More on Retiring Inexpensively Abroad

I've said that I think retiring in a foreign country is a viable alternative for those people who really need to stretch their retirement funds (I also admit that the suggestion isn't the most popular with many people.) Now Consumer Reports is discussing the idea with an author who talks about retiring abroad. Here's a summary of his thoughts on living abroad for a modest amount of money:

Yes, especially Latin America, where the cost of living can be half the U.S. level or under. You can rent a small house in Chapala, near Guadalajara, for $500, and gardener and maid service is very affordable. Even in Europe, where the dollar is weak, avoid the expensive places where everybody else goes. So instead of Provence or the Riviera, try Languedoc-Roussillon. Instead of Tuscany, try Umbria. You can find places that are even cheaper than the United States. In fact, right now is a really interesting time to consider going to Europe. The price of real estate has fallen perhaps even more than here. In Spain, for instance, house prices have dropped between 50 and 60 percent.

And he offers this suggestion for people in their 40's and 50's who may want to take advantage of this idea one day:

I’d say instead of vacationing in the same place every year, use that time to visit different places. Check your fantasy file, and if you’ve always dreamt about Italy, for example, go there for a couple of weeks. While you’re there, don’t just see the sights, but talk to other expats and get a feeling for what it was like for them to move. The main advice is, do your checking beforehand. Don’t rush headlong into it, don’t leave your brains at the border. You really need to know what you’re doing and where you’re going.

I'm not sure I could ever do this. Moving to another part of the world, learning a new language (in many cases), learning the culture, etc. -- seems like too much "adventure" for a guy like me who likes things to stay the same. Then again, I'm saving fully for retirement so I don't have to consider moving if I want to retire before I'm 85. For those who can't/won't save, this is still a viable option and one that many will prefer to working an extra five or ten years.

Comments

[Money Reasons]

I like this idea! But, I've thought about it for my family, and I don't think I could take the plunge. Plus, I'm still in my prime earning years.

If my family scenario was different today, I would take a hard long look at it. Heck, I was even thinking of Canada, but now their currency is pretty equivalent to the U.S. currency, I changed my mind. So there isn't as much benefit as there use to be going there.

Just curious if one does take the plunge and move to another country, what happens to their social security benefits? I would imagine that they still receive social security, but what about medicare?

[BillV]

My bride and I live along the Great lakes. But neither of us likes the cold or snow. (Especially the snow. She watches some show called 'International House Hunters' or something like that for fun. I have reservations myself about moving to Central America or Chapala.

We have discussed selling our current place, and renting around the country to see where we would like to move. She prefers the southeast--Hilton Head, I like Sonoma, Az. HH is very nice too. Of course it means we would sell or store much of our stuff.

My point though (it's hidden in the above ;-) ) is before making any such move the article gives an important piece of advice. Live there for a while. I would add " Be sure to visit there in off season or the bad weather season to be sure you can tolerate it. Next year we plan to rent a place in HH in Feb or March. That is the colder time there. Low 60's as opposed to the low 30's where we are now.

[BillV]

I meant Sedona not Sonoma what it's worth.

[Old Limey]

An extremely important factor as you get up in years is HEALTHCARE.
You need to be in a medicare plan that can provide you with great doctors and specialists, a great clinic with the latest diagnostic equipment, and proximity to a fine hospital. Thanks to Medicare, my wife and I have all this for the combined total cost of $222/month. Even our most expensive prescriptions only cost us $50 each for a 3 month supply, again thanks to Medicare.

If we moved South of the border, apart from the language barrier, Medicare would do us NO GOOD at all. We would have to pay for everything, knowing well that the quality of healthcare would be far below what we have through one of California's finest healthcare institutions, the Palo Alto Medical Foundation.

There's also the issue of safety. We live in a very well run city of 110,000 people with excellent fire and police protection. The fire station is a few blocks away and a 911 call could have a paramedic at our front door in about 2 minutes. The crime rate is very low indeed in our city, and with our own city run electric power company and water company we have underground utilities for phone, cable, electricity, and natural gas and very reliable city services such as street sweeping and bins for green, garbage, and recyclable waste. Another unique city service is the 'Annual Cleanup" - you put anything you like out by the curb and the city haul it away - it's amazing the stuff that some people accumulate.

There are also issues when you get into your final years where you may have to give up driving and may have to move into a place that provides assisted living benefits.

If and when the economy returns to the "Old Normal" there's also the issue that if you move away from an area with expensive homes and excellent city amenities you will probably never be able to afford to move back again if you have a change of heart.

We have been in our home since 1977 and we have it just the way we like it. It's not just the home, its the garden, my vegetable beds and mature fruit trees, the neighborhood, your friends & relatives and familiarity with everything in your everyday life. If we had moved to Mexico in 1992 when we retired it might have seemed a great idea at the time but at 58 you don't think about all of the issues that are of extreme importance to you at 75. Being the handyman type I know everything there is to know about our home, if a problem shows up I know just where to look and what to do, that's another benefit as you get up in years. Fortunately thanks to Prop 13 our property taxes are limited to a maximum 2% increase/year, this has been of vital importance to many of the less affluent retirees in California.

Plus, with the best climate of anywhere I am familiar with, wild horses couldn't drag us away from our home.

[BillV]

In addition to what Ol says, often living in Mexico or Cent America means living in a gated community. While these exist here too, it seems that it would be different there. For me is has the feeling of being a target. Tying into an earlier posting about what it takes to be rich, compared to the locals all the expats would qualify as rich.

I' m happy to be told I'm wrong.

[Old Limey]

BillV
A gated community with a guard at the gate would be a necessity.

We had a vacation in Costa Rica some years ago. It's probably the nicest country in Central America, it doesn't have its own army but has some kind of agreement with the USA for its protection.

Anyway, I asked our local guide, "Why is it that every single window throughout the country has iron bars in front of it". The answer was, "They are for decoration, Sir!" I thought to myself, "Sure they are". I guess the broken bottle glass and razor wire along the tops of the brick walls was also for decoration.

Later in the trip we spoke with an American that was living there, she said she had been robbed several times and also had her car broken into more than once. No way Jose, would I move there.

One nice hacienda that we stayed in also had armed guards patrolling the premises - I wonder why?

[Kyle]

I'm not retired but I do live abroad.

I live in Chile 7-8 months out of the year and the rest of the time I am traveling/in the U.S. My husband and I get top notch health care (on a private plan because we are self-employed, so this is probably even more expensive than what this expense would normally be) for $218 a month, for both of us. We are in the process of looking for an apartment to buy, but we can afford something much nicer than we would be able to in the U.S. For $80,000, while you can't buy something over the top awesome, you can buy a place in a great neighborhood with more than enough space for two people (and a dog). And, because the market is developing, we started a wedding photography business, which is doing fabulously here. Being in South America has afforded us opportunities we wouldn't have in the U.S.

I also qualify for the Foreign Income Tax Exemption because we have residency in Chile. It works out well.

[guinness416]

It's worth considering if you live in a cold climate. Retiring to certain parts of Spain for the Brits and Florida for NYers is practically a stereotype for good reason.

[Old Limey]

A colleague of mine whose family we got to know very well had married a Brazilian woman. The whole family spoke Portugese and English of course, and after retiring at the same time that I did they sold their beautiful home in a very nice neighborhood in Silicon Valley and retired to Sao Paulo, Brazil (the 7th. largest metropolitan area in the world) so that the wife could be with her family. They, and the wife's family were quite affluent and lived in a nice part of town. Even there you could never leave the home unattended or it would be robbed, however they had several servants so it wasn't a problem. However, after a couple of years they returned to California because the crime rate, especially street crime really got to them and they weren't comfortable living there after living in Saratoga, a small, quiet, upscale, Californian village. Last I heard they were living in the foothills of the Sierras where it's very quiet and peaceful and only a short drive to civilization.

[Jim]

If you want a cheap and warm place to retire you can buy a condo in Vegas or Florida for virtually nothing nowadays.

[Noadi]

My dream retirement though unlikely to happen would be to spend it traveling. Now this is 40 years into the future for me so there's no telling what the circumstances will be then.

[BillV]

When I was much younger, in the Peace Corps, and living in a 4th world country, those bars were called 'tief" bars. First floor apts have them in my US city too.

I don't think I want to live in a gated community--at least not now.

[MasterPo]

Ol - Costa Rica (as with many Central countries) has very powerful squatters rights. If you leave your home for more than a day and someone enters and sets up residence - good luck getting them out! (muchless arrested!). That's why Americans (and others) who have bought large estates down there pay people to house sit as a matter of necessity when they come back to the U.S. for family visits etc. and that isn't cheap.

FWIW, MasterPo has heard Belize is very retirement friendly. But many of the same issues as mentioned above.

[Tuan]

FMF,

Just think of it as 2 6-month vacations. One half of the year, you get to stay where you are in the US, get your paperwork/health checks/family gatherings/etc. and the second half is spent away from the usual routine in a cheaper place (maybe). It is still way to early in my life but, I would probably like it just the fact that you get to recharge your batteries every year by having a change of scenery before it gets too dull.

[Wise Finish]

If you do want to retire in Central/South America... Own and learn how to use heavy automatic weapons. It can be a dangerous place.

[The Rat]

@BillV - a relative of mine just recently visited Costa Rica and it's supposed to be absolutely stunning and he had an awesome time. He wants to go back there when he can. I also read an article that it is supposed to be one of the top 10 places to retire in the world!

@MasterPo -the 'squatter rights' you refer to...I suspect you are talking about if you buy a residence or home in the country right and not just renting a property for a few months, right? I'm just curious, because I have heard a lot of positive things about costa rica.

Nice thread!

[Mike Hunt]

Thailand is also a good place to retire abroad, if you don't mind the year-round heat. To get a retirement visa here you only need to keep and maintain about $23K in the bank, if you rent a place and live a simple but fun life your budget would be only $2500 a month, and that's for a very extravagant life of eating out and travelling a lot. Health care is very good (better than the US in many cases even for specialists) and food is excellent. Towns like Krabi or Chiang Mai are less busy than Bangkok.

It would be perfect for someone on a pension looking for a new and great value-for-money adventure.

-Mike

[Old Limey]

Mike:
I couldn't be more positive about Thailand, having been there six times. The people are the absolute nicest and friendliest people I have met anywhere and their Buddhist, peaceful, lifestyle reinforces it. You could have a wonderful and much less expensive retirement in a beautiful home in a town such as Chiang Rai. The healthcare is also of high quality and inexpensive by US standards. I also like the Hindu island of Bali very much, particularly the highlands around Ubud. I suppose, as everywhere there must be crime in Thailand but I have never encountered it or heard of it while there. They believe in Karma, maybe that's why.
However there is one significant disadvantage, as you pointed out. The Climate. If you go in December it's great but many other months you run into extreme heat and humidity and then there are the Monsoon rains to contend with. As much as I like Thailand and Bali I could never retire there because of the climate - I wouldn't want to be a prisoner of my A/C unit for long periods.

[brooklyn money]

I just came back from a vacation in Panama and Boquete, a mountain/cloud forest area, there is overrun with Americans starting businesses and American retirees. The place is gorgeous and gated communities are the exception not the norm. I have also lived in Chile for almost a year and could envision a very nice retirement there as well. Cachai, Kyle?