While some of us reading Your Personal Finance Pro may be years away from retirement, it’s never too early to begin planning for the future. Whether you continue working full time, part time, or not at all, have you thought about where you’ll be enjoying your retirement years?
You may assume you’ll stay where you are in retirement, but what if your house doesn’t suit your needs, or the area isn’t conducive to aging in place? It could be that your children end up on different sides of the country, and it doesn’t make sense to keep a permanent residence at all.
And then there are those of us who want the best of everything: the ability to pack up and leave at any time, travel when we want, and most of all, have it all be affordable. While I’m not an expert on California or Hawaiian real estate, common sense and a glance at Zillow tells me my dream of retiring to a beach oasis on a frugal budget won’t be possible. However, it is possible to have that beach getaway and still be able to afford my older age medical bills – in another country.
Retiring for Affordability: Nicaragua
One of the criteria on my list when I retire is access to a beach, but a close second is affordability. If you’re looking to retire to a beautiful location and save money, you’ll want to look at Nicaragua. The Pacific coast of Nicaragua is beautiful and affordable, particularly San Juan del Sur. This small town is nestled into a bay, with forested hills and mountains to the north. It is known as a tourist-friendly destination in Nicaragua with some of the country’s best beaches.
Most importantly, it’s fairly easy to live in Nicaragua for under $1,000, depending on much house you decide to rent. International Living states that while Nicaragua is less developed than what many of us are used to, you can often get more for your money in terms of luxuries (like a maid, gardener, etc.)
As with many countries, the best health care will be found in a major city and not necessarily in a smaller town. Hospitals and doctors in the bigger cities, like Managua and Granada, provide high-quality health care at affordable prices. Your options may be limited in smaller towns, although you’ll likely have access to basic treatment and common prescriptions. That said, Americans can purchase MedEvac insurance in case of an emergency that can’t be treated in Managua, Nicaragua’s capital.
Note: Nicaragua is listed as “critical” by the Department of State in terms of security. Do be aware that Nicaragua’s high crime rate is not only due to crime, but also due to very low rates of apprehension and conviction of criminals. Police coverage in Nicaragua is not what most Americans are used to. Also note that while the tourist-friendly cities and capital city of Managua likely have many expats and others who speak English, it’s in your best interest to find an expat community before you go to Nicaragua, especially if you don’t speak Spanish. These expats will help acquaint you with the country and can provide on-the-ground information about places to visit.
Retiring for a Mix of Affordability and Creature Comforts: Costa Rica
If you haven’t yet heard about how Costa Rica is a haven for expats, it’s time to check out International Living’s extensive write-up, or many of the other articles devoted to Costa Rica. Not only is Costa Rica well known for its expat population, it’s also known for its incredible biodiversity, from the cloud forests to the beautiful and extensive beaches. If you’ve ever wanted to get lost in the jungle, hiking, kayaking, ziplining through the trees and more, Costa Rica is the place for you.
Costa Rica is the most expensive country in Central America, but you will find a high standard of living for much less than it costs in the US, Canada, or Europe. International Living estimates one person would spend approximately $1,200-1,500 a month, including rent. Health care in Costa Rica is cheaper too, with International Living estimating health care costs at one-third to one-fifth the cost of health care in the US.
Costa Rica has a high number of expats, with around 50,000 living there at any one time. If you don’t speak Spanish, it’s likely you’ll be able to get around fine living in a bigger town with a higher number of expats. Also, if you do get homesick occasionally, you’ll have other people around to remind you why living in Costa Rica is beautiful – and how you’re only a flight away from the US.
Retiring for More Luxury, Still More Affordability: Mexico
Retiring to Mexico, even part-time, is an easy way to combine a lower cost of living with the creature comforts of home. It’s a fairly short flight between Mexico and the US, which makes Mexico a convenient location when you have to return home for family or other events. Finally, the cost of living is much less expensive in Mexico than in the US, depending on where you want to live and how much luxury you want. International Living estimates living in Mexico will cost around $2,000 a month, including a maid and a gardener.
If you decide to become a Mexican resident and obtain a visa, you also get special medical and cultural benefits as an older adult. Mexico has a program called Personas Adultas Mayores, which is a benefits program offering a wide range of discounts on services. Services include health-related costs, like hospitals, pharmacies, and dental work, cultural activities like entrance fees to archeological sites, and discounts on hotel stays and stores. Discounts range from 5-50% off the full price of the services or goods.
As I mentioned in my medical procedures post, health care in Mexico is very good. Doctors and dentists are often trained in the US, and procedures are a fraction of the cost in the US. As always, try to find an expat community ahead of time, particularly before scheduling any medical procedures, to get first-hand information and answers to your questions.
Both sides of the Mexican coast are very good locations to live, although I’m partial to Cabo San Lucas’ and Puerto Vallarta’s beaches. The cost of living will increase on the coast, due to rent, although you may be more likely to find more expats and people who speak English fluently. If you choose to live inland, do some research ahead of time, as some locations in Mexico are more crime-plagued than others.
You’ll notice that in all of these scenarios, I reference renting accommodations versus purchasing a house. In addition to not knowing if you’ll love some place forever, renting also gives you the ability to return to the US if you want to. By not purchasing a home, you’re free to leave whenever you want, for whatever reason (whether it’s an illness, family event, or general boredom). Other countries laws and law enforcement also differ from the US, and no one wants to deal with the hassle of buying or selling property in a foreign country with unfamiliar laws.
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Personal Capital lets you see all of your accounts in one convenient place. Sign up now for free.These locations are but a fraction of luxurious-yet-affordable places you could retire to – I didn’t even tackle South America, let alone Asia. Also, I focused on beach living simply because beach living is delightful to me. However, with a little research, you’ll likely find many places are more affordable to retire to than the US, Europe, and Canada. While retiring abroad isn’t for everyone, it’s certainly an option for those who are a little more adventurous, in better health, and who want the outdoors to be their playground. Is retiring abroad an option for you?
This is a great article. I’ve read so many pieces about retirement and so few discuss the cost of living in the US as we get older compared to enjoying life in another country. Sure, people move to Florida or Arizona, but moving to Nicauragua, Costa Rica, or Mexico would really help stretch those retirement dollars!
Thank you, Sean! Yes, especially as the Gen X and Millennial generation gets older, we’re going to have to stretch our retirement dollars even more than baby boomers. While we can’t predict how much we’ll have to pay for quality health care, we do know that it gets more expensive every year. Plus, the reimbursement system is so convoluted, sometimes US doctors won’t even accept Medicare, just to avoid dealing with the hassle. So if we can get the same quality of care (if not superior), why not move to another country with a cheaper cost of living and access to great beaches and outdoor activities? The only thing you’ll have to consider when you get older is your roots – investment property you may own, creature comforts of living in the US, your family (especially if you have grandchildren). Those would be my only considerations 🙂
I love reading posts like this. Moving to another country (especially a tropical one), would be a lot of fun and great for the wallet.
Even though we’re pretty far from retirement, it’s fun to think about! 🙂 Although this advice works well for people who work from home too, as long as your spouse is willing to travel. The thing that intrigues me the most is the ability to rent somewhere, like Costa Rica, for 6 months and then come back to the States, no strings attached. I think I would miss some parts of the US, so the ability to go back and forth would be reassuring… even if I slowly started spending more and more time in Costa Rica. 😉 Thanks for your comment, Michelle! Maybe you’ll be the next one moving abroad 🙂
I also observed that there are lots of foreigner who choose to retire here in Philippines. I think they love to live here because dollars have a high amount of value.