Many Americans, especially those with a sense of adventure, are choosing to retire abroad these days to Asia and the Pacific Rim. Along with new cultures and experiences, becoming an expatriate in these lands has a financial benefit: The cost of living a hemisphere away is often far less than at home in the U.S., or in retirement destinations in Europe or the Caribbean. One country in particular that's rapidly getting more popular for expat retirees is Indonesia.
Expanding across the equator for 3,100 miles, the fourth most populous nation in the world actually consists of 17,000 islands, the best-known being Java (which houses approximately 57% of the population), Bali, Papua, Sumatra, Kalimantan and Sulawesi. An expat settling in Indonesia has a wealth of adventures and activities from which to choose, from lounging on beautiful alabaster beaches to discovering leopards, bears, monkeys and marsupials in lush jungles.
Here, we take a quick look to see if it’s possible to retire to Indonesia with $200,000 in savings.
Town or Country?
Though low overall (especially by Western standards), the cost of living in Indonesia varies greatly. As with many places, it depends on whether you opt for a major city, such as Jakarta, or a more rural village, such as those that decorate the island of Bali. For more details, see Find The Top Retirement Cities In Indonesia.
The gateway to Indonesia is its capital city, Jakarta, which is a mixture of modern Western architecture (with a smattering of historic buildings from the Dutch and Portuguese colonial period) and traditional Indonesian culture. Expatistan, an online cost-of-living calculator, reports that a large apartment within the city center (the most expensive part of town) rents for an average of $1,321; those willing to live on the outskirts of town could rent an apartment for as little as $261 per month. Compare that with average apartment rent in San Francisco, for example, of more than $4,000 per month: Even a luxury pad in central Jakarta costs less than a third of that amount.
Renting a place in Bali, which, thanks to "Eat, Pray, Love," is one of Indonesia's most popular retirement destinations, costs approximately $870 per month for a 900-square-foot apartment. Not bad, given the $3,000 per month a well-located similarly sized New York City studio can fetch.
Rent or Buy?
As with any country, rent is based upon the location and condition of the property. Even the most expensive neighborhood in central Jakarta is less expensive than most major cities in the West. However, if you want to rent an apartment in a primo spot – right on the beach in Bali, say – you may find yourself spending more.
Foreigners in Indonesia cannot own land, but they can purchase apartments or condominium homes. They can also lease land and build a house, which may be a more pragmatic option if they think they'll spend a significant number of years in Indonesia. Writing in "The Wall Street Journal" about her life in Ubud (Bali's main city), one expat notes, "The cost to build our house today (approximately 2,000 square feet) would be about $350,000. That said, a perfectly nice home could be built for half that amount."
"A reasonable monthly budget for home maintenance, transportation, food and entertainment is about $1,000," the article, "Moving to Bali," adds. Since the average retired worker’s Social Security benefit in 2015 is $1,328 per month, your Social Security checks alone (assuming you're getting them) might be enough to cover most of your living expenses.
Tips for Spending Less
Retiring comfortably with $200,000 in savings is a very real possibility in Indonesia . However, people who move to vacation destinations often find themselves spending if they were still on vacation. Don't fall into tourist habits or traps (they abound in Bali, for example). Just as with most places in the world, it is cheaper to eat at home than it is to eat out. Imported alcohol in Indonesia is very expensive, so develop a taste for one of the local brews the country is famed for, like the best-selling Bir Bintang, or the delightfully named Bali Hai Hefeweizenbier.
Hiring local domestic help is a requirement for obtaining a retiree visa in the country. On the plus side, housekeeping, cooking and chauffeuring services run about $2.50 per hour. And often, locals get better deals at local markets, so it may be worth your while – and save you money in the end – to have your cook or housekeeper do the shopping.
Some Government-Sponsored Announcements
Due to continued security threats, the U.S. State Department issued a Security Warning on June 3, 2014, reminding Americans to be vigilant while in Bali. Foreigners are routinely victims of crime and credit card fraud. It also issued a Security Message on January 3, 2015, warning of a potential threat against US-associated hotels and banks in Surabaya.
U.S. citizens traveling to or residing in Indonesia are encouraged to enroll in the federal Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you in case of an emergency.
The Bottom Line
Of course, there are many things to consider before retiring abroad. It’s a good idea to visit the area more than once before making any decisions – and imagine from a resident’s perspective, rather than as a visitor on holiday. In addition, the tax situation for expats can be quite complicated, so definitely consult a tax attorney and/or qualified accountant when making plans (see Retirement: U.S. Vs. Abroad).
The overriding question for any retiree is whether they have saved sufficiently for retirement. Since it’s impossible to predict how long you will live, it’s impossible to predict how far your $200,000 will take you. One thing is for certain, though: The livin' is easy in Indonesia – and $200,000 will take you farther there than it will in most places in the West.