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A World Apart

Pratima Gulati

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.

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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.

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Froogal Stoodent
Froogal Stoodent
1 year ago

“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.”

Bingo!

An interesting comparison, though as other commenters have noted, California is quite different in some respects from many other areas of the United States.

Mohammed Parvez
Mohammed Parvez
1 year ago

Your article expresses both the positive and negative aspects of moving to US, without taking an emotional stance on either side . It is well-written and contain sound, practical advice. Thank you for sharing.

R Quinn
R Quinn
1 year ago

You have made some good observations, but to be fully accurate about the US you need to get out of California and especially Silicon Valley. They are not representative of the bulk of America.

Neither my wife or I have ever waited weeks or months for health care, although it can happen. Paying a fifty dollar co-pay at the time of service is not typical and selecting from limited doctors is not always necessary. If you needed serious health care, where would prefer to receive it?

Seniors on Medicare have no such limits. And, the largest segments of the entire US budget goes to support seniors. Housing in CA is not representative of housing in the US. In fact, you have to leave the West Coast if you want to better understand this Country.

You mention differences in cost of living. Isn’t that the overall key, that and the standard of living? I’ve never been to India, but I’ve been to scores of other countries and to 48 of the US states and I think you need a larger perspective to make observations about the US.

It’s not Nirvana for sure, but overall comparisons with other countries are very difficult and certainly cannot be made based on one very unique part of the Country.

parkslope
parkslope
1 year ago
Reply to  R Quinn

California is admittedly not representative of the rest of the US, although with 12% of the US population one can’t simply consider it an extreme outlier–especially since NY adds another 6%. The pandemic has also resulted in a surge in real estate prices in many smaller cities. Here in Raleigh, it isn’t uncommon for a seller to get 20 offers on the first day of listing and buyers are putting down 10%-30% of the price in earnest money, which the sellers gets to keep if the buyers back out.

Medicare B has a 20% co-pay unless you purchase medigap insurance and also includes a deduction from SS benefits. Co-pays of 20% for drugs are also common. While most specialist care is readily available, my wife had to wait 6 months to see one specialist of her choice in both NYC and Raleigh and 3 months to see another one.

Thomas
Thomas
1 year ago
Reply to  R Quinn

Agreed. I have a cousin who lives in San Jose and a brother in Palo Alto. From what they tell me, Silicon Valley is like its own country. If you’re not making a high six-figure salary, it doesn’t seem to be a particularly nice place to live. It’s a nice playground for the rich, though.

But I agree with Pratima that the support system for seniors in the US is exorbitantly priced. I’m thankful that I still have my citizenship in another country. If I live long enough, I will probably move there in my old age.

Pratima Gulati
Pratima Gulati
1 year ago
Reply to  R Quinn

This article is more about our experiences which we had as a new immigrant. We have only lived in VHCOL areas here and in india. I am sure our experience would have been a lot different had we been in a different place outside of California or Delhi.

R Quinn
R Quinn
1 year ago

Your analogy reminds me of the three weeks I spent in Russia a few years ago. We started in St Petersburg and traveled a thousand miles down rivers to Moscow stopping at towns and villages along the way. In Moscow we tripped over Mercedes and BMWs on the sidewalk and window shopped at DeBeers diamond stores. The people in many of the villages were living like it was the 19th century. In one home we had tea, the lady lived on $150 a month half of which went to rent. Which was the real Russia?

Thomas
Thomas
1 year ago
Reply to  R Quinn

And I thought income inequality was bad in the US!

Charlie Warner Jr
Charlie Warner Jr
1 year ago

Pratima, good read I always enjoy the comparisons. As someone already noted, California is not representative of the complete USA. Here in Alabama I can easily see most medical specialists timely/easily and for less than $50. With my Medicare supplement plan I can see my primary care doctor at no charge.
What was not listed in your comparison was income??

Langston Holland
Langston Holland
1 year ago

You have some time to think about this, but if you want your children to have your values you should consider home schooling them for a while and then send them to private school when you find one that shares your ideals, and even then maintain heavy involvement with their education. In your reading on the topic, don’t miss some of the challenges to the current incarnation of American public education.

Thank you for coming to America, we could use many more families like yours. 🙂

IAD
IAD
1 year ago

This is fantastic advice! Previously, the education’s goal was to raise the bar for all students. Now it appears to lower the bar until all students can meet it. There was islands of education that didn’t do this, STEM mostly, but now even that has succumbed to the latest educational fads.

johny
johny
1 year ago

Are you going back to India for retirement so you can live like the top 1% there?

Pratima Gulati
Pratima Gulati
1 year ago
Reply to  johny

Right now our retirement is 30 years away and we are in an accumulation stage. We have an open mind and not averse to that thought.

SCao
SCao
1 year ago

Thanks for sharing.

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