How Can The Global Economy Make My 201 K Act And Feel Like A 401K With A Bonus To Boot?
True, this is a tongue and cheek expression. However it is meant to address the sad fact that many people in their early 60’s and beyond saw their savings dwindle by 40 to 50% may have gotten some of it back, but are not facing bright prospects. Perhaps you are retired and have had to face the dim prospects of finding part time work. To make matters even worse what savings you do have maybe tied up in low yielding interest bearing accounts or worse yet in really risky high yield returns that could go south if a number of events were to happen. I have been writing about creative thinking with the idea of becoming more open minded to the larger possibilites.
The fact of the matter is that we are in the midst of a huge structural change. Much of the work force is losing their jobs to the international market, because we do live in a global environment. Hourly rates of $50 to $60 are being replaced at $10 to $20 or less in emerging economies, and these jobs are not coming back. In the local markets what fewer jobs exist have greater competition.
So what does that have to do with my making my retirement or income work harder?
There is a word in economics and finance called “arbitrage.” It is the practice of taking advantage of a price difference between two or more markets.
I was having lunch today here in Mexico with two international consultants involved in the field of helping people transition physically from one country to another. That is they help people see that national boundaries are coming down faster and faster, but that different economies will change at vastly different rates.
What is unfolding and expressing itself everyday is the information age and the use of the internet to transact information. For many this means that services can be offered to world wide audiences. But like any major transition it takes time to retool and make one’s talents available. In other words you may have skills which can be sold on such services as Elance, but it takes time to learn how to do this and turn it into an income stream.
It also means that at least economically the replacement costs for what you pay in the United States are much cheaper.
I am living in San Miguel de Allende Mexico. It is probably expensive by Mexican standards, but I can say that it extends $2,000 of income to $3,000 of goods and services in the states. Were I to live in say Ecuador it might grow to $4,000.
I am writing and learning how to use the internet much as if I were in school again learning how to acquire skills that I can monetize. Slowly I will build an income stream from this source while enjoying the benefits of a dollar stretching environment.
The major issue is that as we age we also become less tolerant of change, yet if we are willing it has never been easier. People say they are not close to their relatives, but with Skype it is possible to read your grandchildren bedtime stories from half way around the world. It is possible to fly to virtually anywhere in 24hours.
Yes, there is a whole host of new things one must learn to live abroad, but it opens up a new dimension of learning and rewarding experiences not to mention recovering some of the purchasing power you might have lost. With open minded and creative thinking more may be possible than you had ever thought.