Retirement Funds Too Little? Retire Abroad


OK, you're not the only one without enough retirement savings. According to Personal Capital's blog, “The median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households. Supposedly two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income [average U.S. annual income, $52,000].” And guess what, U.S. News & World Report says that “Financial experts estimate that the average person, after it all nets out, will need about 75% to 80% of their pre-retirement income to sustain their standard of living after they retire.” Pensions in today's world simply are not the safety net they once were. That average person simply will not have that money.

Where Can You Live Well Just On Social Security?

But, first the good news: The average Social Security benefit for Americans is about $1,300 (USD) a month. In order to earn that money at the current .5 % interest, you’d need to have way more than three million dollars socked away in a savings account (if it were in the stock market, it might yield more, but then you can’t really depend on that going up, can you?). Then the bad news: There’s almost nowhere in the United States where you’d be happy living on $1,300 a month. So you would inevitably dip into capital, which if it were $12,000, or even the savings referred to above – say, less than the average U.S, annual income -- would not last long.

And it is true what they say about some other countries: You can afford a very nice place to live there, a maid, a gardener, and a lot of meals out, all interspersed with some long-distance travel and surrounded by warm, beautiful weather, on your income from Social Security.

How's Your Spanish? 

These magical countries – especially in Latin America, which is close enough to have the grandkids visit – include Mexico, Ecuador, Panama, Colombia, Nicaragua, and Costa Rica. Other Latin American countries qualify, too, but there are some bureaucracy and crime issues in some of them that might just put you off. Tim Leffel's Cheapest Destinations Blog has a very helpful list, with pros and cons for each country set out carefully. This year, actually, Argentina is the blog’s favorite country, at least partially because the dollar is so high right now. That means that all peso countries are remarkably well-priced, but some have more welcoming regulations than others.

International Living, whose tag line is "Live better – for less – overseas," names Ecuador as its top retirement haven this year. But it also has 24 other countries on its top list, so there’s a wealth (no pun intended) of choices out there. And you can check out prices in each country yourself. Go to Numbeo and choose a country to get an idea of the cost of everyday life.

Consider Central America

Panama, for instance, welcomes retirees from abroad with all sorts of special deals – you don’t even have to be retired. Just show $1,000 of income a month and you will be able to buy or import a car tax-free and get a whole list of discounts: 50% off recreation and entertainment activities, 30% off inter-city buses & trains, 25% off flights, 30-50% off the rack rate of hotels (depending on day of the week), 25% discount in sit-down restaurants, 15% to 20% off medical costs, 10% discount for prescription medicines, and a 25% discount on electric and water bills. It’s not that cheap to visit Panama, though. You really have to resettle there to get all this. 

Expats Abound In Southeast Asia

Then there is the other side of the world, Asia, which also contains quite a few cheap but charming countries, which are just on the verge of being discovered by masses of Americans (but already have friendly communities of people from the U.S. and other western countries). Those countries include Vietnam, Thailand and Malaysia. Web-surf the many blogs by expats to get the flavor of life in each country as well as the costs.

And don't overlook Cambodia. According to Cheapest Destinations Blog: “If you’re looking for the cheapest and easiest place to become a resident in Asia, Cambodia wins by a mile. You can buy a business visa that’s good for a year for $280 after arrival and you can get a new one easily (without leaving the country) when that one expires. And unlike in most other countries, here they don’t care if you work or start a business. As long as you don’t do anything to rub some official the wrong way, they’ll leave you alone.”

You’ll want to visit all of these places first before you decide to try retiring there, since they are very far away and very different from the U.S. However, that sounds like fun, doesn’t it? Just the kind of travel a newly-retired person might enjoy and it’s all in the name of research.

The Bottom Line 

Living in the U.S. can be very expensive when your only income is Social Security. Unless you’ve put aside a tidy sum to supplement your income (and most Americans have put almost nothing aside), you might not see your later years as all that golden. But it’s a big world out there, and Social Security benefits can provide a beautiful life for you out in that world. The U.S. government will deposit your checks every month in a bank of your choice and many less expensive countries will welcome you and provide ATMs, among many other services, for your convenience.

Start Doing Some Homework: Plan a visit, and check out visa issues and money transfers before you decide. You'll find lots to go on in this short list of Investopedia articles, most with links to other useful stories as well: Find The Top Retirement Cities In Vietnam; Retire In The Philippines With $200,000 In Savings?; Retire In Malaysia With $200,000 In Savings?; Top 3 Retirement Havens For Expats.