WHEN WE MOVED to California from India in spring 2014, it was a culture shock—and not just because of the much higher standard of living. Financial life in the U.S. is very different. Here are just some of the surprises that my husband and I have encountered over the past seven years:
Health care. I remember walking into my first U.S. doctor’s appointment. I froze—unaware that I had to pay a $50 copay for each visit, despite having insurance. It was my first reality check: So this is how health care works in the U.S. It seemed that the insurance company was at the center of the experience. Another reality check: To get the benefit of our insurance plan, I needed to choose a doctor from the insurance company’s list of providers—or I’d have to pay through the nose.
By contrast, where we lived in India, health care was readily available at affordable prices. Patients can choose which doctor to see. They pay cash for a visit, which would be far less than $50, even without insurance. In the U.S., if a specialist appointment is needed, it can take a few weeks or months. In India, it’s all possible in less than a week. Admittedly, health care in the U.S. is far superior. But the whole system seems intended to make life easier for insurance companies, not patients.
Retirement. Yes, we have Social Security here in the U.S., but it’s designed to be a safety net, keeping seniors out of poverty. If you want a more comfortable retirement, serious planning is involved—saving large sums each month, picking the right retirement accounts, selecting suitable investments. In India, if you want a comfortable retirement, you pretty much have to do the same things, except the amount you need to save is far smaller, thanks to the lower cost of living.
The support system for seniors is incredibly expensive here, whether at home or in a nursing home. Consider this comparison: My grandmother in Delhi had an in-home nurse for $300 a month. The upshot: If we retire here in the U.S., especially in a high-cost area like Silicon Valley, we will—based on a 4% withdrawal rate—need millions saved just to cover basic expenses.
Real estate. When we bought our condo in 2017, home prices were steep, but there was a pleasant surprise: very low interest rates. We locked in a 30-year mortgage at 3%. When we lived in India, such low rates were unheard of. Mortgages run between 6% and 10%, a reflection of the higher inflation generated by a fast-growing developing economy.
The real estate market here is also easier to research, thanks to websites like Redfin and Zillow, which offer a host of housing data. Back home, you need a dedicated agent to do all the legwork for you. The quality of schools also impacts the price of real estate here in the U.S. This isn’t a factor in India. Public schools aren’t great, so far more families send their children to private schools. That means local public schools aren’t a consideration when house hunting. Instead, the only thing that seems to drive home prices is the vibrancy of the local economy.
We haven’t sold a home here in the U.S., but we’re already bracing ourselves for the commission, which is typically 5% to 6% of the final sales price, far above the 0.5% to 2% commission paid in India.
Children. Before having our first child in 2018, we didn’t give much thought to the financial implications, beyond wanting to contribute a large sum to a 529 plan every year. Education is highly valued in India. Our goal is to fully fund four years of college for our daughter.
Like other new parents, we’ve faced the usual array of direct costs, like childcare, clothing and health care. But as our daughter approaches her third birthday, it’s the indirect costs we’re worried about more. We need to start thinking about school districts, plus our condo now feels small. Here in Silicon Valley, if we want a moderately sized single-family home in a good school district, we’ll need to save a few hundred thousand dollars—just so we can make a 20% down payment.
Pratima Gulati is a human resource professional in Silicon Valley. She has an MBA and a keen interest in personal finance. Pratima’s previous article was Land of Opportunity.