Retire Abroad And Enjoy The Good Life On $2,000 A Month Or LessFeb 26, 2021
Perhaps you’re one of the many Americans that consider leaving the United States and retiring in another country. You can do it! And there are many reasons that a move to a foreign land can make a lot of sense.
The cost of good retirement living options in the United States is rapidly increasing. Many retirees cannot afford a retirement home here. Many are unable to retire at all in the United States. And others find that they can enjoy an increased quality of life, with household help, utilities, entertainment expenses, and more totaling less than what housing alone costs here.
Advantages to Retiring Abroad
Retirement might seem like a long time away, but the time will come before you know it. Perhaps you’ve always thought you’d retire and live happily ever after in the good ole’ USA. However, have you ever considered retiring to another country?
Here are a few of the advantages you can find when retiring abroad:
- Significant reduction in the cost of living. There are many great locations with significantly reduced living costs that may suit the lifestyle you desire.
- An elevated standard of living. Along with the reduction in living expenses, you can actually better your standard of living and afford a few luxuries that might be out of reach in the United States once you are retired.
- Your living accommodations can be significantly better. For the cost of a tiny dwelling in Florida, you could be living in a nice condo a few blocks from the beach.
- Hiring a maid, cook, gardener, or even a driver is not out of the question when you are living abroad. Imagine not having to cook, clean, mow grass, or drive yourself around town.
- Location, location, location: Some folks might be in love with the idea of retiring in Iowa. However, most would prefer to retire to a milder climate with more picturesque surroundings. No more shoveling snow or hiding from the heat provided you choose the right location.
- You can own more and do more. With the money you’ll save by retiring in a less expensive locale, you’ll be better able to afford vacations (if you even desire to go anywhere else), nicer cars, a fancier TV, better meals, nights out on the town, and just about anything else you can imagine.
- More cultural opportunities are another perk. The United States is nice, but it’s a relatively young country. The architecture, ruins, and cultural opportunities can be significantly better in other places.
- Tax advantages. The United States is quite unique in how it handles citizens living in other countries from a tax standpoint. It’s not very advantageous to you, if you have a significant retirement income or if your retirement income is passive. But for some folks, the tax advantages can be significant.
There are many financial and lifestyle advantages to living in a foreign country. There can be tax advantages as well. Let’s take a look at what you can do financially, right now, to prepare for your move.
“I soon realized that no journey carries one far unless,
as it extends into the world around us, it goes an equal distance into the world within.”
- Lillian Smith
Any significant undertaking requires a lot of thought and preparation to get it right. Even if your retirement is still several years out, there are many things you can do to start preparing for it.
Consider these ideas on planning, preparation, and thoughts for additional research:
- Assess your situation. As with any retirement planning, it’s important to always have an accurate view of your future retirement finances.
- There are many great places to retire that will require $1,500-$2,000 a month in living expenses. How will you come up with those funds each and every month?
- Are you planning on working during your retirement? Some locations make it easy for foreigners to work. Some countries make it more difficult.
- Will Social Security be enough? Do you have retirement accounts to supplement your Social Security? Is the combination of these income sources likely to be sufficient?
- What is your timeline? Would you like to head overseas in a few months or 10 years from now? Your timeframe has a significant effect on the decisions you make now.
- What is your net worth? If you sold your home and all your possessions (the ones you’re not planning on taking with you) and added those funds to the value of your investments and cash, how much would you have?
- How much income could you generate if you invested that money conservatively?
- Make a budget. A tentative budget will go a long way toward helping you to understand what you can and cannot afford.
Get a good general overview of your finances and make some preliminary plans. It’s never too early to get started.
Except for air, food, and water, shelter is at the top of the list of necessities. Every country is, of course, different in regards to its housing and accommodations.
These considerations will keep you on the right track:
Are you planning on renting or purchasing your new home/condo/apartment? The answer to this question can make a significant difference in your budget.
- If you’re planning to purchase a dwelling, many locales require that you carry health insurance if you’re borrowing money to purchase your home.
- An advantage to owning is the option of renting the property when you’re not there. If you’re planning to divide your time among different locations, this might be important to you. Many people choose to retire to 3 or more countries.
- As in the United States, the cost of maintenance, repairs, and taxes (sometimes) are expenses for property owners.
- Rent is typically higher than a mortgage payment here in the states. However, rents in other parts of the world may be significantly lower and may add the benefit of low or no maintenance.
- Purchasing a home outright with cash eliminates the monthly payments and the interest. However, that money could be left in investments that generate income. So, you’re removing a monthly expense, but also reducing your monthly income.
- Consider renting at first. It makes a lot of sense to rent in your new location for the first 6-12 months. Give yourself time to really learn about an area before pulling the trigger on a real estate purchase.
- The decision to rent versus owning will be a major factor in your choice of locations and your ultimate budget. Get out your calculator and get to work.
Housing can be one of the more complex areas of moving to another country. This is especially true if you’re planning on owning your living quarters. Study up on the local laws governing property ownership in your desired location.
“Wandering re-establishes the original harmony
which once existed between man and the universe”
- Anatole France
There are many issues to consider when it comes to health care. In some locations, you can quickly qualify as a permanent resident and receive the same health care plan available to citizens. In other countries, you must be a citizen to participate.
Costs can vary, but many countries provide outstanding health care at a fraction of the cost of our domestic healthcare system. Panama, for instance, has an amazing healthcare program that ex-pats are extremely pleased with.
In your health care planning, these items are always important to think about:
- Your current health insurance probably doesn’t apply. Very few healthcare plans in the United States cover healthcare costs in the rest of the world. However, it’s worth checking into because you just never know.
- Do you have pre-existing conditions? Pre-existing health conditions that require ongoing care or treatment might necessitate that you focus on the quality and the cost of health care in your target countries. It would also be wise to consider those countries with very liberal healthcare policies toward foreigners and new residents.
My daughter and I went to an International Living conference in Panama. For four days we listened to ex-pats boast about the wonderful lifestyles they lived, as well as the amazing healthcare they received at a fraction of the cost of the states.
Later in our month-long stay, she picked up a nasty stomach bug. We took her to Punta Pacifico, a John Hopkins hospital in Panama City. The care was amazing. We were there most of the day while they ran a variety of tests. They gave her a translator, which was unnecessary because all the doctors and nurses spoke English very well. When she was diagnosed, they gave her some medication and we proceeded to pay our bill. The staff told me that my American Express travel insurance wasn't accepted there and I would have to pay cash and then get reimbursed by Amex later. I was frightened for a moment. How much cash would this be? We were there all day. She had seen a few doctors and even had a personal translator walking around with her.
My total bill for the hospital, the tests, the doctors, the staff, and the medication... was $60. No kidding.
Access to high-quality, affordable healthcare is important to everyone. Ensure that you are choosing a country that will support your healthcare requirements. Be careful to choose regions that have the facilities you will be needing nearby.
I can't recommend International Living enough, either. Not only are their magazine articles informative but they hold conferences in a variety of countries each and every year. The conference we attended was incredibly informative and we would highly recommend attending if you're serious about living abroad.
International health insurance is another option.
Health insurance is dramatically less expensive in most other countries than it is in the United States. There are short and long-term medical insurance policies designed to reimburse you for medical costs you incur while living in another country.
These tips will help you get coverage at a price that works for you:
- The area of coverage is the first consideration. Policies are normally limited to a specific country. If you’re going to be traveling to other countries as well, you would need to get a short-term policy to cover that trip.
- Costs can vary a great deal from country to country, so be sure to check the costs before picking your dream location.
- Pre-existing conditions may be covered minimally or not at all. For example, complications related to well-controlled diabetes (it must be documented) are frequently covered. However, the bad knee you’ve had for the last 10 years will probably prevent your knee replacement from being covered although surgery costs may be significantly less than your coverage's deductible here.
- Standard international health insurance will cover the basics. This commonly includes inpatient care, post-hospital treatment, home-based nursing services, emergency evacuation, emergency dental, and complications due to pregnancy. Routine pregnancy and dental costs are not covered with certain plans. Outpatient care is not covered.
- A comprehensive policy will cover more. In addition to the above, a comprehensive plan will also cover most outpatient expenses. Routine maternity and dental are also covered with some plans.
- Check all the numbers. Just like in the US, premiums, and deductibles can vary. The items that are covered and excluded also vary from policy to policy. Lifetime maximums normally apply, too.
- How does it pay? Be sure to determine whether or not the insurance company will pay the provider directly. In many cases, they only reimburse your costs, and you’re required to pay the bills upfront. Shop around to get the plan you need.
- Consider your needs. If your health is excellent, you might require less coverage than someone who isn’t blessed with great health.
- Consider a hospital insurance plan. As the name suggests, this plan is only usable with the hospital specified on the policy. Sometimes, affiliated hospitals are included in the plan. If you’re not going to move around much in your new country, it can be a less expensive solution.
International health insurance is a wise investment for most retirees. If you don’t qualify for local insurance coverage, an international health plan is the only viable option. Plans are normally quite inexpensive compared to the health insurance premiums you’re used to paying. Don’t discount this important insurance before you check it out.
While Panama still uses US Currency, other countries do not. Also, opening a bank account there is not an easy task. One cannot just walk into a bank and open an account. Introductions are required, seriously.
Naturally, you’ll still require access to your money. While it’s certainly possible to open an account in your new country, you might decide against it. Between online banking and the fact that many banks are international now, you might be able to find an option that doesn’t require you to open a bank account in your new location.
Consider these ideas:
- Getting cash can be as easy as using an ATM. Many banks and online brokerages will allow you to access your money worldwide via the vast number of ATMs around the world.
- Check on the fees. You’re likely to find that different banks have different withdrawal fees for ATM usage. There are some banks that reimburse ATM fees up to a certain amount each month.
- You might be surprised to find it’s unusual for ATMs to charge a fee in foreign countries. It’s your bank you have to watch out for.
- Be sure you can do wire-transfers in absentee. Many banks only permit instructions for international wire transfers to be given in person. Check with your bank to see if they will allow you to fax the instructions or even possibly do them online.
- Investigate paying your bills online. It’s not always convenient or completely safe to pay all of your bills with cash. See if your bank allows overseas online bill payments.
- Have your Social Security check directly deposited into your bank account each month. In many cases, this can even be your overseas account. Check out this site: ssa.gov/foreign/index.html.
- Get a local bank account for local, recurring bills. It can be a hassle to set one up, but it is well worth the time and effort. While it’s not a necessity, it’s a good idea.
The banking aspect of your retirement is hardly an issue at all. Actually, it’s pretty easy to navigate with just a little planning.
“Twenty years from now you will be more disappointed by
the things you didn’t do than by the ones you did do.
So throw off the bowlines, sail away from the safe harbor.
Catch the trade winds in your sails.
Explore. Dream. Discover.”
- Mark Twain
Tips and Tidbits
A few smart tips can go a long way. Expatriates frequently mention several things they wish they had thought of before moving abroad. It’s not easy to think of everything and you’re bound to forget some detail. Therefore, it’s extremely helpful to learn from someone else’s experiences and mistakes.
Here are several key tips you might not have considered on your own:
- Renew your driver’s license before you leave. You might be able to use your current driver’s license overseas. Some countries make it challenging for a foreigner to get a driver’s license. There can be a significant waiting period and substantial cost.
- Consider if you will even need a car where you’re going. Mass transit is much better in many other countries than it is in the US. Remember that renting a car is always an option.
- Think about a cell phone. You might be able to use your current cell phone, but the roaming charges can really add up. Most US phones are ‘locked’, which prevents you from being able to use that phone with another carrier.
- The easiest solution is to get a phone in your new country. Pay as you go phones are very inexpensive overseas.
- Keep your current phone and pay the roaming charges while investigating retirement havens. Get a new phone after you move.
- Figure out how to manage all of your belongings. A lot of your household items probably aren’t worth moving halfway across the world. The transportation fees would be outrageous.
- Some countries will allow you to import your items duty-free, but some will impose hefty taxes. Be sure you understand the situation.
- Look at the replacement cost of your items in your new country. Then consider the cost of transportation. For larger or inexpensive items, it’s probably much less expensive to sell the item, pocket the cash, and buy new ones after you move.
- Not all real estate practices are universal. In the United States, when you purchase a home, you normally also get the lighting fixtures and appliances. However, in some countries, that is not the case.
- For example, if you’re moving to Panama, your dwelling will not be equipped with any appliances or light fixtures.
- Outside the main cities, it’s frequently customary to seal a rental agreement with a handshake, not on paper. Check and make sure that is an actual custom in your new country and not someone trying to pull a fast one.
Keeping the above tips in mind will make your transition much easier.
Retirees who have moved abroad have also mentioned many mistakes that they made when moving to a new country.
Consider their advice:
- Not using the locals. If you have a real estate question, local tax concern, or any other issue that requires an expert, the expert that normally helps you in the US is not going to be any help whatsoever. Use someone local and make them your new “expert.” The "expert" you find here is most likely charging you several times more than a local there would. Don't fall for it.
- Underestimating the cost of living. Why most ex-pats suggest renting first: you'll figure out where you want to be and how much it really costs. While part of the goal is to find a less expensive place to live, you still have to use accurate numbers. Be sure you’re doing all the necessary research to ensure your cost of living numbers are realistic.
- Living beyond your means. No matter where you go, there you are. That’s another way of saying that your tendencies will tend to follow you wherever you go. If you’re prone to outspending your income in the US, you’re likely to behave the same way elsewhere.
- When people first move, they tend to go into “vacation mode.” As a retiree, you’re not really on a 20-year vacation and you can’t spend as if you are. Remember, you’re living your day-to-day life, just in a different location.
- Underestimating moving costs. Most people tend to do well when estimating the cost of housing, food, electricity, and other expenses. But the costs associated with moving are another story.
- It’s the one-time or once-a-year costs that tend to surprise people. Legal fees, unusual taxes, fees associated with real estate purchases, and the like can be problematic if not taken into consideration.
- Ignoring exchange rates. It can worthwhile to consider getting some expert advice on whether to keep your money in US dollars or in the local currency.
- Not updating your will. Your new country might not recognize your will and could seize all of your local property upon your death. You are likely to need a local will for your local assets.
Try not to make the same mistakes as others before you. Keep these items in mind and you’ll avoid the challenges they can present. Going to an International Living conference touched on all of these and so much more. The investment in education is worth it.
It doesn’t seem possible to escape taxes completely and the US is more brutal than many when it comes to income earned overseas, even if you become a citizen of your new country. The only way to completely escape US taxes is to renounce your citizenship or keep your income extremely low.
Keep these issues in mind regarding taxes:
- Most foreign countries do not tax retirement income from pensions or from Social Security. This isn’t true everywhere but tends to be the norm.
- Your age matters. In some locations, tax breaks are given to those over a certain age.
- You’ll have to file tax returns in both locations. The US is one of the few countries that will tax you if you’re living outside of the country on a permanent basis. As you can imagine, your new local tax laws will vary wildly by location.
- Some countries have agreements with the US that will help you avoid double taxation. Other countries don’t tax any income brought into the country. Make yourself aware of the tax situation.
- You’ll need 2 tax attorneys, one in each location. Do not designate yourself an expert on international tax issues. Hire an expert. The best expert is almost certainly not the same person that does your taxes each year now.
- The IRS has a foreign earned income tax exclusion (FEIE). This might be helpful, depending on whether or not you intend to earn any income in your retirement. The IRS doesn’t tax you for the first $97,600 (2013) you earn in your new country. Keep in mind that this only applies to wages and self-earned income.
- Your income earned from investments is not protected by the FEIE.
- To qualify for the FEIE you must pass 1 of 2 tests. The first test is the 330 Day Test. You must live outside of the country for 330 days out of 365. The 365 days may span 2 calendar years, March 1st, 2013 and February 28th, 2014, for example.
- The second test is the Bona Fide Residency Test. In this case, you must move to another country and make it your home. You can intend to return to the US at some future date, but you must move to another country for at least one full calendar year.
You definitely want to hire an expert to assist you with your tax concerns. This is especially true if your finances are complex.
Interesting Retirement Locations
“Adventure is a path. Real adventure – self-determined,
self-motivated, often risky – forces you to have
firsthand encounters with the world.
The world the way it is, not the way you imagine it.”
- Mark Jenkins
Here you’ll find several communities that meet our $2,000 a month limit. You’ll see the total monthly cost including renting a home (the most expensive option) and owning an apartment (the least expensive option).
These expenses are included in the monthly cost of living estimates:
- Rent (if renting)
- HOA fee (if renting)
- Cable TV
- Transportation (public)
- Property Taxes (if owning)
- Homeowner’s/Renter’s Insurance
- Household help
These locales are tempting choices for retirees looking to live abroad on a budget:
- Ambergris Caye, Belize
- Monthly Cost of Living when you own an apartment: $2,000
- Monthly Cost of Living when you rent a house: $2,750
- This is the most expensive option in our list of desirable retirement destinations. The climate is tropical and warm all year round. If your retirement dream revolves around the Caribbean, this is the place for you.
- The real high points are the taxes and language (English). The low points are the schools/education. The health care and infrastructure are average, but they’re adequate for the needs of most people.
- Samana, Dominican Republic
- Monthly Cost of Living when you own an apartment: $1,420
- Monthly Cost of Living when you rent a house: $2,172
- Samana is several hundred dollars less expensive per month than our previous location. The advantages and disadvantages, however, are similar. Though English is not as prevalent, there are many English-speaking folks around.
- The main draws to this location are the ocean beaches and water-related activities.
- Cuenca, Ecuador
- Monthly Cost of Living when you own an apartment: $960
- Monthly Cost of Living when you rent a house: $1,427
- Cuenca is considerably less expensive than our Caribbean options and is actually a more desirable place to live in many ways. The climate is spring-like all year long with highs in the 70s and lows around 50. It’s at the equator but in the mountains.
- The quality of healthcare is excellent and costs about 15% of the costs in the US. You can get by without learning Spanish, but speaking Spanish would greatly enrich your experience.
- Cuenca has nice museums, theaters, and other public places. However, many other parts of Ecuador are not as developed. The natural beauty is impressive, though. The school system is also quite good.
- Languedoc, France
- Monthly Cost of Living when you own an apartment: $1,070
- Monthly Cost of Living when you rent a house: $1,855
- Languedoc, our first European suggestion, has a variable climate. The summers are hot and dry, while the winters are wet. Spring and fall are both cool.
- Healthcare and the education system are among the best in the world. The same can be said for the cultural and recreational opportunities.
- Though most people in France can speak English, the citizens are less than enthusiastic about those who don’t at least attempt to speak French. A few lessons and a little effort can go a long way.
- Abruzzo, Italy
- Monthly Cost of Living when you own an apartment: $1,120
- Monthly Cost of Living when you rent a house: $1,660
- The climate in Abruzzo is similar to Languedoc.
- The healthcare system is also among the best in the world.
- You can get by without learning Italian, but it is recommended.
- Abruzzo is also one of the more attractive areas of Italy.
- Kuala Lumpur, Malaysia
- Monthly Cost of Living when you own an apartment: $710
- Monthly Cost of Living when you rent a house: $1,190
- This may be our best location. There are no real weaknesses and the cost is very low. The healthcare system is very good, though not quite up to the standards of the European options. Healthcare is also very inexpensive.
- Many languages are spoken, though nearly everyone knows and uses English on a regular basis.
- The climate is hot and humid. Temperatures average in the mid 80’s all year-round.
- Morelia, Mexico
- Monthly Cost of Living when you own an apartment: $695
- Monthly Cost of Living when you rent a house: $1,130
- Morelia has some of the cheapest real estate around. A nice house can be rented for as little as $200 a month. A large 4-bedroom house can be purchased for less than $150,000.
- The temperatures in Morelia are consistent year-round, mid-80s during the day and 50 degrees at night.
- The healthcare offerings are very good.
- If you don’t want to venture too far from home and being on the ocean isn’t important to you, Morelia is worth checking out.
- Chiang Mai, Thailand
- Monthly Cost of Living when you own an apartment: $650
- Monthly Cost of Living when you rent: $950
- Chiang Mai is the least expensive option on our list. Purchasing real estate is a risky proposition because, in Thailand, foreigners cannot own land, though they can own construction. This means you can own the house, but not the land.
- Expect temperatures in the 90s year-round and a lot of rain from May - October.
- The healthcare is very good, and your English will suffice.
There you have 8 great locations spread over much of the world. Hopefully, you found something on this list to your liking. There are many other great places to retire as well. For more intriguing locations, search online or find a book dedicated to retiring overseas.
Think about the climate and geographic location you prefer and start looking there. Keep in mind your other potential requirements, such as healthcare, cultural activities, and entertainment.
Retiring overseas is a big step, but it’s exciting and certainly doable. The most important step is to simply get started. Look at your finances and timeline. From there, you can develop a budget and start looking for your dream spot.
Though you can do a lot on your own, you’re going to require experts to assist with certain parts of your transition. The tax situation, in particular, can be complicated. Owning real estate when you’re a foreigner can also be complex in many countries.
There are many great places to live with much to offer. And all of this at a much lower cost than you would experience in the United States.
Get started today and take the first step toward your exciting retirement in a new country.
Michelle R Russell
© The Prosperity Process, LLC
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