Retiring abroad can be an attractive option for older adults in search of new experiences, a better climate and a lower cost of living during retirement. Ecuador has received a lot of attention as a retirement destination, but its neighbor to the south has a growing community of expats who say Peru is worth a look. Peru, which to the Quechua Indians who live there means “land of abundance,” sits on the Pacific coast of South America, just south of the Equator.
Nearly 4 million tourists visit Peru each year for its beaches, mountains and rainforests, as well as its friendly locals, rich culture and many archaeological sites. Expat retirees go for the same reasons – and to take advantage of one of the lowest costs of living in Latin America. For most people, a primary concern when deciding where to retire is cost. Here, we take a quick look at how much money you need to retire in Peru, plus a couple of tips for stretching your retirement budget.
Living Cheap or Living Large
Whether you retire at home or abroad, how you retire will affect your budget. It’s possible to retire in Peru for about $500 a month, for example, if you are willing to live very frugally – in a small, one-room apartment, eating simple home-cooked meals and skipping most of the comforts and conveniences you may be used to at home. On the flip side, you could easily spend $10,000 a month – or more – living in luxury in an exclusive beachfront house. Your needs and lifestyle preferences will determine how much money you’ll need to retire – where you live now, in Peru and anywhere else.
Cost of Living
The city and country database website Numbeo.com publishes several indices that compare costs in cities around the world. One index is the Consumer Price Plus Rent Index, which compares the cost of consumer goods – including groceries, restaurants, transportation and utilities – plus rent to the same costs in New York City. Numbeo.com reports that living in Lima, Peru’s capital, costs just 30% of what it costs to live in New York City.
Most expat retirees don’t attempt to live as frugally or as lavishly as possible, but settle somewhere in between, where they can enjoy a comfortable lifestyle on a reasonable budget. A couple can retire comfortably in Peru for about $1,000 a month (including rent), and single expats can live on even less, according to International Living, a publishing group that covers living and retiring overseas. Your costs may be higher or lower, depending on your situation and lifestyle, but $1,000 is a good starting point. For more information, see Retire in Peru with $200,000 of Savings?
To put that amount in perspective, the average retired worker’s Social Security benefit is $1,328 per month, according to the most recent data available from the Social Security Administration. For a couple, that adds up to $2,656 per month, which would be more than enough to retire comfortably in Peru, with money left over to cover some of your additional expenses, such as private health insurance, trips home to see friends and family, and unexpected expenses. You can apply for a Rentista Visa – permanent resident visa – if you have a private or state pension (which includes Social Security) of at least $1,000 per month.
Keeping Your Budget in Check
No matter where you retire, if you want to save money you’ll have to live like a local and not like a tourist. This can be surprisingly difficult, especially if you’ve visited an area before and gotten used to splurging on lodging, meals and entertainment. If you have the budget to live as if you’re on vacation, that’s great; if not, you’ll have to take a different approach.
One way to control expenses is to shop where the locals shop. Get to know the local vendors and farmers – and figure out where to go to get the “local” rate and not the “tourist” rate (you probably do this at home without even thinking about it). You can also save money by purchasing local goods instead of imports, which may mean giving up your favorite brands. The difference in your monthly budget, though, can be sizeable.
The Bottom Line
Retiring abroad gives you the chance to enjoy new experiences, a more favorable climate and a lower cost of living, but it’s not for everyone. Life outside your home country can be quite different from what you’re used to, so it’s helpful to have an open mind and adventurous spirit in order to fully embrace the experience. If you are considering retiring abroad – whether in Peru or elsewhere – it’s always a good idea to visit first with a longer-term rental to make sure the destination suits your needs and goals. For more, see Top 5 Cities to Retire to in Peru.