Retirement Planning
Can’t Afford to Retire? Let’s Look at Other Countries
Lower cost-of-living, safety and good healthcare are widely available
It’s the numbers that scare you…
$275,000 in out-of-pocket healthcare costs in a typical retirement, according to Fidelity Investments.
70% chance you’ll need expensive long-term care at some point after age 65, according to the U.S. Department of Health and Human Services — an expense not covered by Medicare, Medicaid or traditional health insurance policies.
20% chance you’ll experience in retirement a financial shock — necessary home repairs, emergency dental, etc. — for which most retirees are unprepared, according to the Society of Actuaries.
$55,000 in annual spending needs for 65- to 74-year-olds, according to the Bureau of Labor Statistics’ 2017 Consumer Expenditure Survey.
$740,000: the nest egg Age Wave/Merrill Lynch estimates a retiree needs to generate just $30,000 a year in retirement.
$172,000 – the median nest egg of Americans in their 60s ($117,000 for those in their 50s), according to the Transamerica Center for Retirement Studies.
No doubt: The third stage of life promises to be expensive.
And few people are prepared for it.
Which is why an AARP study in 2019 found that for nearly half of Americans, life’s greatest fear is running out of money in retirement.
An all too common way pre-retirees manage this fear is the standard “I’ll cross that bridge later.” Problem is, by the time you reach the bridge — realizing retirement is costing more than you can afford — it’s too late to do much about it, other than downgrading your lifestyle or dumping yourself back into the workforce at an age when you’d rather be fishing, traveling or babysitting grandchildren.
A better approach: Accept that America is pricey and give thought to retiring overseas. For lots of people, that’s a bridge too far, and it seems a radical move.
But it’s not as radical as you might suppose. As of December 2019, the Social Security Administration was sending nearly 700,000 Social Security checks every month to recipients living in 180 countries abroad.
To be sure, moving overseas in retirement has its challenges in terms of lost-in-translation moments, cultural differences that make integration frustrating at times, and day-to-day bureaucracy that can make an American DMV office seem the most efficient place on Earth.
Nevertheless, increasing numbers of U.S. workers are opting to retiree overseas these days, and often in countries where the cost of living is sharply lower.
More than 63,000 Social Security checks now go to Mexico – a country that, despite its violent reputation, is a low-cost haven for American retirees because of climate and a high-quality lifestyle that would necessitate a millionaire’s nest egg back in the States.
International Living, a magazine focused on retiring abroad, estimates that, based on the experiences of real expats living locally, the cost of living in Mexico is just under $23,000 a year — less than half of the $55,000 in annual retiree spending in the Bureau of Labor Statistics survey. In some corners of Mexico (beautiful, safe corners) expenses are substantially less.
Given that the average retired American couple is earning combined Social Security benefits right at $2,450 a month, or roughly $29,000 annually, a Mexican retirement means Social Security pretty much covers all your living costs. So, essentially, you can leave your nest egg untouched, or draw on it for whatever fun you want to have in retirement.
Another 50,000 checks, split about equally, go to Social Security recipients in Greece and Italy, countries with great weather, phenomenal food, unlimited travel and exploration opportunities, and inexpensive costs of living.
Another 50,000 checks, split about equally, go to Social Security recipients in Greece and Italy, countries with great weather, phenomenal food, unlimited travel and exploration opportunities, and inexpensive costs of living.
Take a place like Chania, a beautiful, small, 3,000-year-old seafront city on the Greek island of Crete, where the port in the center of town looks like a Disney set. Expat retiree lifestyle here is uber-casual. The food — lots of fish, vegetables and free-range lamb — is almost all local, fresh and far more healthful than the typical American diet. Weather is unbeatable. The scenery (Think: occasionally snow-capped mountains racing to the Aegean Sea) is gorgeous. Numbeo.com, a crowd-sourced font of global cost-comparison data, shows that for $2,860 a month, an American in Chania could live a lifestyle equivalent to $5,500 in Chicago.
Then there are Spain and Portugal.
A combined 25,000 Social Security checks — again, split almost equally — head to that pair of countries every month. With good reason. They rank among the very best countries in the world for expat retirees to stretch their nest egg.
International Living’s 2020 list of best places to retire slotted Portugal in the top spot. The reason: high-quality healthcare, relatively low expenses and the ease with which Americans slip into the local lifestyle. The magazine estimates a retired couple could live a good life there on just $2,200 a month, well within the combined monthly Social Security benefits the typical retired couple receives.
Rounding out the top 10 are, in order: Panama, Costa Rica, Mexico, Colombia, Ecuador, Malaysia, Spain, France and Vietnam. (And if you’re interested in the cheapest places where Americans are retiring, International Living says it’s Cambodia, Vietnam, Bolivia, Peru and Ecuador).
Some of those places, no doubt, sound iffy. But in every location, enclaves of expat retirees from the U.S., the U.K., Australia, Canada and elsewhere are popping up in cities and towns that are safe, beautiful and exceedingly easy on the wallet.
Equally important, these destinations all offer high-grade healthcare from Western-trained doctors who routinely exert a financial sting no more painful than a middling dinner out.
Retiring overseas certainly isn’t right for everyone. But if you have an open mind, an adventurous spirit and a nest egg that promises to underwhelm, then retiring to places like Mexico, Portugal or Greece can stretch your retirement savings further than you ever imagined.