Retire in Colombia With $200,000 of Savings?

Say “Colombia” to just about any American a decade ago and he or she would think: drug lords, kidnappings, violence, Jack Ryan and his covert strike team. The idea of retiring to Colombia would have been laughable. 

What a difference a decade makes. The U.S. Department of State has this to say about Colombia now: “Tens of thousands of U.S. citizens safely visit Colombia each year for tourism, business, university studies and volunteer work. Security in Colombia has improved significantly in recent years, including in tourist and business travel destinations such as Bogotá, Cartagena, BarranquillaMedellín and Cali. However, violence linked to narco-trafficking continues to affect some rural and urban areas.” 

Significant Improvements

In the Global Peace Ratings for 2015, Colombia ranks 149th on the list of 162. To put that in perspective, the United States is at 96, Mexico, 145. And while five Colombian cities still make the list of the 50 most violent cities with a population of over 300,000, four U.S. cities – Baltimore, Detroit, St. Louis and New Orleans – do as well. In the commentary that accompanies the list, there’s a hopeful note: “The most important violence reductions are spotted in Colombian cities.”

The government of Colombia has been engaged in peace talks with FARC, the Revolutionary Armed Forces of Colombia, after a half century of internal conflict that left 200,000 dead. No final agreement has been reached as yet (talks have been going on for two years) but in July 2015 FARC declared an indefinite ceasefire. 

Starting in 2007 the Colombian government has worked to allay travelers’ fears, erase the negative image and convince folks to visit their country with the slogan: “The only risk is wanting to stay.” Two years ago, the slogan was changed to “Realismo Magico,” referring to the literary style of the country’s most famous writer, Gabriel Garcia Márquez. Finally, 22 years after the death of Pablo Escobar, notorious Colombian drug lord, the country was able to drop the reference to “risk” and woo travelers with a much more positive tag line. (For more, see Is It Safe To Travel To Colombia?)

Now a Top Retirement Spot

What’s more, Colombia just landed the No. 8 spot in International Living’s 2015 Index of the World’s Best Places to Retire, No. 2 in South America. The index takes into account the features that contribute to making a country a good retirement choice: cost of buying and renting an apartment or house, benefits and discounts for seniors, cost of living, ease of “fitting in,” availability and cost of healthcare, good climate and more. According to the editors of IL, “There isn’t a single segment of the IL membership concerned with climate, culture and lifestyle that couldn’t find their niche in Colombia.” 

Medellín, the city that gave its name to Escobar’s drug cartel, now hosts a fledgling expat retirement community and one Huffington Post writer predicts that “five, seven years from now, when you say Medellín to the average American, he’ll think: retirement. Because that’s what this City of Eternal Springtime is on track to offer – a very appealing and competitive retirement option that right now is among the world’s most affordable.” 

Now, let’s look at how well and how long you will be able to live in Colombia with your $200,000 in savings.

Cost of Living in Colombia

One of the reasons that Colombia ranks so high on IL’s Ten Best List is because of its low cost of living “in a country that offers many of the first-world amenities and an infrastructure that you’d expect in a much more expensive location,” according to IL. Its figures show that you can count on spending at least $1,300 per month for two people if you own your own property; $1,700 per month if you’re renting an unfurnished apartment. This calculation is based on rent, utilities, telephone, Internet, cable, food, entertainment and public transportation. If you’d like to hire a full-time maid, add $300 a month; more if you want a car.

According to expatistan.com, a site that monitors cost of living in cities all over the world, living in Medellín costs 68% less than in New York City, in Cartagena, 64% less. Numbeo.com, a similar website, reports that a bottle of wine in an inexpensive restaurant costs as little as $8, gym membership is $35 per month and a three-bedroom apartment is under $500. 

Doing the math, using $1,300 per month as a monthly expense (sorry, no maid), you will be able to live on your $200,000 savings for approximately 13 years ($200,000 divided by $1,300 = 154 months, or 12 years and 10 months). This is a basic example and assumes your monthly expenses stay the same over the years.

Add in Social Security

According to IL, you can “live a dignified lifestyle [in Colombia] on social security and a luxury lifestyle on just a bit more.” The latest U.S. government figures show that the average social security payment for retired workers is $1,334. That means you can likely cover the basic $1,300 with your social security check and use your $200,000 to move up a notch or two to luxury living and pay for trips back home.

Rent or Buy?

One website that keeps tabs on the global real estate market is bullish on Colombia: “The current exchange rate is handing today’s buyers shopping with U.S. dollars a whopping 32% discount off the cost of real estate in [Colombia]...” 

IL rates Colombia second out of the top three countries in which to buy property: The purchase process is straightforward. There are no restrictions on foreign buyers whether you are a resident or not. It is fairly easy to set up a corporation with which to buy a property and the country has a sound process for tracking property titles. 

In Medellín, a one-bedroom, one-bath apartment in the popular El Poblado district costs $78,000; a nearly 2,000-square-foot penthouse on three floors with spectacular view is $199,000. 

Of course, no matter how attractive the deals may seem, proceed with caution and always rent before you buy. Make sure that you like the city, the neighborhood and the neighbors before you take the leap.

Where in Colombia Do You Want to Live?

Once you decide to consider Colombia as a retirement destination, you need to figure out where you’d like to live. What kind of climate do you like best? If it’s tropical, try out the coast and eastern plains. You’d like it cooler? Head for the highlands like Medellín. Big city? Think Medellín or Bogotá. Something quainter? Popoyán, a university town in the Andes; Manizales, the hub of the coffee-growing industry or Cartegena, a popular tourist destination on the Caribbean that combines beach living with a walled Old Town of 16th-century plazas and colorful colonial-era buildings.  

It’s Medellín that seems to be a favorite with expats: A city of 2 million, it’s “like a miniature version of Buenos Aires, from its annual Tango Festival to its Botero Museum, but more manageable than Buenos Aires, easier to navigate and cleaner,” according to U.S. News & World Report.

Dan Prescher, senior editor of IL, says that although Medellín just got onto the radar of North Americans looking for a retirement home, the Brits and Europeans have been there for years. He adds that Colombia is a thriving economy, a doing-business kind of place. And it’s a place where things work: Roads are wide and well-paved, wireless Internet is everywhere and free in many places, including in Colombia’s equivalent of Starbucks, Juan Valdez Cafés.

Robert Rose, a travel TV host who has lived in Colombia, reports that Antioquia state, where Medellín is located, is his favorite part of Colombia because of “its incredible natural beauty, temperate climate (it felt like Spring every day of the year to me) and some of the friendliest people I’ve ever run across in all my travels. It also helps that it was cheap. I lived for a fraction of the cost of living in the United States and quite well (doorman building, eating out every day).”  

Medellín is also host to an upbeat gay culture according to Huffington Post writer Kathleen Peddicord. “Parque Lleras is famous for hosting one of the most entertaining and energetic gay scenes in South America.” 

How’s the Healthcare?

Retirees usually want to know about the quality of healthcare in their chosen destinations. Good news in that category: According to an AmericaEconomia magazine survey, of the 42 best hospitals in 12 Latin American countries, half are in Colombia. And, Colombia is the country with the largest number of healthcare institutions in the top 10. 

Tips for Saving Money in Colombia

The best advice is to live like the Colombians. Shop where they shop, eat where they eat and travel the way they travel. AARP’s Travel Center website lists discounts up to 25% in Colombia for seniors, including hotels and car rentals.

The Bottom Line

Colombia is drawing more and more retirees from the United States, and Medellín especially is the locus of a fledgling American expat community. Although the country’s negative image discouraged so many from even visiting Colombia not that long ago, the country’s high score on IL’s index of the best places to retire means that it will most likely continue to grow as a retirement haven.

The cost of living, the climate and the culture are all powerful draws but, since the North American expat community is not a long-established one, you should know some workable Spanish before you make the move. Visit any and all of the places you are considering and, since tax implications of retiring abroad may be complicated, work with a qualified attorney and/or tax specialist as you do your planning. You may also be interested in reading Plan Your Retirement Abroad.