For generations, Italy has been a favorite retirement spot for wealthy expats intent on claiming their place in the sun, preferably one with a spectacular view and its own olive grove. But is it possible to do it on less than a millionaire’s stash, say with a nest egg of $200,000? The answer may be yes, as long as you’re willing to forego the olive grove and live like a local instead of like an American movie star. 

It should be said first that $200,000 can’t be, and probably won’t be, your only source of income. Nine out of 10 Americans age 65 and over receive Social Security, with an average payment of $1,341 monthly in 2016. A couple may double that. You should also consider any other source of income, such as a pension. And, out of choice or necessity, many Americans continue working after age 65. Although getting a job is difficult or even impossible in a foreign country, Internet-based freelance work is now an option for almost anyone with a skill to sell. (For more on retiring overseas, see What Does Retirement Abroad Cost? and Plan Your Retirement Abroad.)

Running the Numbers

Based on average nationwide numbers, living in modest comfort in Italy would take an income of about $24,000 to $31,800 per year. That works out to $2,000 to $2,650 per month. Using the standard affordability measure that income should be four times rental cost, this estimate is based on  multiplying the average annual cost of renting a one-bedroom apartment in Italy by four. That one-bedroom rental will cost an estimated $500 a month outside a city, or $662 a month in a city center, according to the latest data from Numbeo.com, a cost of living comparison website. (These estimates were based on the late-2015 exchange rate.) 

If you have only that average Social Security income, totaling $15,900 a year, and drew on your $200,000 nest egg to make up the difference, you would exhaust your savings in a bit over 12 years, at the upper end of the cost range. (Obviously, this is a very rough calculation, assuming no growth in your income, your $200,000 investment or your costs of living.) 

Finding Your Place

So, is Italy an impossible dream on a budget? Maybe not. The average monthly income of Italians, as of 2012, was about $2,388based on nationwide cost-of-living numbers. That's solidly within the range for a moderate expat lifestyle, as outlined above. If you want to live well in Italy on a budget, you need to live like an Italian. And you need to find your place in the many parts of Italy that have not been utterly transformed by expats and tourists.

First and foremost, that means traveling well away from the over-publicized beauties of Tuscany, Venice and Rome. There are wide disparities in costs of living in Italy, with the southern regions significantly less expensive than the north. The bonus: Southern locales have far more balmy climates than some of Italy’s most fabled northern cities, notably Venice and Milan.

Here are a few suggestions of places where other expats have found happiness on a tight budget:

  • Le Marche, the region along the Adriatic coast, due east of Florence. It has everything from snow-capped mountains to pristine beaches. According to AARP magazine, living here with an annual income of $20,000 (excluding the cost of housing) is at least “feasible.” A one-bedroom apartment outside the town of Rimini can be rented for $400, or in the center of town for $550, according to the latest numbers from Numbeo.com.
  • Agrigento, in the western region of Sicily. A couple tells ExpatExchange.com that they settled in the small town of Cianciana after finding that it had some of the lowest housing costs in Italy, plus local amenities that include an English-speaking doctor and dentist. Prices for a one-bedroom apartment in the region average $165 outside of one of the towns, and $220 in the center.  
  • Abruzzi, also on the Adriatic Sea but farther down the “boot” of Italy, has beautiful beaches of its own and a reputation for welcoming expats. Pescara and Chieti are among the most popular towns. One-bedroom rentals in and around Pescara range from about $359 to $469.
  • Puglia, on the “heel” of Italy’s boot, has attracted many British and American retirees, who tout its low cost of living and stunning natural beauty. Rents in and around the town of Lecce range from about $326 to $412.  

The Bottom Line

Your modest nest egg of $200,000 won’t go far for long in the parts of Italy that have already been American-ized (or British-ized) to the max. But if you get off the tourist trail, especially if you head south, you may find your perfect retirement destination at an affordable price. For more, see How Much Money Do You Need to Retire in Italy? and The Top Regions For Retirement In Italy.