This article was written at the end of 2021 when the realities of our departure from the US were still fresh in our memories.
We left the US in 2019 right before the pandemic struck and are better off for it. But we didn’t leave entirely, and it looks like we never will. Our story may enlighten those considering life abroad – what it means to live outside the US and what it takes to make the break. It will also shed some light on the dirty little secret that you can never really leave – not with all your money, anyway.
When the promotion I expected didn’t happen, my wife and I knew my days at my company were numbered. We had to ask ourselves if we wanted to make a go of it where we were or make a move. We lived in Chicago. The chances of me getting a comparable job at my age were slim at best. My wife’s job at a retail bank would have provided healthcare (but with less coverage than we had under my plan). And her salary would have covered food and utilities but not the mortgage payment – not to mention property tax and building fees.
Fortunately, we’re dual citizens, so we had an option too good not to consider. But before getting into all that, it’s worth pointing out a few things.
What’s good about America
I’m not going to wax philosophic (or patriotic). Let’s set aside for a moment the intangibles like the basic human liberties and freedoms. I’m not taking them for granted – but there are caveats we’ll come on to later. Instead, I’ll point out the inarguable tangibles. The concrete practical realities.
Money. We accumulated a life savings in seven years after arriving from the UK in 2012, with very little to show for the six years we had lived and worked there. During the fourteen years in total I had lived abroad (I was born and raised in the US), I had been unable to accumulate any real savings, establish a national pension or retirement savings (apart from the little I saved in the UK), or buy a home. We had none of those things many Americans – especially in my advanced age bracket – take for granted. I was earning enough money to expect these things.
Housing. We bought a home in 2014 – just two years after we arrived in the US. No bank in any European country I know of would have financed the purchase of a home without a much larger (usually 25%) down payment. And with the eye-watering cost of real estate in the cities I lived in – London, Brussels, Dusseldorf – saving anything, let alone trying to come up with a hundred thousand Euros, proved impossible.
Healthcare. As long as we worked, we had excellent healthcare available to us. There were some out-of-pocket expenses, but all things considered, as long as one of us had a decent job, we were okay. More than anything, it was the quality of healthcare in the US that gave us peace of mind.
More money. And we had access to the largest financial market in the world. If we had not had the opportunity to make sensible investments in the stock market with the money we earned, we would not have accumulated the savings we did in such a short time. Simply put, the combination of a 401-k and saving separately (and investing this in the market) increased our nest egg enormously in a very short time.
Overall, we were pretty pleased with our decision. But these were the big wins, not the day-to-day challenges that can make life in the US strenuous and a bit gritty.
But the US is the best country in the world – isn’t it?
In many ways it is. Even though the standard of living has deteriorated over the last forty years, it still offers the benefits I described. But this comes at a price. How big a price depends on what’s important to you. It depends on your perception. For us it boiled down to crime and healthcare.
The level of crime in the US is unacceptable. For my wife, who comes from a country where the overall crime rate is very low, it proved intolerable. There were 21,570 homicides in the US in 2020, according to FBI statistics. That is 6.5 per 100,000. And that was an almost 30% increase over 2019. By comparison, Croatia had 39 homicides, which works out to just under one in a hundred thousand. This was an 18% increase over the previous year, but since 2000, the homicide rate in Croatia has more or less been in decline. Seeing murders reported on the evening news every day got to her.
Globally, the US ranks unacceptably low for safety. Each year Global Finance Magazine publishes its list of the safest countries in the World. I prefer this to other indexes like the Global Peace Index, because the Global Finance Safety Index takes into account three factors: war and peace, personal security, and national disasters. In 2019, the US ranked 65. Croatia, together with the rest of Europe, ranked above this (Croatia was 22nd). Many Americans, when they travel abroad, are concerned about their safety. You would have to look pretty far off the beaten track to do worse than the US. (Disclaimer: I’ve used the 2019 rankings because 2021 results have been skewed disproportionately by each country’s response to COVID-19).
The cost and availability of healthcare for us was a kind of ticking timebomb. If we lost our jobs, we lost our healthcare. This kind of all-or-nothing proposition is an insecurity we were unwilling to live with. The most obvious flaw is the link to employment. Losing your income when you lose your job is bad enough. But to have your healthcare coverage vanish at the same time is an enormous and unnecessary blow. In the US, you have two options for quality healthcare coverage: you must have either an unstinting employer or independent wealth.
With the exception of the US, developed western democracies provide universal healthcare. We believe this is a basic human right. However, in the US, it is a politicized issue. Americans have been led to believe that universal healthcare is a slippery slope leading to socialism (with the belief ingrained in Americans that socialism in any form is a bad thing). But we have millions of Americans without healthcare coverage and millions more who are healthcare “light” – meaning their coverage is thin or susceptible to sudden loss. This needs to be fixed. And nationalizing it, by the way, doesn’t have to be the answer.
The rush for the door
We left the US in September 2019. Our determination to leave happened earlier in the year, after my promotion didn’t come through. In practical terms, here’s why we chose to leave.
First, ageism. I turned 54 in 2018. A career executive recruiter and friend advised me that if I hoped to find a new job, I didn’t have much time. He was being kind. In the consulting industry, if you’re not already partner by that age, you’re done. I had started late in consulting and plateaued at the level below partner. During the last five years I was with the firm, I had done everything right, but it was the wrong firm. It was time to go.
Second, housing. We had a mortgage, with about 50% equity in the place. But we weren’t going to come up with several hundred thousand dollars fast to own it outright. I had been counting on partner bonuses to pick up that slack. About three years’ worth would have done the trick. Since it wasn’t going to happen, we had to rethink everything. We had no desire to ride out the remainder of our lives in and rental, so we began to explore the idea of returning to Europe.
Third, retirement. With housing already an issue, we educated ourselves on other challenges we might face as seniors. The fourteen years I worked outside the US had left a big hole right in the middle of my social security contributions. So there wasn’t a lot to look forward to if I made it to 68. Since I had never counted on collecting much from social security anyway, this wasn’t a tremendous blow. The blow came from Medicare. It isn’t free. The various plans you require as you grow elder to manage a retirement budget add up to several hundred dollars per person. Add the high cost of property tax (in case we ever could afford to get into a home), plus HOA, assuming it would be an apartment, and we were facing a few thousand dollars a month before we even fed ourselves.
The US is no place to grow old if you’re not moderately wealthy. We made our decision.
Europe is for Socialists
The point of this is not to sell anyone on Europe or any other country outside the US. What we learned to our horror and want to share with others is how shackled we found we were when we began to look at our circumstances from the point of view of leavers. Once we made our decision to leave and began to explore where to go, we learned a lot about other places in the world and a lot about the US.
For a fraction of the cost of Obamacare, for example, we would both have complete medical coverage in Croatia. The cheapest “affordable care” I could find in the US was just over a thousand dollars a month for a married couple. Double that, and our healthcare was covered in Croatia for the year. Granted, the quality of Croatian healthcare leaves much to be desired. So, we supplemented this with an international healthcare policy valid in every country in the world except the US. The deductible is high, because we wanted it for worst-case scenarios and to keep the cost down. The combined price for Croatian national healthcare and global coverage totaled less than $4,000 annually
Socialism begins to look a little less scary when you look at it from this perspective. No healthcare system is perfect. And no government is an efficient manager. But the difference can be summed up by what my wife said, “In Europe healthcare is a right. In the US it’s a perk.”
We paid cash for our home in Croatia, which isn’t a possibility in the US. It’s an hours’ drive north of Zagreb, the capital, next to the Slovenian border. Every amenity we need is a short drive away in Slovenia, which has developed more rapidly than Croatia since the end of Yugoslavia. There is no property tax.
The cost of living, not including housing, is roughly half that of Chicago. Utilities are expensive, and the cost of petrol and diesel are high, because Europe as a whole must import this. But the cost of food is much cheaper, while the quality is generally superior.
Both Croatia and Slovenia are former communist countries. Both still have much to learn about democracy and continue to struggle with many of the basic principles of a free-market economy. But what these social democratic countries offer is a very different freedom than what is found in the US. We have no fear of violent crime (and very little fear of property crime). It is a physical liberty to have no fear of strangers and to be able to leave your home unlocked or the key in your car ignition. And the freedom from fear of illness or old age is also a liberty unknown to many in the US. Security in the form of personal safety, healthcare, and permanent shelter are basic human rights, and we have these in Europe.
You can go, but your money stays here
My wife left her job at the beginning of September, 2019. By the end of the month, we had moved her, our two dogs and a cat, and all our stuff into our new home in Croatia. The plan was simple. While I continued to work and arranged to sell our apartment, she would set up housekeeping (which in reality meant project managing the many improvements to the traditional stone and timber cottage we bought). The moment the apartment sold, I would resign and join her.
Winter, of course, is no time to sell in Chicago, and the place didn’t. By January, we knew well enough that we would be apart for a while. I got a new agent and agreed to upgrades. In the first week of March, I came down with COVID (I’m an early adopter). By April the work on the apartment was done, and so was I. There was a seat on a flight to Zagreb via Frankfurt in the first week of May, and I took it. My amazing real estate agent put the place on the market the same day I left Chicago. In the first week, she had five offers above the asking price. We closed in July.
It sounds smooth, but it wasn’t. We got out, but our money didn’t. The big learning is you can’t just open a bank account in your new home country and transfer your life savings there. I discovered that a 401-k can’t remain a 401-k but must be transferred into an IRA. If you want to take the money with you, you can. But you will lose about 30% or more of the value – it’s the penalty imposed for early withdrawal and unpaid taxes. If you want to preserve the full value of your life’s savings, you must leave it in the US.
The next big learning is that you can’t simply ask your bank to change your primary residence to an address outside the US. If you leave the US without maintaining a real physical address of some kind there, no bank wants you as a customer. You have to find a financial firm willing to have a non-resident American as a customer. There are surprisingly few. If you don’t have an enormous pile of cash socked away, the number is even smaller. There are work-arounds. You could maintain a residential address in the US through family or friends (no PO boxes, please). But this isn’t fully compliant with US law. If you don’t have an enormous pile of cash (we don’t), and if you prefer to be compliant with the law (we generally do), then you need a financial services firm that, ideally, specializes in US ex-pats. I found one.
The silver lining
Finding my advisor proved to be a godsend. They are an intermediary that uses Schwab as their investment platform. Schwab provides a debit card to access your money from anywhere in the world. But they are not a bank. Once in Croatia, I chose the Fintech route. Using a Wise card, I can transfer money from the US to Wise, a London-based financial services firm. Wise offers competitive currency exchange rates and the possibility to open buckets in multiple currencies. You can pay money into these buckets as you would into an ordinary bank account. I set up buckets in two currencies – Euros and USD – and maintain balances in both to cover basic living costs. My wife, who is now employed, has a conventional bank account in Croatia in her name to simplify her money management.
As unnerving as these discoveries proved to be, the silver lining is the access to US financial markets this arrangement offers. While the lion’s share of our savings is managed by our financial advisor, I have money set aside for the stock market and options trading. That’s opened up the unexpected possibility of earning money to enjoy our new life in Europe even more.