How to Afford to Retire in 2011

Your retirement locale can impact your ability to retire.

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Whatever figure you have in your head for how much money you need to retire, forget it. That’s not the point.

Between approaching zero interest rates, low investment returns, and tax rates, you’ll likely never feel like you have enough money set aside for your retirement. And while you’re working to build a nest egg you think will carry you the distance, healthy years of your life are passing by. These are years you’ll never again have to look forward to, no matter how much you eventually succeed in building your retirement accounts.

[See 10 Tips for Retirement Overseas.]

The question, therefore, isn’t how much money you need to retire. The question is, how much money do you have? And what kind of retirement lifestyle could that buy? In some U.S. destinations, the cost-of-living can be remarkably low. Beyond Manhattan and Los Angeles, U.S. cities can be downright cheap in this downturned age. You could retire to Tulsa or Dayton and live out your days on your Social Security checks alone, if that’s the beginning and the end of your retirement budget.

Those nowhere near the age of Social Security eligibility may also be able to retire in 2011 if they pick the right place. How much money would you have if you sold everything you own right now? Maybe that’s enough to buy you a 2011 retirement, as long as you keep your lifestyle expectations simple and your geographic objective away from any U.S. coastline.

[See The World’s Top Retirement Havens For 2011.]

Here’s another idea: Look beyond the United States. When you do that, even a Social Security check or the dividends from a very modest net worth could buy you not only retirement in 2011, but also a new life full of adventure and the unexpected.

If your current retirement budget amounts even to $1,200 a month, you could afford to retire this year in some places. In Spanish-colonial Cuenca in Ecuador, for example, the weather is pleasant, the lifestyle is relaxed, and the surrounding mountain views are inspiring. Other affordable retirement spots include lakeside Granada, Nicaragua, the Pacific coastal city of Las Tablas, Panama, and Chiang Mai, Thailand, a historic and cultural city that more than 17,000 expats already have chosen to make home. In Kuala Lumpur, Malaysia, one of the world’s most exotic and comfortable places to live, you could not only retire on $1,200 a month or less, but you could reinvent your life in the process.

[See How to Choose an Overseas Retirement Haven.]

Would you be happy living in Cuenca or Kuala Lumpur? I don’t know. But I can tell you that the secret to affording retirement at any age is identifying a place where whatever retirement budget you have will buy you a lifestyle you’ll like.

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.