One of the many benefits and advantages of retiring to a new country can be the opportunity to lower your cost-of-living, perhaps dramatically.
It’s hard to say by how much you might reduce your monthly expenses. It depends on where you’re coming from, where you move to, and how you choose to live. But your cost-of-living anywhere is highly controllable. While some costs are set, many expenses, including the ones that constitute the majority of your budget, can be scaled up or down.
A retirement budget for anywhere in the world, including in the United States, includes the following expenses:
- Homeowner’s association fees, if you live in a building or a development where one is charged
- Health insurance
- Utilities (gas, electricity, water)
- Telephone (land line or cell phone)
- Cable (if you want it)
- Travel (within your new country and return visits to the U.S.)
- Household help (if you want it)
- Miscellaneous (haircuts, dry cleaning, cleaning supplies, etc.)
In addition, you have housing costs, including property tax, homeowner’s insurance, and the costs of maintenance and repairs if you own your own home or rent if you don’t.
Some of the costs on this list are negligible in the scheme of an overall budget, such as a cable and Internet package. So when trying to determine which overseas retirement havens you could afford on the retirement budget you have, focus on the costs that make a real difference: rent, transportation, health insurance, food, entertainment, travel, and household help.
I strongly recommend that you rent rather than own when moving to another country, at least at first. It will cost you $1,000 to $1,500 to rent a nice two-bedroom apartment in a good neighborhood of Panama City. But you could rent a two-bedroom house within a few minutes' walk of the beach on Panama’s Pacific coast near Las Tablas for $300 to $500 per month or a two-bedroom house on the Pacific coast of this country’s Veraguas Province for as little as $150 per month. Your cost of housing in Veraguas could be one tenth your cost of housing in Panama City, and that would make a substantial difference in your budget overall.
Expenses for food, entertainment, and travel can also vary dramatically from one country or even region of a country to another. Your entertainment budget in Paris could be 10 times that of your entertainment budget living in a small French country town. Your weekly visit to the local farmer's market in Otavalo, Ecuador, could yield you a cornucopia of interesting, healthy, tasty foods for, again, a fraction the cost of a trip to the supermarket in Quito.
Transportation costs also vary widely depending on the choices you make. You can take the local buses from one end of Panama City to the other for 25 cents or a taxi across town for $5. The bus ride from Boquete to Panama City costs $17.25, while one-way plane fare is $122. It's a balancing act between how you want to live and what standard of living your monthly retirement income will afford you.
Here are sample budgets for the cost-of-living in 13 overseas retirement havens:
Buenos Aires, Argentina: $4,000 per month
Cayo, Belize: $2,200 per month
Maceio, Brazil: $2,700 per month
Medellin, Colombia: $2,000 per month
La Serena, Chile: $2,500 per month
Cuenca, Ecuador: $2,000 per month
Bearn, France: $3,000 per month
Abruzzo, Italy: $2,400 per month
Kuala Lumpur, Malaysia: $1,600 per month
Puerto Vallarta, Mexico: $2,500 per month
Panama City, Panama: $2,500 per month
Chiang Mai, Thailand: $1,200 per month
Atlantida, Uruguay: $2,300 per month
These budgets should serve as a starting point for estimating how much it will cost to live in each of these countries. It's not going to cost you exactly $2,300 per month to live in Atlantida, Uruguay. Your cost-of-living could vary dramatically from these figures depending on the spending choices you make.
While you could spend more living in any of the places listed here, you could also spend considerably less. These budgets include generous allowances for rent and assume a one- or two-bedroom apartment in a central location. They also include the cost of in-country health insurance, entertainment, in-country travel, and regular household help. To further cut costs you could rent someplace less central and nice, spend less on entertainment, and not hire household help. You could also reduce your in-country travel budget to zero if you had to. You can build these costs up or scale them back, controlling your cost-of-living according to your circumstances and priorities.
It is possible to make a move overseas on a strict and fixed budget of less than $1,000 per month. You could live on this budget easily in Thailand, by paring back allowances for household help, entertainment, and travel. You could also manage a comfortable, interesting life on a very modest nest egg in parts of Panama (outside Panama City), parts of Ecuador, and in Medellin, Colombia, again by scaling back on non-essentials and renting an apartment outside the central and expat-popular neighborhoods used for the budget calculations above.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.