Do You Have an Exit Strategy?

What if it doesn't work...

No one wants to ask this question. But we must. It doesn’t matter if you have already made the leap or are planning to do so. What will I/we do if it isn’t all sunshine and Skittles? What if we don’t like it? What if we miss home? What is our exit strategy?

Surprise

The first time it happened, I must admit we were surprised. A couple who had retired in Portugal were moving back to the US. Even though they had lived in VRSA for only two years, they had put down roots. They had bought and renovated a house. They owned a car. They spent time learning the language and spoke to their neighbors in Portuguese. They were also part of the “expat community” in our small town.¹ They seemed to love living in Portugal.

However, they wanted/needed to be closer to family. In their case, moving back to the US meant needing to sell a house, car, bike, etc, etc. As it turned out, they pretty much broke even on the house as they had been able to do many of the renovations themselves. (Had they made a profit they would have been subject to a 28% capital gains tax as they were not buying another Portuguese property within 36 months.)

It also meant going back to work. Yes, they could comfortably live on their social security and investments in Portugal…but in the US? Not so much.

Surprise Again

The second time we got the “surprise, we are moving back to the States” call was a few weeks ago. Yes, they are enjoying Portugal. They seemed to enjoy traveling throughout Europe even more. During their “working life,” they had dreamed of visiting all these European cities, and now they could do it without worrying about shoving it into a two-week vacation. Life is good.

But now there were grandbabies. As I lack all maternal instincts, I have a hard time appreciating this gravitational pull. To me, babies and tiny people mean unpleasant smells, drool, sticky fingers, and eardrum-shattering screams. But I realize not everyone feels that way, and as such when they made the surprise announcement I suggested I understood. (I realize I missed the Oscar nomination process for this year, but there’s always next year.)

While this couple has never divulged their investment portfolio to me, I sense that they may be even more financially conservative than me. Their more frugal, cautious approach has meant that they have been renting and do not own a car. Still, after a few years, we all acquire “stuff”. And perhaps more to the point, all the stuff we got rid of in the US now costs more.² So while returning to work is not required, there is still a cost to returning.

Think Ahead

So if you weren’t fortunate enough to inherit an 8-figure/year trust fund, what is one to do? Permit me to suggest that you begin with the “what if we hate this party” approach. Have you and your partner ever discussed how to “leave early” if you don’t like the party? I know we have. At one point in our lives, it was, “Nancy has a very early flight in the morning…I’m sorry but we have to duck out early.” Now it might be an early tee time. Whatever the excuse, it is wise to agree on your exit strategy before you go to the party.

And as moving to another country is a bit more of a commitment than going to a party…take some time to think about it.

Já pensaste nisto? Se sim, por favor, diga-me…

Nanc

1. I am not sure how many Americans now call VRSA home, but it is at least three times as many as when we moved here just two years ago.

2. The house we sold in California is now “valued” at $700,000 more than we sold it for three years ago without any additions or renovations.