3 Places to Stretch Your Retirement Dollar Abroad
Welcome to Episode 4 of the Retirement Renegade Blog on Substack– the premium blog dedicated to helping you understand the issues impacting your retirement security so you can be better prepared for the golden years!”
I’m Winn, the Retirement Renegade, who rejects the conventional wisdom of a US-based retirement.
I hope you’re enjoying the news, views, and information you’ve already received on the Substack.
Why abroad?
Let’s get to it.
One-third (34%) of Americans would like to go and settle in another country if they were free to do so, according to a recent Monmouth University poll.
As you know, one of the prime directives of the Retirement Revolt Substack is to help you save and invest enough money to live out the “golden years” blissfully—and preferably overseas.
There are 3 immediate pros and cons.
First, the 3 pros.
1. Cost of Living – I know this from my own experience teaching English abroad in Latin America for a decade – the dollar is king.
Remember, the US dollar is the key currency—that is, it’s acceptable in almost every country in the world for business because so much of global commerce takes place in the dollar every day. That’s a distinct advantage Americans have when they want to retire abroad.
Now, as the US national debt continues to accelerate, given the exuberant government spending in Washington, the country's financial stability could be at risk. The president of J P Morgan bank and highly-acclaimed smart money man – Jamie Dimon – is quoted by CNN Money in a May article saying - the problem will be caused by the market, and then you’ll be forced to deal with it. That is, if the two parties in Washington do not come to a conclusion about overspending, the financial markets will deliver the blow to the US credit rating and that will severely impact the currency. Heck, inflation right now is reducing the value of the currency. So, yes, the dollar right now helps retirees, but there is a cloud in the future, given the sorry state of the national finances.
And here’s an added thought - Taking into account that the average monthly Social Security check in December 2023 was $1,767.03, additional funds of what you can save for retirement could make retiring abroad more appealing. Whatever the status of the dollar in the “golden years,” one fact remains - Relocating to a country with lower living costs doesn’t necessarily entail a sacrifice in lifestyle standards.
2. Another big cost during retirement is health care, which can be found more affordably abroad. Quality care (sometimes by US-trained doctors but not at the US price) is available in more countries than not—as long as you do your homework. I remember having my heart attack in Medellin, Colombia, and a Yale-trained surgeon saved my life. Remember, if you retire early, Medicare doesn’t start until 65 and the program's financial stability is doubtful right up there with Social Security unless the politicians in Washington act. Oftentimes, you might be able to join the state-run programs in a country or shop around for a private plan at major savings compared to the US. So, as you can see already, two of the biggest issues facing Gen X, Millenials, and Gen Z – having enough money to outlast how long you live and medical coverage for old-age expenses, which run higher – could – be mitigated by opting to retire outside the US.
3. Adventure and a new culture await! Retirement evokes the spirit of independence, trying new things, opening new doors, and blazing new trails. What could be more exciting than finding a new home, sweet home, where you least expect it? If you’ve traveled internationally leading up to the “golden years,” you probably have a few ounces of wanderlust still in you, right? Of course, visiting and living in a place overseas are distinct. Was there a particular place you visited in the past years that struck your fancy? Do you speak a second language? (More on that later). Some find the expat life puts life into perspective and gives meaning and color to the new chapters in their lives.
Now, the 3 cons.
1. The Bureaucratic Hassle—both in the US (as long as you’re an American citizen) and in your new country. Remember, the US is one of the only two countries that taxes its citizens abroad. Yes, the IRS. Plus, you may want to keep a US-based address for bank and investment accounts or insurance. In your new country, you need some type of visa to remain in the country. Thankfully, some locales are more welcoming to foreign retirees than others. There are agencies in countries that help out as well.
2. Your Family. What will be the distance between your new home and your loved ones back in the States? Just a short flight or a long haul?
You will miss the grandchildren. How much? Will your family be able to visit you easily? Sure, you’ll make new friends in your new land, but they’re no substitute for your own loved ones.
3. Culture Shock. Are you a cosmopolitan? Have you done a trial stay in your new country and absorbed some of the culture? Do you speak the language? Speaking the language is one of the best moves new retirees can make in non-English speaking locales. You’ll be better able to negotiate rent and policies, deal with the bureaucrats, and just order an expresso at the coffee bar. If you speak another language already, you know it’s the key to opening your eyes to a whole new world and stimulating your senses. Some have a knack for learning a language, while others struggle. High school Spanish is just not going to cut it. Overcoming the cultural and language obstacles is one of the challenges that awaits.
So, now you have a balanced look at both sides of the coin for those contemplating retirement overseas.
Where in the world should you possibly consider living out your “golden years” abroad?
Some locales are more welcoming to foreign retirees than others.
As always, it pays to do your homework, and you’ve got the Retirement Renegade Blog right here on Substack to help you along the way!
By sheer affordability and opportunities, 3 countries are frequently considered “doables” for American expats.
Each will be covered more in-depth as
1. Panama – Panama has fashioned itself as a retirement mecca. The doors are open now and rivals Costa Rica as an expat overseas haven. According to International Living – The “Pensionado residence program has already helped thousands move here with relative ease.) These days, there's a visa for everyone.” Panama uses the US dollar as currency, and direct flights to the US are available via Copa Airlines – its dominant airline.
2. Colombia – Colombia ranked #10 in the International Living 2024 Retirement Index. The magazine writes: The biggest benefit to retiring in Colombia is the affordability and ease of traveling from one region to another. The income requirement for the Colombia retirement visa (M-11) is 3 times minimum salary in Colombia. The minimum salary or “salario minimo” in Colombia is COP 1,300,000 pesos in 2024, which is roughly $1,000 dollars per month. From the Caribbean coast to the “eternal spring” of Medellin or the hot southern part, geographical and cultural diversity reign in Latin America’s oldest democracy.
3. Mexico—Despite sensational headlines, most people in the US’ southern neighbor have welcomed foreign visitors and retirees for decades. Latin America's largest Spanish-speaking country—by population—hosts clusters of retirement havens for Canadian and US expats (around 1 million). The coasts and the mountains are the main draws. Culture, affordable health care, the weather, and yes, the hospitality of the people, beckon expats from around the world. And like Panama and Colombia, visits to the States to see family or attend to business is only a short flight away.
Conclusion
So, what do you think about retirement overseas?
Given the money crunch many of us saving for retirement face, the toxic economic, social, and political milieu in the US (without much hope for improvement), and the financial stability of Social Security and Medicare in need of immediate attention, among other factors, the adventure and excitement of another land that is more affordable and offers more or less a decent standard of living, casting eyes abroad while saving for the “golden years” may not be a bad strategy for some.
You have 3 reasons for and against a move abroad after you quit work and 3 candidates for places to call your new home.
Expect more on this topic as the Retirement Revolt Substack unfolds as it’s tied to our overall approach to building retirement security and enjoying serenity in the “golden years.”
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Be sure to do your due diligence before making any decision to live abroad and consider all factors before making a final determination.
Please consult your financial and/or tax advisor before making any financial or investment decisions.
Please consult your financial and/or tax advisor before making any financial or investment decisions.
I’m Winn, your devoted leader of the Retirement Revolt! 🚀✨