You can certainly retire in comfort with a modest nest egg – say, $200,000 – in Spain. Just follow the long line of British expats to the lively towns along the Costa del Sol, Spain’s Mediterranean coastline.
For many years, Americans have been looking to Mexico, and more recently to its Central American neighbors, for an ideal retirement spot on a less-than-lavish income. But the generally favorable exchange rate for the U.S. dollar against the euro has made Spain an attractive alternative for Americans.
The Costa del Sol is by no means the least expensive choice for retirees in Spain. But it is the most popular, given its temperate climate, laid-back lifestyle and coastal attractions. It’s also a relatively easy place to settle, given the large English-speaking population.
The Costa del Sol has at least one big advantage over Central America – it’s a perfect base for weekend trips to many other great places. Since Málaga, the region's capital, is a popular vacation destination, European discount airlines like EasyJet and Ryanair offer frequent, affordable round-trip flights from Málaga to places like Paris, London, and Berlin, often for under $100.
AARP estimates a “frugal” lifestyle in Spain costs about $20,000 a year, while a “comfortable” retirement costs about $25,000. Those hold true for the Costa del Sol – and for most of Spain. The exceptions are the world-class cities of Madrid and Barcelona, both of which have much higher living expenses, those still far less expensive than comparable American cities like New York and San Francisco.
Running the Numbers
First, consider that $200,000 might not be your only source of income. Nine out of 10 Americans age 65 and over receive Social Security, with an average yearly payment of about $16,848 in 2018 ($28,080 for a couple). Also consider other sources of income, such as a pension. You may also choose to work after age 65. Getting a job in a foreign country is difficult, and can be impossible, but internet-based freelance work is now an option for almost anyone with a skill to sell.
That average Social Security income for a single person is $3,152 short of the $20,000 AARP estimate for a frugal lifestyle, and $8,152 less than the estimate for a comfortable lifestyle. By making up the difference with your nest egg, it would take almost 49 years to exhaust your $200,000, and almost 22 years at a comfortable lifestyle.
So, retirement in Spain is doable – if you don't expect to wallow in luxury. But you won’t have to struggle, either. These options could be within your budget:
- Buying a home: Property prices in Spain are generally reasonable compared to those in much of the U.S. In Málaga, the current price is about $163 per square foot on the outskirts of town to $206 per square foot in the city center. Websites such as Simply Andalucía and Spain Property list many small villas and large apartments for under $200,000.
- Renting a home: Rentals run about $510 to $655 a month for a one-bedroom apartment (again, with the lower end of the range getting you a place on the outskirts of town), and about $800 to $1100 a month for a three-bedroom. The smaller apartment is the reasonable choice if you rely solely on Social Security supplemented by a $200,000 nest egg.
Málaga is more expensive and more developed than most of the Costa del Sol. Kathleen Peddicord, founder of the Live and Invest Overseas publishing group, recommends looking east of Málaga to towns like Torrox for lower prices and a more laid-back style.
And, of course, there is the rest of Spain to consider, especially if you prefer city living. Segovia, Granada, and Córdoba all are featured on a list of 10 beautiful Spanish cities that offer “a lot of bang for your lifestyle buck.”
The Bottom Line
In the past, the Central American countries neighboring the United States were clear winners over European countries as potential retirement locations. But these cost-of-living numbers and today’s ease of international travel show that a new life in the Old World is open to you, too. Retiring on $200,000 in savings is certainly doable in Spain.