Many retirement spots are beautiful. Some offer sandy shorelines and long coastal vistas, while others boast interesting histories, welcoming populations, and top-notch medical facilities. And, of course, some places around the world are much more affordable than others.
When you consider the world map with the agenda of trying to identify the ideal place to retire overseas, it can be easy to become confused and overwhelmed. Of all the places in the world, which one should you choose?
The trick is to remember that you’re not searching for the world’s top retirement haven. You’re searching for the best place for you to think about retiring. To make that determination, start by clarifying your primary personal agenda. Here are some of the most common reasons people give for seeking out a new life overseas, and where to look in each case to find a lifestyle that’s sure to satisfy these objectives:
Cheap living: Cuenca, Ecuador; Chiang Mai, Thailand; Leon, Nicaragua. Ecuador is one of the world's cheapest places to retire comfortably. You could live in this beautiful, safe nation on as little as $700 per month. That amount would be enough for a simple life in the country. A lifestyle supported by more amenities, services, and diversions could be enjoyed in Cuenca on a budget of as little as $1,000 per month if you own your own home or $1,400 per month if you rent.
Another super-affordable place to retire in Latin America is Nicaragua. You could live well in the second-oldest city in the Americas, colonial Leon, on as little as $1,000 per month if you invest in one of the city's grand old haciendas or about $1,300 or $1,400 per month if you rent.
However, the world’s most affordable places to live in retirement are in Asia, specifically in Thailand, Vietnam, and China. In some parts of Asia you could live simply on as little as $700 per month or less.
Luxury living on a budget: Paris, France; Kuala Lumpur, Malaysia; Medellin, Colombia. You aren't going to live a luxury lifestyle in Belize, no matter how much money you have. There's no fine dining, great shopping, or haute-couture to be found anywhere in Belize, Nicaragua, the Dominican Republic, or Honduras either. It doesn’t exist.
Luxe living has as much to do with opportunity as it does with income. Three places where you could enjoy the good things in life on a budget of, say, $3,000 per month or less are Paris, Kuala Lumpur, and Medellin.
Assuming that you can free up enough cash to buy an apartment in Paris, living in Paris is as luxe as it gets, and can be far more affordable than you might ever imagine. A couple could have a hard time spending $3,000 per month in this city, assuming no rent. Many of the finest offerings in Paris come gratis or nearly so, and transportation is next to free. Telephone, cable, and Internet are a bargain. And, outside the tourist zones, everyday things such as haircuts and groceries can be very affordable.
The very good life is available at even less cost in Kuala Lumpur, a city with thriving nightlife as well as a national opera and symphony, regular concerts, theater, dancing, museums, galleries, five-star restaurants, and international brand-name shopping. Kuala Lumpur boasts all the trappings of luxury living as they’re generally recognized, with an Asian twist. The best part is that you could enjoy it all on a budget of as little as $2,000 per month, including $900 to $1,000 a month for rent.
Another place where you can enjoy regular doses of culture, fine dining, and shopping, plus full-time help around the house and other luxuries such as spa treatments and in-home massage, is Medellin, Colombia. The weather is great year-round, and this city of parks and plazas is beautiful, with manicured gardens and a notable absence of litter anywhere. A budget of $1,800 per month would keep you in high style in Medellin.
Relocating with school-aged children: Montevideo, Uruguay; Panama City, Panama; San Jose, Costa Rica. If you're moving with school-aged children, you might want to consider a city and especially capital city living. That's where you'll find the international schools you need, as well as things like tutors and sports facilities. Consider Montevideo, Panama City, and San Jose.
Entrepreneurs welcome: Panama City, Panama. It’s not that you couldn’t start a business almost anywhere in the world if you want to or need to supplement your retirement income. You could. But starting and running a business as a foreign resident can be complicated, hassle-filled, and sometimes can trigger unwelcome tax consequences.
If your retire-overseas plan includes an interest in running an international business, I recommend Panama. The infrastructure, accessibility, English-speaking labor pool, pro-business and pro-investor agenda, and approach to corporate and personal taxation make Panama an excellent place to launch an Internet business.
International-standard health care: Paris, France; Kuala Lumpur, Malaysia; Panama City, Panama; Medellin, Colombia. If you have an existing health concern, it's essential to consider the health care options in a retirement spot. Large cities are generally the most likely to have excellent health care facilities. France, especially Paris, is generally recognized as offering the world’s best medical care. It’s not cheap, but neither is it as expensive as you might imagine. And if you’re a legal resident, it can be free.
Three other cities offering particularly top-level health care are Panama City, Kuala Lumpur, and Medellin, the last of which is home to five of the best 35 hospitals in all of Latin America. These cities are also home to growing health-tourism industries and among the best places in the world to seek medical care at an affordable (even cheap) cost.
Great weather: Boquete, Panama; Medellin, Colombia; Mountains of Costa Rica; Ecuador. If you don’t like to too hot or too cold, the weather is just right, all year-round in Boquete, Medellin, and the mountains surrounding San Jose, Costa Rica.
English-speaking: Belize; Ireland; Bay Islands of Honduras. If you don’t want to learn a new language, residents speak English in Ireland, Belize, and the Bay Islands of Honduras (though not on the mainland).
Tax-friendly: Belize, Malaysia, Panama. Most countries are relatively tax-friendly when it comes to retirees. A foreign resident’s pension or Social Security income is often not taxed. However, you could owe tax in the U.S. on your retirement pension income. That tax obligation must always be considered as separate from and in addition to the local tax burden in your new jurisdiction. For example, if you retire from the U.S. to Panama, while you’ll owe no tax on your pension income in Panama, you could owe tax on it in the U.S.
Things get more complicated when you have passive (investment) or earned (wages or business, including self-employment) income to report. Tax rules vary greatly from jurisdiction to jurisdiction. A few countries (including the U.S.) tax residents on their worldwide income. As an American abroad, no matter where you go, you’ll always carry your U.S. tax obligation.
Some countries tax foreign residents on what’s called a “remittance basis,” meaning they expect their share of any money you bring (remit) into the country. This can work to your advantage if you earn your money outside the country and are able to live on little. Some countries tax foreign residents only on income earned locally. If you earn no money locally, then you have no local tax burden. This is as good as it gets from a tax-planning point of view, and this is the case today in Belize, Malaysia, and Panama, among other jurisdictions.
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.