Yahoo Finance How Corruption Affects Retirees Overseas
Corruption occurs in many of the places overseas where I have lived or traveled. I don't pay bribes, but I realize that corruption does affect me in other ways.
[See: 10 Affordable Places to Retire Overseas in 2016.]
I'm not involved in politics and have never had any ongoing interaction with the governments of the countries where I've lived. Nevertheless, I recognize that corruption is still an issue for me because corrupt public officials, police and business people didn't become dishonest the day they got their jobs. They're the product of a culture where dishonesty is tolerated and even expected. This is why corruption can and does have an effect on the personal life of a retiree overseas.
We Americans are among the world's rule followers. We are largely honest, and we assume honesty in others. As a result, adapting to a dishonest culture can be difficult.
In my experience in Latin America, countries with high corruption levels are the countries where you have to lock your car doors, count your change at the register and be careful that you're not being overcharged. Taxi drivers are likely to inflate the fare. In shops, prices may not be marked, and merchants can charge you based on what they think you can pay. People often fail to keep appointments and expect you to accept any excuse.
[See: How to Prepare for Retirement Overseas.]
For example, I've been short-changed in Ecuador dozens of times over the years. Each time, the wrong change was politely explained as an honest mistake, but the mistake has never been in my favor. On the other hand, in Uruguay, Chile and Colombia, I've never been short-changed in all the years I've spent time in those countries. I'm sure there are dishonest individuals in these places, but dishonesty is not culturally acceptable.
Transparency International publishes an annual corruption perceptions index. It's a "perceptions" index because it's impossible to objectively measure corruption using published data. Instead, the report is based on surveys of people who deal with the public sector in the countries being analyzed. In other words, this index is not really tailored toward expat retirees. Still, it's a good broad indicator.
You probably don't want to pick a retirement spot based only on the corruption index. Public sector corruption is only one criterion of many, and it can often be offset by other criteria.
For example, Ecuador is not rated well for corruption in Transparency International's report, and I've had personal experiences in this country that lead me to believe the poor score is warranted. However, I also know firsthand that Ecuador can be a great place to live thanks to its fantastic weather, low costs and wonderful people. A retiree could live in Ecuador, depending where you base yourself and who you associate with, without ever having a problem. You might be able to further reduce your risk if you don't drive or avoid certain areas of the country.
Instead of using the corruption rating to pick a country, I recommend you use it to set your expectation levels and establish your behavior. If the country where you're considering retiring overseas ranks poorly in Transparency International's survey, simply knowing that fact can mean a better experience. If you know that it's likely you will be approached for a bribe, if that does come to pass, you won't be shocked or outraged, but prepared.
[See: 50 Affordable Places to Buy a Retirement Home in 2016.]
A country's corruption rating shouldn't disqualify it as a retirement spot, at least not countrywide. But it should be among the criteria that you use to make your choice of where to settle abroad. Everyone's priorities are different. It could be that the available opportunities in a country, such as great weather or beautiful and affordable beaches, outweigh any minor concerns about corruption.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group.
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