The Scenario
After graduating from college, you got a job – not your “dream” job, but one that paid the bills. Thinking you would eventually move into your dream job or profession, you didn’t worry about your future, only about the present. Next thing you know, 15-20 years have passed and all of a sudden you’re not 20-something anymore. Not only did it take you much longer to attain that dream, you realize you haven’t saved enough for retirement along the way. With retirement staring you in the face only 20 some-odd years away, you scramble like crazy to concoct a plan.
The Problem
Whether the excuse was waiting until you had your dream profession in place, made enough money, or thinking you had nearly an eternity to worry about those golden years, you haven’t saved enough to live comfortably in retirement. Trying to live the equivalent lifestyle you have now in retirement will be difficult since time is working against you. You don’t have 30+ years of compounding interest to help build your nest egg. Rising inflation will also mean that even if your income remains consistent, the cost of living will be higher in retirement.The short 20 years or less until retirement will be spent focusing on saving as much as you can now for a modified lifestyle then.
The Solution
There are some solutions to not having saved enough to live comfortably; one of which is to continue working well past your retirement age. Some people may be just fine with this, yet others may not. Another solution may be having to settle for lifestyle deflation. Reduce your expenses as much as possible and live frugally. Again, for some, this will be the solution of their choice. But a third solution often overlooked, is moving out of the country to one that is much less expensive. Some people may find this solution difficult since it may mean leaving family behind (children and grandchildren). However, for couples who have family all over the world, or no children, this could be the perfect solution.
Recently, a Yahoo Finance article identified five countries that cost less than $500 a month in rent. I found two of these countries intriguing and added a third:
- Las Tablas, Panama – One of my favorite picks since health care is accessible and very good; something that’s very important as we age. Rent ranges between $300-400 a month which means if a person can bring in $1,000 US a month, that would leave plenty of money for food, utilities, transportation, and health care.
- Chiang Mai, Thailand-Another favorite. I’ve heard Thailand is beautiful. I also found an Expat Club that meets each month to create friendships and help members integrate into the culture.
- Belize – This wasn’t on the original Yahoo article list, but I’ve read that Belize is an up and coming retirement and eco-tourism destination. I also found a couple of sites describing first-hand experiences of moving to Belize. One is a personal blog, the other site explains more matter-of-fact information. Belize is affordable, English is one of their primary languages, and health care is very affordable.
Becoming an expat isn’t for everyone. This is a conversation my husband and I have been having lately. Though retirement is 25 years away for us (or sooner perhaps), we’d have to really research the benefits and potential drawbacks for leaving the US for good. However, it’s definitely an option to explore given that our nest egg may not allow us the same luxuries here in the states.
It can be hard to enjoy your retirement when you are worried about money, and taking out a standard mortgage on your home will not help matters because you will have a new mortgage bill to pay. A reverse mortgage is designed specifically to help you during retirement by allowing you to tap into your home equity with no short-term consequences. After you use a reverse mortgage calculator to figure out the percentage of home value available, you can spend it in whatever way you want. However, if you ever move out of your home, you must pay the loan balance back with interest. Alternatively, you can allow the sale of the home. None of your other assets can be seized, so any balance remaining after the sale will be erased.
Be sure to read my other series posts.
Have you thought of some alternatives to traditional retirement? Have you researched other countries?
16 Comments
Glad you are back LH!
There are a number of countries one can spend one’s retirement. All it takes is an open mind, and a spirit of adventure!
I would say, visit the country you think might be a fit, see how you like it and then plan accordingly.
@Money Cone – I’m already hinting to Mr. LH that we need to go to Belize on our next trip. I like that English is a spoken language there, and it’s not too far from the US compared to the other options.
We think we’ll be fine in retirement but we’re considering this option for lifestyle reasons as well. WARM (i’m 35 years in with Canadian winter).
Mind you, the way the earth is warming, in 25 years Canada may be a warm enough place as is …
@Sustainable PF – The weather is definitely a benefit. Of course, you’re right – it may be too warm 25 years from now!
My parents are in Chiang Mai, that’s my hometown. 😉
I love Belize too, it’s great! The official language is English and the Cayes are awesome! It’s also really close to the US if you need to go back and forth a lot.
@Retireby40- Oh, maybe you should give a little info about Chiang Mai. or photos, perhaps? I’m already hinting to Mr. LH that we need to visit Belize. The English is definitely a plus.
My step-father and my mom will confront this issue soon. He would like to move back to his home country when he retires. The cost of living is cheaper and it’s a beautiful place to…visit. My mom likes how everything is conveniently located here in the states. Plus. she’s miss her soaps. They have some time yet to retire, but I know that it won’t be pretty.
@Sandy – It can be a great option, but there are definite draw backs and life style changes. I think about how easily it is to go to the grocery store or ride my bike to Starbucks and think, “Could I live someplace remote if it was beautiful enough?” maybe. I need to check out these options and weigh the pros and cons. I’d love to read what your mom and step-dad decide. Keep us posted!
I considered it a number of times! Maybe, I am unwilling to do what is necessary to make it work or too old to make the change. The biggest reason is having children who live here (California). If we were going to do make this change, it would have to be gradual. Start with a second home and vacation there, gradually staying longer.
@Krantcents – Mr. LH and I have just started talking about this, but not seriously yet. My biggest fear is we move out of the country and I become a widow (I know it’s morbid, but I’m in better shape than Mr. LH.) I’d hate to be in a foreign country and not have any family nearby (kids or no kids.)
I like watching house hunters international, but don’t think I’d want to live permanently abroad. Although I’d like to spend and extended time in Barcelona (but it’s not cheap).
@Barb Friedberg – I haven’t thought about it in depth, so I’m not sure if I could really do it or not, but the benefit of a less expensive local is appealing! Of course, Barcelona isn’t on that list. 😉
Hi Little House, my husband and I talk about this regularly. It’s not that we don’t have enough money, but we may want to live somewhere else for a while. Our Spanish skills are very good and that increases our options.
As far as conveniences go, a cheaper country doesn’t necessarily mean you are in the boonies. For example, Panama City in Panama is about as developed as Miami. Although you can’t get Starbucks (they have a local brand), you can get pretty much any kind of American food you can think of. The city was set up for US soldiers, so you can do the same kinds of activities as at home: mall shopping, bowling, bars, casinos, movies, etc. The Canal is right there so you can get all the toys and clothes you are used to as well.
@Jennifer Barry – Thanks for sharing that info about Panama, it’s definitely a city I’d like to research a bit more.
We’ve been to Belize on vacation and enjoyed the beaches. I don’t know about living that far from kids and grandkids. We’d have to see.
@Kay Lynn – I think that’s what keeps some people from retiring in other countries- being so far from family. My husband and I still don’t have kids, so it would be a little easier for us to move. However, you could always try to convince your kids (or grandkids) to move with you. 😉