Tips about where you can live well on a tight budget, and ideas for making your retirement income go further overseas…
I recently read an article in the British press that suggested a married couple in the UK would need to build up a retirement pot of at least £600,000, (circa $920,000), if they wanted to retire relatively comfortably. I don’t know about you but I think £600,000 seems like an incredibly huge amount of money to work towards saving, no matter how young you start a pension!
If you’re concerned that your retirement savings won’t stretch to afford you a decent standard of living in America, or you want to get more for your money by moving abroad in retirement, this report has been researched and written with you in mind.
The cost of living in countries like Great Britain and America is high – so it’s no wonder that we need a lot of money to retire on if we want to remain living in such nations. But not all countries in the world have such high prices placed on everything from health to housing – there genuinely are places in the world where it is cheaper to live, and where the standard of living is high, affording you a decent way of life and meaning you don’t have to compromise.
You may be thinking about a retirement abroad because you’ve always fancied travel, you dream of living in a tropical climate or you just want to get out of the country you’re in. Or, perhaps you’re in a position where you feel change is being forced upon you in the form of relocation overseas because you know you cannot afford to remain living in the country you’re currently in. Either way, what’s important to know is that it’s an absolute fact, you can have a very good life living overseas – and so a move abroad should be looked upon as an adventure, and planned carefully to ensure success.
Where in the World Are Homes More Affordable?
If you currently own your own home and you want to sell it to buy real estate abroad when you retire, you can take your pick of continents because I assure you, there are plenty of places left in this world where a house or an apartment is an affordable commodity in relative terms. Depending on which sources you trust, at the peak of the housing bubble in America the average sales price for a home reached between $230,000 and $300,000 – now assuming sales prices have fallen back and perhaps you don’t live in whatever constitutes ‘the average home’ in America, let’s assume you have between $75,000 and $100,000 to put into real estate overseas. For your budget you’ll likely be pleased to know you have vast choice.
You could choose a villa in Turkey on the Mediterranean coast surrounded by stunning views and enveloped in glorious sunshine for much of the year…or perhaps a condo in Mexico would suit you more, allowing you to be more accessible to your old home haunts? If you’re prepared to venture further south you’ll find homes in the likes of Costa Rica, Belize, Argentina and Brazil for less…or if you want the history and culture of Europe then what about Portugal or even Sweden?
A good and detailed real estate search on the Internet, restricted only by your budget, will reveal to you a whole world of opportunity currently out there and perhaps open up your mind to nations you’ve never even heard of or know very little about. So, if you’re not sure where you want to live, why not let your budget guide you. Find real estate you like the look of, and then explore the realities of retiring to the nation in which the property is in.
Alternatively, if you have a fixed idea about the country you’d like to live in, remember that the further away you are from centers of tourism and business, the cheaper real estate will become. This is simply because property is worth less, as is the land it sits upon because it is less in demand – and this can mean you get more for your money the further you’re prepared to step off the beaten track. So even if your country choice is considered ‘expensive,’ you may well find an affordable property if you dig deep and go beyond the obvious communities where expatriates gather.
If that doesn’t take your fancy one bit and instead you actually like the idea of moving into a ready made community abroad, where you know you’ll meet like-minded people of a similar age and perhaps even from a similar background, making your integration even easier, what about looking into retirement communities overseas.
From Australia to Wales, Greece to Mexico there are dedicated retirement communities abroad where you can buy in for the duration of your lifetime, and live in luxury surrounded by new friends and also care and support from professional staff. With the concept originating in America and now spreading worldwide, you can potentially find a home within a neighborhood that’s secure and maintained. Alternatively, gated style residential communities are becoming more common around the modern world too, offering you secure living but without the retirement centric, supportive environment.
Where in the World Can You Afford a Better Lifestyle?
The cost of living is always relative, in terms of affordability, to that which local people earn – therefore, if you’re limited in your budget, you need to look at where actually your budget is worth an awful lot more than it may be in mainland America. This doesn’t mean you have to look at the most impoverished places in the world! Far from it! Countries like America and Britain are overburdened by taxation and social care programs, they require one to pay out for health care in the form of private insurance or National Insurance and as a result, one’s money is restricted in terms of how far it will stretch because of policies that one has no control over.
If you look to countries where the economy works differently, you’ll quickly realize that there are places in the world where you will taxed far less and even have to pay much less for essentials such as medical care. Countries such as Costa Rica and Argentina become affordable at this point, as does Mexico. Or what about nations such as Belize, Malaysia and Thailand where there are retired persons incentive programs that make it cheaper and easier for you to live in such countries once you hit retirement. You may even be able to live in them 100% tax-free legitimately.
Considerations you need to keep in mind when looking for an affordable place to live include the amount it will cost you to physically relocate there, what your month to month tax obligations may be, how much you will have to pay out for any insurances – from medical to earthquake – and then what basic and essential groceries and foodstuffs cost on average. There are many forums where those who have expatriated already gather to chat, and in such forums you’ll find valuable information about what the cost of living is really like for retired Americans.
Be sure to check out every day costs in person before you commit to relocating if you can. Spend an extended holiday in your chosen retirement destination getting to know it as a potential resident rather than a perpetual holidaymaker!
How on Earth Can You Make Your Retirement Income Go Further?
Having found the right country to live in and an ideal home for your retirement, the final issue to tackle is making sure you can stretch your pension income far enough to sustain your lifestyle every single month. You might like to consider your options for topping up your pension with part time work – after all, once you move overseas all sorts of new opportunities could arise.
You may find you have a knack for teaching and your language abilities alone make you into a desirable teacher – or perhaps you have professional skills you can offer to local companies or through advising or lecturing. Maybe a hobby you’ve always enjoy as a distraction from work could earn you an income abroad – or would you consider going back to what you have always done but in a part time capacity in your new country?
All these options mean you’ll be earning more and therefore you’ll have more reserves to ‘play with’ each month. But if working isn’t an option you can or want to consider, the management of your day-to-day money will be key to your long-term financial success.
Budgeting will be central to you managing your money effectively; you therefore need to work out your essential costs each month and meet them but don’t go over them. You can save and reinvest any money you don’t spend, taking advantage of any improved interest rates perhaps available abroad for example. Shop around for goods and services just as you would in your old home nation – and learn to haggle like the locals do! In most countries it is totally acceptable to make an offer below the asking price – particularly when it comes to big ticket items. And in some nations it’s even normal to haggle at the market when you’re doing your weekly shop!
Talking of shopping, look at how the local people shop. Whilst you may be used to everything being cheaper and easier in the hypermarket back home, overseas it may be the case you should go to specialist food sellers to get given items, and shop at the weekly or daily market for most produce. If you build up a relationship with store owners, after a while they will almost certainly ‘see you right’ when you continue to shop with them! This can have the effect of your grocery bill going down in terms of costs each month.
It’s an absolute fact that our money can take us far further if we’re prepared to consider retiring overseas – and that retirement abroad can provide us with a high standard of living in a beautiful home and a fabulous environment. Finding and securing such a life for yourself does of course require dedicated effort in the form of research and planning for example, but the benefits are definitely worth it. So, instead of worrying about retiring in poverty at home, plan to retire in style abroad.
About the author: Susan Beverley is a writer and editor for Escape From America Magazine and also writes for and maintains Expat Daily News – the expat news blog for EscapeArtist.com. She traveled extensively before becoming an expat herself having found a place to call home in South America where she has lived since 2005. She understands the concerns, needs and difficulties that expats face from first-hand experience and is dedicated to supporting and encouraging anyone who is looking for a new nation to call home.