Less than 5% of Americans use this lifestyle change to save big money after they quit working.
Living abroad can stretch your retirement dollars more than any other single change, but few Americans take advantage of this hack. Maybe it’s because they don’t know how easy it is to investigate living in a new country and connect with expats. Or it could be they’re unaware how much they could save by living outside the U.S.
According to the Bureau of Labor Statistics, the average person age 65 and up in the U.S. spends $46,000 per year. That’s a hefty amount to fund, especially when 42 percent of baby boomers have nothing saved for retirement, according to the Insured Retirement Institute’s 2018 report. Social Security won’t cover that kind of lifestyle when the average payment is $1,300 a month.
It’s true that the thought of leaving family and friends to reside in a foreign country is not for everyone. But it can be a grand adventure with the right mindset. It doesn’t have to be permanent: a stay of five or 10 years abroad in early retirement can boost finances enough to fund a return to the States in later years.
As one example, beach lovers might explore the white sands of Nha Trang, Vietnam, where it’s possible to live comfortably on less than $900 a month, including rent. You’ll find plenty of friendly locals and expats, as well as great weather year-round and a good health care system at a much lower cost than stateside.
Looking for a good climate with more entertainment options? Consider Panama City, Panama. Choose a modern high-rise or live in a colonial building in the old quarter. There’s a vibrant art scene with plenty of modern conveniences and a European feel. You can get by in the city for $1,500 a month, including rent of about $1,000. Add in more meals out and entertainment for a budget of $2,500 a month.
Your money goes a long way, thanks to Panama’s Pensionado program that gives all retirees, including foreign ones, discounts on a wide variety of services. Take half off entertainment costs, 10% to 20% off medical services, and a quarter off an airplane ticket and utilities. You’ll also receive a one-time import tax exemption for moving your household goods, and a tax exemption every other year on a new car.
So you think you’ve got your costs nailed down for your move abroad? There are some sneaky expenses that can crop up outside anyone’s budget. Check your numbers and make sure you’ve allocated money for these hidden costs:
Where to Go
International Living’s Annual Global Retirement Index is a great place to start checking on possible retirement destinations abroad. Here are their top countries for 2019, ranked on cost of renting, cost of living, healthy living and climate:
Or, you may want to consider the countries where the most Americans retire, tracked by following Social Security checks. They are Canada, Japan, Mexico, Germany and the United Kingdom.
Remember that although your Social Security check will follow you, Medicare won’t. You’ll have to buy health insurance no matter where you go. Check possible relocation areas for both the quality of their health care and the cost of health insurance.
Don’t forget to add in other expenses when you calculate spending. It’s likely you’ll want to fly back to the U.S. on a regular basis. The savings you’ll get from living in Nha Trang may be obliterated by the cost of airfare, which is almost $1,500 to Atlanta one way. On the other hand, fly round trip between Atlanta and Panama City for about $700, or take budget-conscious Spirit Airlines for a mere $310. The latter includes the clothes on your back (the airline suggests you wear several layers instead of packing because a suitcase is not included in the price) and a purse or satchel, but hey, it’s cheap, and the flight only lasts 63 minutes.
You’ll also have the one-time cost of relocating you household and any pet(s). Some countries require a retirement visa for lengthy stays. At the high end, discerning nations like New Zealand require a NZ $750,000 (about $495,000 in U.S. dollars) investment over the two-year visa term and an additional NZ $500,000 ($330,000 U.S.) to live on. Definitely not a budget country!
Enjoy Your Stay
Moving abroad can be intimidating, but it should be something you’re looking forward to. If you’re dreading the move because you’re only making it to save money, then rethink where you’re headed.
Spend time researching the many appealing vacation spots located around the globe, and visit the one you’re most interested in. It’s a good idea to go back in different seasons, and stay for an extended period of time. A remote beach spot may seem ideal until you’re there for three weeks and realize that museums, theaters and other entertainment is hours away.
Retirement Isn’t Vacation
It’s easy to get into vacation mode when staying in another country. After all, that’s what you’ve always done in the past. You go out to eat, take in the local attractions, and generally act the tourist. Ah, but that’s expensive. You need to start thinking like a local.
Where do the locals go out to shop, to eat, to be entertained? Are there street food vendors who rival some of the best restaurants in town? Is it a lot cheaper to go out for lunch than make reservations for dinner? Are there restaurants that cater to the local crowd, with prices to match? Just like in the U.S., you need to search out the best deals on food, drinks and entertainment to stay within your budget.
Research is Key
Look into as many locales as interest you, then pick a handful for serious research. Check for access to health care, the cost of living, and visa and residency requirements. Taxes can become more complicated, so you may need an attorney or tax specialist to help out.
If you’re moving to a country where the first language isn’t English, you’ll be wise to start learning the lingo well ahead of your move. Even if the local population has English speakers, anything can cost more if you need a translator (think driver’s license, rental agreement, etc.).
Above all, approach your move with a smile and a spirit of adventure. Of course there will be bumps in the road, but attitude is everything. Whether it’s for a few years or a lifetime, your new location will offer novel opportunities to make new friends and share exciting experiences.
Click below for the other articles in the September 2019 Senior Spirit
Health – Do You Need Protection from Cell Phone Waves?
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