How much do you need to retire? Even if you don’t have an exact number in mind, just think of an amount you guess would be close.
Maybe $1 million or so? Or a bit more or a bit less depending on other sources of income you may have?
Whatever your number is, now take half of it. What if this was the amount you really needed to retire? Makes those golden years of rest and relaxation seem much closer, huh?
It’d be nice, of course, but it could never happen, right?
Think again. I have recently run into two posts on big personal finance sites that have the answer for you of how to retire at half the cost.
The solution? Retire in a foreign country.
The Top Five
We’ll start with Kiplinger (who posts an article from Wise Bread) and their article titled (what else?) Retire for Half the Cost in These 5 Countries.
Their list of countries:
1. Mexico
2. Thailand
3. Albania
4. Malta
5. Croatia
For each country they list the cost savings compared to the US for food, housing, transportation, and entertainment. They also share the cost of a one-bedroom apartment as well as the total monthly cost of living in the country.
Here are the results for Mexico:
- Food = 64% cheaper
- Housing = 83% cheaper
- Transportation = 72% cheaper
- Entertainment = 64% cheaper
- One-bedroom apartment = $300-$500 per month
- Total cost of living = $1,200+ per month
Of course, you don’t have to move overseas year around (though you won’t save as much). Their subtitle hedges a bit and asks, “Why not live somewhere tropical and exotic for at least half the year and cut your expenses down considerably?” So you’d cut your annual retirement expenses by 25% doing this — still not a bad idea.
The Top Six
Not to be out-done, Bankrate lists six cheap places to retire abroad where they say “retirees can easily live on an income of $2,000 a month.” They are also more specific than Kiplinger as they name cities as well as countries.
Their list:
- Chiang Mai, Thailand
- Guam
- Vancouver, British Columbia
- Valencia, Spain
- Buenos Aires, Argentina
- Lake Atitlan, Guatemala
So comparing the two lists we get Thailand as a winner! Congratulations!!!!
There’s no disputing that you can live in other countries at a lower price, but there are several major negatives (or at least potential negatives) that could stand in the way. Here are some I would consider:
- Safety — You’re not going to live on the beach in Cancun, Mexico. It’s more likely you’ll either be crammed into an urban apartment or out in the hinterlands. Is it really safe there? I’m not sure, but I’d sure want to find out. Same for the other countries.
- Medical options — Is the medical treatment at least on a par with the US? Here’s a ranking of the top health systems in the world by country. Of the countries above, Malta is #5 and Spain is #7, but the rest are down the list. (FYI, the US is 37).
- Location from family — If your family will remain in the US and you want to see them a couple times a year, it’s a lot easier to do that from Mexico than if you live in Thailand.
- Language and Culture — Do you want to learn a new language? Are you ok with a new culture?
There are many more issues, but these are the ones I see now.
Still, adding several years on to your retirement sounds enticing, right?
I must say that Guam does intrigue me a bit. Here’s what Bankrate says about it:
Guam is an often-overlooked alternative for American retirees, despite its many benefits. Because it’s a U.S. territory, English is spoken everywhere on the island, and its currency is the U.S. dollar. And, at least on the surface, much of the country’s culture and politics will seem familiar to many Americans.
Situated 3,700 miles southwest of Honolulu, Guam is a lower-cost alternative to Hawaii — while sharing the same climate. One-bedroom apartments in Guam can rent for as low as $400 per month, with luxury units facing the sea costing $1,000 per month. American citizens can buy property on the island; 3-bedroom houses often sell for less than $200,000.
Since the territory is a small, remote island, most items have to be imported, which means groceries can be more expensive than on the U.S. mainland. Meats, most vegetables and some dairy products can cost twice as much. Restaurants, however, are usually comparable in cost to their American counterparts.
Besides enjoying the weather, retirees in Guam can use both American and Guam-based insurers — including Medicare — to cover their health care costs. All major medical services are available at Guam Memorial Hospital, which is certified and accredited by several federal agencies in the U.S.
A cheaper version of Hawaii sounds awesome!!! Of course, a cheaper version of Hawaii might still be way more than I’m paying living in Colorado. 馃檪
Fortunately for me I don’t really need to look out of the country to be able to afford retirement. But for many Americans trying to find any way to retire at any time, this could be a viable solution.
What do you think? Are any ESI Money readers considering retiring overseas to save money? If not, would you consider it? Has anyone already taken the plunge and moved abroad?
P.S. I found this post after I had written this piece. It gives a detailed cost breakdown of retiring in various cities around the world for $1,200 a month or less.
P.P.S. Found another post after I wrote this. Their list of places where you can retire for $1,500 a month or less (also from Bankrate, interestingly enough):聽Cambodia, Nicaragua, Guatemala, Peru, and Colombia. Here’s another one too: 50 cheapest countries to live in. And聽Thailand Vs. Vietnam: Which Is Better for Retirees?聽And here’s a post that helps people retire abroad.
George says
My wife and I are definitely considering retiring out of country, potentially as a sort of compromise. Despite the cold, I would like to retire to New England and she wants to stay warm… but I am just not suitably impressed with retirement options in the south (where we live now).
I strongly agree with your comment about distance though. I would love to retire in Guam, and I’m sure we’d make new friends, but being on the other side of the planet from family and friends is rough versus a short flight to Mexico.
I am not sure what are big expenses would be if we stayed in the States. We would own a paid off house, paid off cars… just insurance on the house, and property tax. It doesn’t seem too daunting.
happy1 says
I have thought about becoming an expatriate to save money in retirement. You have already mentioned my major objections to the idea. I have told my friends that I could buy a lot and double wide trailer for less than 100K in Mississippi. I could also slurge and purchase a house for the median house price of $164,900. If you are 65 or older or totally disable you can qualify for a homestead exemption on the first $75 of the true value of your home.
Mississippi for retirees exempts state taxes for Social Security, pensions, annunities, IRA and 401K. Remaining income is taxed at 5% in Mississippi. If you received $30K a year from Social Security and a pension (60K total) you would pay a federal income tax of $1615. (https://smartasset.com/retirement/mississippi)
I could have a small garden and have fresh vegetables. I would buy only used cars to save money. I must mention that I am not a Southerner and never lived in Mississippi. Mississippi is not as exotic as living in a foreign country. Some people however might consider the state a foreign country .
DS says
You mentioned my main qualm with moving far away: Distance from family and friends. If Mexico were safer (maybe it’s safer than I think), it would be a short plane ride away.
BH says
I love Chaing Mai, Guam, Vancouver, Buenos Aires, and I really LOVE Lake Atitlan! That is the best list I’ve seen, not necessarily because of financial savings, but those are all just beautiful and interesting places to spend time. For the reasons you listed above, I don’t see myself living full time in any of those places, but I could spend a significant amount of time each year in any or all of them. Lake Atitlan is so beautiful and peaceful. Buenos Aires has all of the benefits of a European city for less money, plus it is in close proximity to skiing in Argentina or Chile, or beaches in Uruguay or Brazil. Chaing Mai has amazing food, and I love the beaches in Koh Tao to the south. Guam is a cheaper version of Hawaii; not quite as nice but okay (but then you’re close to Palau, which in my opinion is even better than Guam and a worthy early retirement option as well, especially if you love to dive).
Jon @ Be Net Worthy says
I’ve toyed with the idea before. Potentially Mexico, but I know my wife would want to be close to the kids and potentially grand kids. Now, having a vacation place down there somewhere is interesting. I know that Costa Rica has come up on many lists as being safe and affordable with good medical facilities. Apparently there are whole communities of Americans popping up down there. Being in the same time zone to family, plus or minus a few hours would be a big plus.
The goal now is to save up enough money and build enough passive income to have options!
jim says
For Vancouver it says: “The average house price is $857,400.”
This is in their “cheap” list??
Ok, yeah I see they go on to say that medicine is cheap. But you’re not going to save enough on health insurance or out of pocket medicine to justify paying for a $850k house.
Coopersmith says
Not for me and my wife would be absolutly NO.
Her circle of friend and family are too important to her and the future is not set with our kids.
I have to plan to live in the states.
Memories says
Also, what’s the cost of moving?
ESI says
Yes, this is a cost to be considered as well.
My guess is that you’d sell your house and many of your possessions in the US and use that money to set up a new residence elsewhere.
One interesting note related to moving: I knew a couple that moved from a high income tax state to a no income tax state and the savings in taxes in the first year alone paid for their entire move. These were high earners, of course.
Katherine says
Although you did link to one particular article from the Frugal Vagabond blog … there is a specialized website created by the same blogger that allows you to see what’s available around the globe and filter by budget or any other criteria.
The Earth Awaits
https://www.theearthawaits.com
Blog Post to Launch the New Tool (with description of what you can find there plus some methodology behind the information)
http://frugalvagabond.com/2016/09/07/earth-awaits/
Mike H says
Thailand has parts of the country that are very cheap while other parts (Bangkok) has services that encourages a higher level of spending and is certainly more expensive than a Midwestern US city but certainly much cheaper than a medium to large US city.
Keep in mind that while you can get a retirement visa for those over 50, you need to keep about $25K USD in a local bank account. You will also need to report to immigration every 90 days or enter and exit the country. The visa needs to be renewed on a yearly basis too. Travel costs back to the USA from here is expensive, about $1200 per person per seat in economy and it’s a long journey.
Medical care options here in Thailand are many and the top private hospital here is regularly ranked in the top 10 in the world. Bumrungrad hospital is considered by many to be the Mayo Clinic of Asia. With a bit more money you can live really well here but it’s not for everybody as it’s definitely culturally different from the USA.
http://www.healthytravelblog.com/2016/08/25/the-worlds-best-hospitals-a-guide-for-international-travelers/
-Mike
JayCeezy says
I live in California. In 10 years, it will be part of Mexico. Officially, I mean. My plan is to ex-pat in place.
Fulltimefinance says
Honestly while finances are a consideration there are just so many other factors in this discussion. What about seeing family? Will you be OK with the culture shock? Will medical standards be sufficient? Do you have the support network local enough to support you should issues arise. Honestly if I were considering this rout I’d want to “try before I buy” to see if the area was right for me.
Physician on FIRE says
Thank you compiling those lists!
There’s now an app for that from The Frugal Vagabond.
https://www.theearthawaits.com/
Find a place that works for you!
Best,
-Physician on FIRE
Jover says
Has anyone considered many of the low-cost areas of the US? Many small and medium sized cities in the Midwest are totally affordable, compared to high cost cities along the US coastlines.
Heck, I live in the suburbs of a tourist area along Florida’s Gulf Coast, and I live on less than $25k per year.
ESI says
Anywhere near Destin?
Wealth Psychology says
This is a good idea. I was also going to mention https://www.theearthawaits.com but PoF beat me to it. It’s a great tool that lets you search on criteria like safety and purchasing power. Whenever I use it, Cordoba Spain keeps coming up for me 馃檪
Having visited some cheap counties, I can definitely say living in one will work for retiring earlier than usual. Having lived abroad for some time now, I can definitely say it’s not for everyone. Leaving most of your relationships behind and reintegrating into a new community can be very psychologically stressful. It can also be an awesome adventure! -Aaron