Can You Really Save Money by Retiring Overseas? Should You?

Are you facing the prospect of a retirement in which the defining characteristic is financial struggle?

Are you concerned that you haven’t saved enough for retirement?

The internet is awash with stories and articles about how you can live comfortably overseas for just $1500-2000 a month – which is within range of most couples’ Social Security checks.

These figures are said to include rent for a two-bedroom furnished apartment, meals (including some meals eaten out), and utilities, including internet service. The people who write these articles claim that you don’t have to pinch pennies to achieve these results, nor do you have to live in squalor.

Can this be true? Such claims always prompt the skeptical me to think, “If it seems too good to be true, it probably is.”

The short answer to this question is yes – you can probably find some acceptable places to live for less than $2000 a month. The major caveat comes with how you define “acceptable.” You will need to make a lot of lifestyle adjustments to be able to pull this off.

Perhaps the better question is, should you move to a different country to achieve a significantly lower cost of living?

In order to answer this question, you need to do an honest self-assessment. Ask yourself (and your spouse, if you have one) questions such as these:

1. How adaptable are you to change?

Day-to-day life is different in other places. The pace is slower, and service can be more leisurely. In the U.S., when we are expecting a delivery or repair person, we are usually given a 2-4 hour window. In many parts of the world, you’ll probably be given a 2-4 day window.

Most people don’t own a car and rely upon public transportation, walk, or ride bicycles or scooters.

Street cars

Dwellings are simpler, and most people own a lot less “stuff.”

Stores are generally smaller and more specialized. You won’t recognize many of the brands of products.

Local customs, political viewpoints, and religious influence may be quite different from what you are accustomed to.

2. How comfortable are you in different surroundings?

Your new environment may be noisier. One couple who lives in Ecuador reports that they use a rain-noise generator at night to mask the sounds that permeate their external surroundings.

You shouldn’t expect other countries to be “America Lite” at half the price. If you expect to confine yourself in an expat community, speak English, and try to recreate the type of home and lifestyle you enjoy now, then not only will you probably be dissatisfied, but you’ll be shutting yourself off to all the good things a different place has to offer.

Outdoor cafe

In many other parts of the world, the difference in wealth and lifestyles between the “haves” and the “have-nots” is even more pronounced than in the U.S. and many other first-world nations. Even living on $1500-2000 a month, you will be among the upper class. There are slums and people living in extreme poverty in most places in these cheap cost-of-living countries. Even though you won’t have to live in these areas, it will be difficult to avoid seeing them or passing by them as you live your day-to-day life. How will you feel about seeing this?

3. Do you really want to do this?

If you thrive on adventure and discovering new places, you will probably enjoy this experience. Have you enjoyed traveling to new places in different parts of the world for your vacations?

On the other hand, if you are considering retiring overseas primarily to save money, chances are good that you’ll be miserable.

4. How good are you at making friends with new people?

When you move overseas, you’ll be leaving your friends and family behind – far behind. While the internet makes keeping in touch easier than ever, you can’t rely on these tools exclusively for your socialization.

The people who enjoy the best experience abroad do so by making friends with the locals. And to do that, you need to learn the local language and customs. Are you willing to strike up conversations with people you encounter in your day-to-day life, or are you more of a keep-to-yourself person?

Many of the most highly-touted foreign retirement destinations are in Latin America. If you are from the U.S. or Canada (or another predominately white, English-speaking country), you will be the “Gringo.” You can counter this by adapting as much as possible to the local norms. You should do this not only for the benefits of socialization; there have been many cases where expats have been charged “Gringo prices” for things (especially homes) that are two to three times what the locals pay, because the prices still seem cheap to Americans, and because you don’t know any better (yet). Being the “Gringo” may make you a higher-profile target for theft, as well.

5. What elements of your current environment and lifestyle would you miss most?

Write down everything you enjoy that is a part of your day-to-day life – even the most mundane things. This may include the stores you shop in, the types of food you eat, your favorite TV shows, the sports you follow, the live music and arts scene, your favorite restaurants, and so on.

Clothesline across street

What are you willing to do without? What is available at the destination you are considering? Will local alternatives be just as enjoyable as what you’re accustomed to? For example, you might discover that you enjoy watching soccer matches as much as American football, and that the local baked goods and fresh fruits and vegetables are even better than what you’re familiar with.

6. Will you be able to achieve the low cost of living these articles claim is possible?

To a great extent, this depends on whether you are willing to live more simply and adapt to living like the locals. The more you try to live like you live now, the more it will cost you – especially if you import the products you are accustomed to using or you are willing to pay higher prices for them in the local stores that import them.

It also depends on how often you plan to travel home. Will you want to travel home for weddings, graduations, milestone birthdays and anniversaries, funerals, and holidays, or are you willing to forego some of these? Countries in Central America, the Caribbean, and even northern South America are just two or three hour flights to the U.S., but making very many of these flights will significantly eat into your savings.

The biggest difference in the cost of living is the cost of health care. The United States has, by far, the most expensive health care in the world, and costs continue to rise well above the rate of inflation every year. In most countries, there are private and public health facilities. You will probably want to use the private ones and either buy private health insurance or just pay for everything out of pocket. It’s still far cheaper than the U.S., and in many countries, the quality of health care is quite good.

For more, read 12 Questions You Need to Answer Before Retiring Overseas.

After considering all these factors, are you still intrigued by the possibilities of moving to another country to enjoy a lower cost of living, as well as embarking upon a new adventure? Here are ten great options for overseas retirement destinations.

Now it’s your turn.

Does the idea of retiring overseas appeal to you?

Where would you move?

What concerns do you have?

Please share in the comments below!

© 2016 Dave Hughes. All rights reserved.

Photo credits:
Malaga skyline: Nicole Abalde. Some rights reserved.
Street cars: POR7O
Clothesline across street: Charles L.
Outdoor café: Linh Nguyen

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