I am still receiving feedback, including some backlash, for a piece I wrote a few months ago on Mwakilishi.com entitled â€œKenyans Living in USA May Have to Retire There, Data Showsâ€. I guess it touched some raw nerves but I refuse to disavow this statement. I will however try to answer this related question that I keep getting. What is the most practical age for a parent to say goodbye to USA? Here is the simple math. Think of a number. How many years until your youngest child is 26 years old? Now add this magic number to your current age. That is the age they may let you to go. They got you at 26 to life, hello! In a good way though.
The percentage of young adults who live in their parentsâ€™ home continue to rise based on the U.S. Census Bureau data. We have more young adults in 20s and 30s living with parents than any other time in history. For most of us, living independently means not living at home. Nearly 60 % of Diaspora parents that I talked to still provide some financial support to their adult children who are no longer in school. It doesnâ€™t have to be direct cash. It includes housing, transportation costs, and insurance coverage. These same parents also have some obligations in their mother land, taking care of their own aging parents.
Letâ€™s look at this number again. If you are forty with a 5 year old, you still need 21 more years of â€œbabysittingâ€ to do. You will be ready at 61, hopefully. But, wait there is more. Kidsâ€™ college education is bound to do some damage to your wallet, so I will give 9 more years to regroup. Heading home at 70 is a good possibility. Go ahead and shoot the messenger!
With this in mind, is buying tons of land in Africa a good investment? I want to make this clearer. Itâ€™s not buying real estate, per se, thatâ€™s a problem, it is the way you go about it. Real estate in Africa can be very important part of your diversified portfolio. It can provide a steady source of cash flow as well as collateral for a loan. Real estate appreciates in value over time and no doubt that equity is part of your net worth. Obviously you can also live there. I can name numerous other benefits. However the discussion here is about asset allocation and location.
Regardless of where one decides to stay after years of work, availability of funds is an obvious common denominator. That brings me a question of liquidity, the accessibility of an investment. Is it possible to access the money fairly easily? How long would it take for your dependents to get the money if they happen to need it there and then? This will be determined not only by the market but also by the required leg work, paperwork and legal hoops back home. Your kids may not even have the wherewithal to go looking for that piece of property you bought two decades ago in Mamaland County South. This may be harder when you are no longer able to deal with hand wringing and mumbo jumbo that often goes with real-estate deals. If you are no longer in this life, where do the grown up children start?
My other argument was that children and their social ecosystem is a factor that migrant parents may have to wrestle with in their retirement calculations. When planning, you may not assume that this second second-generation will share your love to relocate to the motherland. They are the Rubios, Cruzs and Obamas. They are more assimilated and more Americanized than you are. Parents often suffer from sporadic pangs of homesickness and acute nostalgia when we think of motherland. Children see their friends, established homes, families, businesses and places of worship wherever right where they are. As they grow up, a house in USA may make more sense to them. They can see dollar signs in the old family home. The thought of creating new networks in a different country is not what they have in mind. Did I mention they may have a retirement home with your name on it? Again, the messenger requests that he please not be shot for this message.
This a general analysis is a best case scenario that assumes the kids will get a job and move out. Family dynamics are often more complicated than that. You could end up with a moocher who pays no rent, is constantly racking up debt and has no desire to go to college or improve his or her life. Yes, spending all of their little money on frivolous and extravagant things. Their fiscally irresponsible behavior can easily throw a wrench into your retirement planning. This is still your child.
I also talked about health and aging. One of the toughest parts of retirement planning is healthcare. The rising number of Kenyan patients seeking treatment abroad is a good indication of a health system that still needs some work in terms of service delivery and diagnostic capacity. This is not something you can ignore. Even in USA, things are not that smooth. We know that co-payments, deductibles and out-of-pocket expenses can clean up your account very quickly. While you are putting it all together, the biggest question remains: Where would you rather be if you were 85 with no money and facing a major health crisis? Without a cent, can you just go to a nearby emergency room?
The logic here is quite simple. You may need to diversify your investments factoring in liquidity in the process. We are not talking about get-rich actions, just thinking ahead. Asset allocation can be tricky since there are a lot of other variables that would come into play depending on a specific case. The desire to retire thousands of miles away from where you spent a bulk of your life, away from children and familiar amenities only aggravates the thought process. What a conundrum?
I am in no way saying that the sky is falling. On the contrary. I like the loaded wisdom found in this old Chinese proverb: "The best time to plant a tree was 20 years ago. The second best time is now." If youre hovering around 30-40, you still have a few decades to retirement. Things will get better. Just donâ€™t put your head in the sand. Obstacles are uncomfortable realities of life, I wrote a book about it. We can learn from each other. Thanks for the response on my earlier piece on this subject. I would love to hear more from you. Have you ever been in a situation like this? How did you handle it? What was the outcome? Comments are appreciated. Letâ€™s keep the conversation going! â€œWe will have so much winning that you will get bored with winning," It will be huge! Trust me on this.
By Mahugu Nuthu. Mahugu is the author of the book â€œNuthology.â€