’t thing is would be $1500 each month.

[LAWRENCE SCHULTZ]

Stephen, I think that you have little to worry about social security going broke. The politicians all know that if social security goes broke they will all be looking for a job. If you buy a home from your savings, leave a decent nest egg from those savings to take care of any emergencies. If your home is paid for, then the $2,600 per month is social security and pension should be enough for you to live on comfortably in Ecuador. Also, you might want to avoid having your savings in an Ecuadorian bank. I believe they have had problems in the past and it would be safer to have your fvunds in an FDIC insured account in the United States.

[STEPHEN VAN OSDELL]

THANK YOU Lawrence for the encouraging words!

[CHARLES E CARROLL]

Stephen,
Here is one more thing you should factor into your decision. If things get so bad that Social Security goes belly up, you can expect the government to come after IRAs and other savings/investment accounts just like they did in Cyprus. Desperate governments do desperate things. I think that it doesn’t make much difference where you are living if the US gets in that kind of situation. If the US economy tanks, the world economy is going to follow.
I live in Ecuador and am dependent on Social Security and an IRA in the US. I haven’t pulled the money out of the IRA because I’d have to pay income tax on it at almost 40 percent(ouch). I made my decision to come to Cuenca based on the idea that if the US economy goes south I will be in good company. Also, it wouldn’t make much difference where I am living.
I empathize with your tough decision. There is no universal right answer. It will be different for different folks.
Charlie Carroll

[ROBERT CRENSHAW]

I think your putting “the cart before the horse”. I get the impression that you haven’t been to Ecuador yet, I may be wrong. If you haven’t you need to “test the water”. Who knows you might get there and not like it. I doubt it but it’s possible.

[STEPHEN VAN OSDELL]

Robert, I’ve never taken cars for a test drive that I couldn’t afford to begin with. But, more seriously, things are beginning to crack here in the US of A (IMHO) and we are planning to come visit in January. But, I wanted to settle the financial question in my mind first – that way I don’t come down there, fall in love with the place, and then figure out I shouldn’t move.

[EDWARD BALDWIN]

I am a new Canadian member and browsing for info for planning an exploratory trip to Ecuador in new year. The best interest rate that I can find in Canada is only 1.9% for a daily interest account. That would only produce a paltry $3800 per year, which is about $320 per month. We can get slightly higher returns for locking-in for 1 yr. (2%) to (2.85%) 5 years, but that’s nuts.

[MICHAEL GALLAGHER]

I’m retired on a military pension and not yet eligible for SS or using my IRA. After a year and a half of research and preparation, I’m still moving to Ecuador BECAUSE I’m fearful of the US economy going belly-up. Also, Congress and the current administration are already nibbling at my DOD retirement! I think work opportunities are far better for an expat in Ecuador with life experiences that would be an asset and are valued far more in Latin America than currently here in the US (where I’m considered another old fart wandering around with a resume, begging for a job, but not viable to join someone’s clone army). Am I taking a monetary risk? You betcha, but the opportunity to make a contribution and the adventure at this time in my life make that risk far less worrisome. I’ve made that decision and I’m jazzed about it! If I stay here and the economy does tank, then I really am financially screwed. The paperwork is in order and I’ve just booked my flight. See ya!

[BERNARD JONES]

Stephen,

I recently bought a place in Ecuador – it was a quasi investment/potential home.

You can buy places on the coast for (50-60,000) in more out of the way places or up to 250-300,000 in places like Salinas.
That would get you a prime location on the beach.

In my search, I found that the typical Ecuadorean houses are more small rooms/ small bathrooms/kitchens.It depends what you are looking for. I wanted more open-plan and so I bought new construction…you can also find relatively modern units with open plan too.

For some reasons, many Ecuadorean condos have the balcony glassed in, I guess they see it as an extra room.

If you are ‘ away from the main drag’ you might need a car.

Also you need to see how close is the nearest medical help..

I looked at lots of places before I decided..and took into account lots of factors.

You might also want to learn Spanish, I found that not many people speak English – they seem to understand it, but not speak it.

It is a great place, full of history , nice people and with good quality food – all organic and cheap.

Best of luck

Bernie

[JOHN WALKER]

Rather than worrying about social security tanking you should research the actual probability. As I understand it the system is in good shape to pay as promised until ??? after which, if nothing happens in the meantime (unlikely) then the payout will be less than 100% of what is promised BUT NOT ZERO.

See http://www.ssa.gov/oact/trsum/ for the trustees view of this.
This contains the following statement:”Treasury will redeem trust fund asset reserves to the extent that program cost exceeds tax revenue and interest earnings until depletion of total trust fund reserves in 2033, the same year projected in last year’s Trustees Report. Thereafter, tax income would be sufficient to pay about three-quarters of scheduled benefits through 2087.”

Hope this helps,

John

[ANDREA LYMAN]

Something else to think about….if your wife will be getting her permanent residency visa as your dependent and something happens to you, she will have to get her own visa (and go through the whole process) to remain here in Ecuador. Some couples get separate visas so this is won’t be an issue (e.g husband gets a pensioner’s visa, wife gets an investor’s visa). Something to consider!!

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