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

If you have traveled internationally, you have probably visited charming, exciting places and fantasized about what it would be like to retire there.

There are many reasons why retiring to a different country seems tempting. Maybe you want to enjoy your leisure years in a locale with a warmer climate and breathtaking natural beauty. Perhaps you are ready for a new adventure and the opportunity to discover new lands and experience new cultures. Or maybe you are concerned about the current social and political situation and you don’t like the direction in which your country is headed.

If you are concerned that you haven’t saved enough for retirement, retiring to a country with a lower cost of living and cheaper healthcare costs might seem appealing.

The internet is awash with fanciful stories and articles about how you can live comfortably overseas for just $1,500-2,000 a month – which is within range of most people’s Social Security checks.

The figures these articles quote typically include rent for a two-bedroom furnished apartment, meals (including some meals eaten out), utilities, and Internet service. The people who write these articles claim you don’t have to pinch pennies to achieve these results, nor do you have to live in squalor. They paint a rosy picture of a carefree, exotic lifestyle where everything can be enjoyed for a fraction of what it would cost in the US.

Can this be true? Such claims should reasonably raise a red flag and prompt you 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 $2,000 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.

Even in small countries such as Panama and Uruguay, there is a wide range of housing options available. Some are modest and some are luxurious, and price tags vary accordingly. There are some very desirable areas and some not-so-desirable areas. Generally, you get what you pay for.

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 some research on important topics such as these:

1. What are the immigration requirements?

Not all countries roll out the welcome mat for retirees. The immigration process is often lengthy, tedious, and expensive. In some cases, your only option is to move while you are still working or below a certain age in order to obtain a residency visa.

After doing quite a bit of research on visa requirements for my book, The Quest for Retirement Utopia, I came up with only about 30 countries that offer either a retirement visa, or a visa that simply considers the amount of income you have. Most countries offer a visa only for work, study, or family reunification. You can get into a few others with a very substantial investment in property or a business.

Most countries allow non-citizens to remain in the country for up to 90 days. You can visit Canada or Australia for up to 180 days or New Zealand for up to 9 months, so a partial-year living arrangement in these countries may be possible.

2. How can you participate in that country’s health care system?

You can find world-class healthcare at considerably lower costs in many overseas retirement havens. But since you have not paid into their system during your working years, you will need to purchase health insurance to cover major medical expenses and pay out of pocket for everything else. This will still be more affordable than healthcare in the US.

3. What is the weather like year-round?

If you have visited your potential destination only during their tourist season, you should experience or at least research what it’s like during their rainy season and how hot and cold it gets throughout the year. Also find out if the area is prone to hurricanes or other undesirable weather phenomena.

4. How stable is the government?

Learn everything you can about the local system of government, the laws, and the country’s political history. Consider the current political environments in countries like Nicaragua, Venezuela, Argentina, Brazil, and the Philippines. Assess whether the potential for political upheaval exists in the country you are considering and think about how comfortable you would feel if your new country experiences turmoil.

While there have been many unsettling events in the United States, the US government is still more stable than many other governments in the world – believe it or not.

5. Will you be accepted?

Talk to locals, read local news sources, and search for expat blogs to gain insight into how foreigners and minorities are accepted by the local people outside of the tourist zones. Will your religion, race, or sexual orientation be an issue?

In some countries, especially those where people are proud of their distinct heritage and traditions, many locals simply do not want to see foreigners move in.

Next, conduct an honest self-assessment. Ask yourself (and your spouse, if you have one) questions such as these:

6. Do you speak the language, or are you willing to learn?

If you hope to truly enjoy the culture and people in your new home, you really should learn the language. If you move to an English-speaking expat community, you may never fully engage with the local community. In places where English is widely spoken as a second language, the locals may speak English with you out of necessity but you may find it difficult to become integrated into their community.

7. How often will you want to return home?

You will probably want to return occasionally for holidays or significant events such as weddings or funerals. Travel expenses could significantly offset the savings you are hoping to realize by moving to a place where the cost of living and healthcare is lower.

8. How much are you willing to leave behind?

Shipping a lot of possessions to another country will be expensive. You will probably live in a smaller domicile than you reside in now. Most long-term expats sell everything and either rent a furnished apartment or buy what they need once they get there.

9. What cultural, entertainment, and recreational amenities will you have to do without?

If you enjoy American TV shows, theatre, movies, concerts, and sporting events, most of these will not be available in your overseas destination. Of course, every place has its own cultural, entertainment, and recreational amenities. If you are willing to discover and embrace what’s available in your new home, you’ll be happier.

10. Can you adjust to the differences in shopping and dining options?

If you are accustomed to large shopping malls, grocery stores with a wide selection, big box retailers of all types, and a plethora of restaurants offering a wide variety of world cuisines, your shopping and dining options will be more limited If you retire to a smaller town in a smaller country. On the other hand, the food you buy from marketplace vendors will be fresher and more delicious, and the food in the local restaurants will be wonderfully authentic.

Familiar US stores such as Walmart, Costco, and Home Depot are present in some other countries. Local stores are generally smaller and more specialized. You won’t recognize many of the brands at first. You may be able to find some familiar brands that have been imported, but they will be more expensive because of the shipping costs and tariffs.

Believe it or not, Amazon doesn’t operate everywhere in the world (yet). Shocking, I know. Online shopping and fast, reliable, and safe delivery may not be available in places you are considering.

11. How is the pace of life different, and will you enjoy that?

In most other places in the world, the pace of life is slower than in the United States, particularly in larger US cities. This may be just what you want, but you may find the more leisurely service you get from waiters, repair people, and government agencies to be frustrating. In the US, when you are expecting a delivery or repair person, you are usually given a two- to four-hour window. In many parts of the world, you’ll probably be given a two- to four-day window.

Street cars

12. How adaptable are you to change?

You shouldn’t expect other countries to be America Lite at a fraction of the price.

Day-to-day life is different in other countries. Many people don’t own a car; they rely upon public transportation, walk, or ride bicycles or scooters. Dwellings are smaller and simpler, and most people own significantly fewer possessions. Local customs, political viewpoints, and religious influences may be quite different from what you are accustomed to.

Even veteran expats and seasoned world travelers experience culture shock and homesickness. Most people who move overseas question their choice at one point or another. Are you willing to endure these periods of uncertainty until you become better adjusted to your new surroundings?

13. How comfortable are you in different surroundings?

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

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 US and other First World nations. Even living on $1,500-2,000 a month, you will be among the upper class. There are slums and people living in extreme poverty in countries with a cheap cost of living. Even those who earn middle-class incomes live in homes that are noticeably more modest than you are accustomed to. It’s a different standard.

Even though you won’t have to live in these areas, it will be difficult to avoid seeing them or passing through them as you live your day-to-day life. How will you feel about seeing this?

14. 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. As you probably discovered during the COVID pandemic, seeing and talking to someone on Zoom, Skype, or Facetime is not quite the same as being in the same room with them.

If you expect to confine yourself to an expat community, speak English, and try to recreate the type of home and lifestyle you enjoy now, then not only will you be less likely to achieve cost savings, but you’ll be shutting yourself off to all the good things a different place has to offer.

People who enjoy the best experience abroad do so by making friends with the locals as well as their fellow expats. 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 inclined to keep to yourself and stay in your comfort zone?

~~~~~ continued below ~~~~~

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15. Are you willing to do a lot of research and get good advice?

The real estate market and the home renovation/contractor market, in particular, operate very differently in other countries. If you move to an area with a strong expat community, get connected with them so that they can recommend reputable people and advise you about local laws and practices. If you move to an area without an expat community, you will need to do a lot of research and learning. If you’re not fluent in the local language, you will be at a particular disadvantage.

Many of the most highly-touted foreign retirement destinations are in Latin America. If you are from the US or Canada (or another predominately white, English-speaking country), you will be a 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. Unscrupulous dealers can get away with this because the prices still seem cheap to Americans and because you don’t know any better (yet). Being a Gringo may make you a higher-profile target for theft, as well.

If you decide to move someplace else, you would be well advised to hire a reputable immigration attorney rather than trying to navigate the immigration process on your own. An expert knows how to fill out all the paperwork properly and has a working relationship with the people at the local government agencies. Hiring an expert will cost more money, but it will save a lot of time and aggravation.

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

You and your spouse (if you have one) would do well to make a list of everything in your life that will change when you move to your new country – even the most mundane things. This may include the stores you shop in, the types of food you eat, your favorite TV shows, American movies, the sports you follow, the live music and arts scene you enjoy, your favorite restaurants, and so on.

What is available at the destination you are considering? What are you willing to do without? 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 eat now.

Think about which possessions are most important to you in your day-to-day life or for sentimental reasons. Determine what you will want to move with you, what you can replace in your new home, and what you will do without.

17. 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 maintain the lifestyle 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 makes sense that if you don’t own a car, you live in a smaller home, and you own less stuff, it will cost you less to live. You will be spending less money for a scaled-back lifestyle. Could you do the same if you stayed in the US?

It also depends on how often you plan to travel home. Mexico and countries in Central America and northern South America are only a few hours from the US, 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 healthcare. The United States has, by far, the most expensive healthcare in the world, and costs continue to rise well above the rate of inflation every year. In your new country, you will need to buy private health insurance to cover major medical events and pay for everything else out of pocket. It’s still far cheaper than the US, and in many countries, the quality of healthcare is on par with the US.

18. Do you really want to do this?

If you thrive on adventure and discovering new places, you will probably enjoy this experience.

The more patient and flexible you are and the less you approach your new country with high expectations and preconceived notions, the more you are likely to enjoy your new home.

On the other hand, if you are considering retiring overseas primarily as a way to save money, it’s more likely that you’ll be miserable.

The place you move to should truly excite you, even after several visits. It should feel right. Don’t move somewhere that you think you will be able to merely tolerate.

Most important, give your new location a trial run for a year. Rent a home in your new locale. Don’t sell your house and your possessions until you have experienced your prospective new home during all four seasons and you’re sure you are going to like it.

Now it’s your turn!

Does the idea of retiring overseas appeal to you?

Where would you move?

What are the most important considerations for you?

What concerns do you have?

Please share in the comments below!

Other articles about retiring overseas:
10 Great International Retirement Destinations
Fabulous Places to Retire: Spain
Fabulous Places to Retire: France
Fabulous Places to Retire: Uruguay
Fabulous Places to Retire: Colombia
Fabulous Places to Retire: Portugal
Fabulous Places to Retire: Malta

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© 2021 Dave Hughes. All rights reserved.

Photo credits:
Sidewalk cafes (Puerto de la Cruz, Tenerife, Canary Islands, Spain): Pedro Szekely. Some rights reserved.
Passport and residency paperwork: Beatrice Murch. Some rights reserved.
People asking directions: gavilla

Street cars (Madeira, Portugal): POR7O
Fruit in a market: Arturo Rivera

4 Responses

  1. Marilyn says:

    Thanks for this wonderfully comprehensive article, Dave! It’s SO important to consider the elements of moving abroad besides PRICE!! Re. item #3 – we need to remember that climate change IS REAL! (When we moved to AZ 17 years ago, the summers weren’t ANYWHERE near as hot as they have become, and the winters weren’t nearly as cold!)

    Something else I hadn’t anticipated in retirement was how much more our lives would become INTERNAL, as we now have the time to pay attention to and process our feelings, memories and emotions, especially during these pandemic times! My wanderlust was quenched in 1975, the summer I worked on a cruise ship sailing the Caribbean and South America, as well as a 6-week gig in Puerto Rico; it was a fun adventure but I knew for sure, for better or worse, I prefer the USA! ❤️

    • Dave Hughes says:

      Hi Marilyn,

      Thanks for your comments. I didn’t know you worked on a cruise ship. That’s similar to moving to a foreign country in that some people seem to like that experience a lot more than others.

      Re: climate change, that’s another topic for another article. I just finished reading a book on that, and the implications and consequences are mind-boggling. I’m still processing it all in terms of what I might have to offer here.

      Yes, it’s definitely hotter in Phoenix now than it was 25 years ago when I moved here.

  2. patricia frame says:

    Great article Dave! I have been lucky enough to live in other countries while working and the differences thrill some and make others unhappy. Doing one’s homework and trying the place first are vital. Of course the same is true of moving within the US to a cheaper locale – many try but a lot are unhappy and moving back is often harder. Still, so many retirement articles on living in some inexpensive place do not talk about all these items so I really like your checklist of what to think about!

    • Dave Hughes says:

      Hi Patricia,

      Thanks for your comment. In hindsight, I wish I had availed myself of opportunities to work overseas for awhile. I’m sure there are pluses and minuses to every place. I have a couple friends who are working in China now, and they like it – or at least they have found things to like.

      There are many factors that play into how much or how little it costs to live someplace, but I think desirability plays a large role. The market generally reflects that.

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