When my grandparents retired, they moved to South Carolina. They thought it was exotic. Being used to frigid Ohio winters, they found the fact that temperatures seldom dipped below 40 appealing. They wouldn’t have to shovel a few feet of snow every few days. Not to mention that there were plenty of opportunities for Gramps to go bowling.
A lot of Americans move to warmer, sunnier climes for their golden years. For decades, retirees have flocked to Florida, with sunshine, beaches and golf. In fact, according to the U.S. Census Bureau, nearly 85,000 people over the age of 60 moved to the Sunshine State in 2016 alone.
However, some retirees are moving farther than Boca Raton. In fact, they’re going beyond the borders of the United States.
American Retirees Are Moving Abroad
According to the U.S. State Department, roughly 8.7 million Americans currently live abroad. And although that statistic hasn’t been broken down by age, it’s clear that a hefty percentage of those folks are retirees.
Indeed, the U.S. Social Security Administration reports that, in 2017, it mailed more than 500,000 monthly payment checks to overseas Americans (up from 400,000 monthly checks in 2016). And that doesn’t account for direct deposit payments or checks sent to expats who retain U.S. postal addresses. So, the total number of Baby Boomers abroad is likely much, much larger.
So what’s the big appeal of moving abroad?
First, living in an exotic place like Costa Rica or the South of France sounds awfully nice. But even more important, many retirees are flocking to faraway lands, because it makes more financial sense.
Lower Costs of Living Stretch Your Retirement Dollars
In 2018, the median household retirement savings for people ages 55 to 64 is just $120,000. For these people, retirement is just around the corner. And many are realizing that $120k is just not enough to live comfortably for more than a few years. The chances are excellent that you would outlive that kind of money. If you don’t want to work until you keel over, you’ll likely need to make drastic changes to your standard of living. Or move somewhere cheaper.
Moving abroad can greatly stretch your retirement dollars. Now, keep in mind that some exotic destinations, such as the Bahamas or the Riviera Coast, may be just as expensive as — if not more than — living in the U.S. But there are plenty of countries, especially in Central and South America and even Europe, that are safe, clean, friendly and very inexpensive.
Retiring to Ecuador may sound a bit off the wall. But I know a few couples who have moved there, and they love it. Quito is a world-class metropolis that’s been dubbed the most beautiful city in South America. You’ll find museums, fine dining, shopping malls and a surprisingly high standard of living. All this for just a fraction of the cost elsewhere. It’s possible to live a very comfortable lifestyle there on less than US$2,000 a month. And at that amount, you can still eat out, go to the movies and even employ a maid.
Portugal is another popular destination for retirees. It boasts one of the cheapest costs of living in western Europe, and the weather is glorious. The capital city, Lisbon, is only a six-hour flight from New York and Boston. Plus, you can easily hop on a train and explore all that Europe has to offer. Rent a good-sized apartment in a nice part of town, and it will cost you only about $1,000 per month. Or you can move to the Portuguese countryside for a whole lot less.
You Can Save Big on Healthcare Costs
Moving abroad also makes sense if you’re concerned about the cost of health care here in the U.S. The experts calculate that, even with help from Medicare, the average 60-something couple can expect to shell out more than a quarter of a million dollars over the course of their retirement years. That’s ludicrous!
Many other countries offer the same standard of care (with U.S.-trained doctors) that you’d find here in the States but for just a fraction of the price. Mexico in particular is a popular expat destination for just this reason. On average, in Mexico, a visit to the doctor’s office — without insurance — will cost only about US$30. And an overnight hospital stay in a private room will run you only about $100.
In addition, many countries in Central and South America and Europe allow expats to enroll in public healthcare systems once they meet residency requirements. That can save you even more money.
You Can Make Your Retirement Dreams Come True
Retiring abroad certainly isn’t for everybody. You may have to give up some of the everyday conveniences we take for granted here in the U.S. For example, some places don’t have a 24-hour McDonald’s drive-through or pay-at-the-pump gas station. I don’t think my grandparents would have considered moving out of the country — even though there are bowling alleys in Ecuador! It can also be a very tough decision to leave behind family and friends, even though apps like Skype and Facebook can make it easy to stay in touch.
However, making the move can save you a huge sum of money. It could make possible the comfortable retirement of your dreams. And multiple studies have shown that learning new languages and exploring new surroundings can help our bodies and brains stay active and alert longer. So if you’re concerned about how far your retirement dollars will go… and if you’re intrigued by adventure… it might be a good financial solution for you.
I know that moving abroad sounds like a very complicated — if not expensive — proposition. However, if you do your due diligence and consult with the professionals, you may find that the process is easier than you’d expect.
Here at Investor Junkie, we’re committed to helping you make smart decisions when it comes to your retirement savings. So, in upcoming articles, we’ll be taking a closer look at the nuts and bolts of moving abroad, including how to invest in real estate overseas.
Have you considered moving abroad for your retirement? Tell us in the comments!