Five Places to Retire On Social Security Alone

We've discussed the fact that many people are relying too much on Social Security for retirement as well as how retirees can make their money go farther by moving to a foreign country. Now here's a piece that combines both of these topics. Yahoo lists five places to retire on Social Security alone as follows:

• Boquete, Panama - Resident retirees receive a long list of benefits.

• Granada, Nicaragua - You could live well in Granada on about $900 per month.

• Hangzou, China - About $1,000 a month could buy you a comfortable and super-exotic new life in Hangzou.

• Morelia, Mexico - You could retire on a budget of about $1,100 per month in this colonial city full of charm and history.

• Cuenca, Ecuador - The average monthly Social Security check could buy you a pleasant new life in Cuenca.

Of course, there's a lot more to the decision to move abroad than money. I've listed the issues to consider in my post titled How to Afford Retirement: Move to a Foreign Country.

A few thoughts from me on this subject:

1. If a large portion of Americans will be counting on Social Security as their only or primary form of income in retirement, they likely face a lower standard of living in the US than what they've been used to. Moving to a foreign country offers them the chance to live a middle to upper class lifestyle for relatively little money.

2. Other than Hangzou, China, all of these cities are close to the US, making it relatively easy to visit relatives. In fact, you may live closer to family in some of these locations that you would be if you lived on one side of the US and your family lived on the other.

3. Personally, I don't want to have to consider this as a retirement option -- I want to retire where I want (in the US). That's why I'm saving to make that happen. People who aren't saving are limiting their options.

4. We have friends who spend several months of the year in Costa Rica (not because they need to save money, because Michigan winters can be a bear) and LOVE it there. Remember that the US does not have the corner on the "great places to retire" market.

Does anyone know someone who's tried this (or are you thinking about it)? It would certainly to hear about their (your) experiences.

Comments

[brooklyn money]

I just vacationed in Boquete, Panama. Beautiful. Not cheap. Houses start around 300K from what I can tell.

[rdub98]

#6 - A cardboard box under the highway - you can get a new home for free every week if you want depending on how close you are to a Best Buy.

[Budgeting in the Fun Stuff]

My uncle and aunt are retiring to Indonesia next year. They are engineers and only in their early 40's, but they have more than enough to live quite nicely in Indonesia forever. My uncle was born here in Texas, but his wife is from Indonesia and they have been world travelers anyway (met in Algeria), so it fits them perfectly.

I personally have lived in Holland and Argentina...very nice places, but I don't want to live outside the U.S. again. I enjoy that feeling of stability from knowing the culture and the food and the humor. So, we are saving. Alot.

[Matt]

Before you look outside the USA look to rural America. My mom and dad move 100 miles north of Detroit 20 years ago and cut there taxes, auto insurance, living expenses etc. considerably. It is no $1000 a month but well within there budget of what they wanted to live off of. The biggest problem people have is staying in the high rent districts of major urban areas with no assets.

I know for a fact that when I retire I will need to move from where I am now because unless I want to work unil I am 70 I will not be able to afford where I am living now.

[JimL]

China would be my pick. I would have to be in an area, however, that has pollution as most cities are problematic.

[sunil]

the issue many of these reports/articles/studies fail to consider is real estate. real estate is appreciating like nuts everywhere but the USA - most developing nations at least - and yes the places mentioned above as well. so while cost of living in china / india could be $1000 USD per month, and it very well so is, the cost to rent or buy is ridiculous and often not factored into studies i have read. as a world traveler, and owner of properties in several jurisdictions, i have a much different perspective on this topic. sure, there are places where real estate is dirt cheap in countries like china and india, but those places are probably not where you'd want to set up retirement shop.

consider the market in the US today - real estate has crashed, properties in detroit are selling at 70% discounts (including in the community where i have one of my rentals) and in my opinion groceries,etc are not really sky rocketing. in addition, there is government help and a relatively better healthcare system. not sure how much of all that will be there in a few years. also not saying it's better or worse to retire in the USA - rather adding perspective to this discussion

[Old Limey]

All those planning to retire overseas had better buy RosettaStone and start learning your new language. I pity a retiree trying to learn Mandarin. Spanish is a lot easier.

[MBTN]

Agreed that rural US might not be a bad option. There are a lot of rural "college towns" which has a lower cost of living but still offer the activities and culture of a big city. You might not be able to live there on Social Security alone, though...

[MasterPo]

Are those figures gross or net?

If gross the analysis is misleading.

[Foobarista]

The problem is there's no such place named "Hangzou" in China. Not sure how much homework was done if they can't spell the city's name correctly :)

There is a major city named Hangzhou, but it isn't particularly cheap to live in. It's a very nice city near Shanghai, and has an attractive waterfront on a decent-sized lake with forested hills and lots of nearby temples, but nobody in China would think of it as "cheap". It's had the same RE boom as the rest of coastal China.

[Bruce]

I am an American, my wife is an Australian, and we currently live in Europe. Now, since it's hard to predict what the world will look like 20-30 years from now, we have spread our assets all over not only to diversify our portfolio but also to provide asset protection and to give us various opportunities on where to retire. In many ways my philosophy isn't all that different than yours. People who are in the USA relying on Social Security are limiting their options. But then if you take it the next step further, people who are relying solely on the future of the USA (US dollar, US stock market, only a US passport, etc) are also limiting their options.

[Harold]

I agree with the comment about Boquete, Panama. Overall, the cost of living in Panama is steadily rising due to the steadily increasing population of Americans in that country. It is likely to become as expensive, or higher, than the ridiculous cost of living which Costa Rica has become since we gringos discovered and glamorized it 20-30 years ago.

Five years ago my wife and I retired to the highlands of Guatemala. Our driving factors were cost of living and climate. We couldn't be happier. Our monthly expense budget is $1,500 which does not include housing because we purchased our home in full, but it does include luxuries such as a housekeeper and gardener.
We also spent time exploring several places in Mexico to make our home. But you can't beat the year round Guatemala weather or warmth of the indigenous Guatemalan people.
We were also pleased to discover that health care is more than just acceptable here, both in terms of cost and proficiency. Our experience is that first class treatment by specialists taught in the US runs about 20% of US costs, and often lower.
We only miss family, old friends, and good roads. Otherwise, for every trip we make back to the US we quickly find ourselves becoming homesick for our little Guatemalan village. The most we can stand is 2 weeks before getting too settled into the old familiar (yet subtle) complacency of a puritanical and materialistic lifestyle beginning to work its way back into our lives. Not to mention the old familiar costs. While we do appreciate the overall "orderly" ways of life in the US vs. that of Central America, we also find it boring and lacking a sense of personal freedom in contrast.

In hindsight, if we were to start over, the only thing we "might" do differently would be to rent instead of buy. Once you become familiar with the various networks of locals you come to discover many opportunities for very nice places to rent at costs averaging about $250/month, fully furnished and complete with facilities like cable tv, of which we have about 30 English speaking channels for $9/month.
We love our 1,800 sq ft home with all its amenities. But I sometimes think about how many years of traveling around the world discovering new places for indefinite periods of time we could have gotten if we had not directly applied our $135,000 equity from the sale of our US home onto our Guatemalan home. And yes, that was the cost of our 3Br 3Bathroom home with a view on 1 acre of beautiful property with annual taxes of about $100.

But cost of living factors aside, perhaps the biggest bonus we discovered in choosing Guatemala for retirement is the countless opportunities it offers to do something meaningful in your golden years. Many expats definitely do choose to live out their lives on bar stools in the cantinas. But alternatively, there's so many non-profit groups who gladly accept volunteers to do meaningful hands on work for this country, which is one of the three most impoverished in the world.
It's hard to put a price on the rewards one can get from a daily life that includes helping others when you can afford to do that outside the issues of a paying job.

Lastly, another surprise bonus we came to discover is that learning to speak a second language on a daily basis is excellent stimulus for our aging brains.

It's hard to put a price on the value of things like that.

Overall, our advice is to spend serious time discovering places where you're considering moving. For us, after doing our online research, it only took one 10 day exploration trip to Guatemala to realize that the meal was much better than the menu.
Living outside the US is definitely not for everyone. Thank God. And now that we've made it in we wish someone would close the gate.

[Mike Z]

Got anywhere that speaks english? Perhaps TX or TN would be a good place to retire.

[Eugene Krabs]

Fascinating, Harold. Thanks for sharing!

[Roger Goldsberry]

My wife and I retired to rural Nicaragua 7 years ago. Neither of us speaks acceptable Spanish yet but we get by easily. Many folks return here after their careers working in the States. It never gets cold enough to require heating. It doesn't get hot enough to need A/C.
Fresh food is cheap. Domestic help is cheap. The downside includes utilities that are unreliable (water off half the time, etc.), a legal system that isn't, auto drivers that frighten even the most experienced.
We do not plan to ever leave.

[Phillip Stewart]

Interesting. I'm seriously looking at Nicaragua, and Granada would be my top choice. I'm surprised to see it listed since there aren't a lot of Gringos there yet. I have been down there four times now and will be going again in December. So many Americans believe that Central America is dirty and unsafe. Let them keep thinking that until I've closed on real estate.