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Retirement can be one of the best moments of your life, but one thing is certain: it's not cheap. The average person aged 65 and over spends nearly $ 46,000 a year, according to the Bureau of Labor Statistics. If you spend so much each year for, say, 25 years, that's a grand total of $ 1.15 million.
This is an exorbitant price, and most future retirees have not saved as much. In fact, 42% of baby boomers have spared nothing for their retirement, according to a report published in 2018 by the Insured Retirement Institute. This means that those who are behind their savings will probably end up depending on Social Security benefits to make ends meet – but when the average check is only $ 1,300 a month, there is much to be desired.
If you are nearing the age of retirement and your savings are missing, you may think that your only option is to find a way to save more. While this is never a bad idea, there is a way to potentially reduce your costs without sacrificing your lifestyle: retiring abroad.
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A drastic move (but potentially profitable)
Moving to a new country is an important decision, which probably explains why very few retirees even consider it. In fact, according to a new survey by the financial planning firm Stash, only 4% of Americans said they would be moving abroad to find a more affordable lifestyle in retirement.
Retiring abroad is probably not an easy affair, and many people are reluctant to leave their friends and family behind and start afresh in a different country (and eventually have to adapt to new culture and learn a new language as well). That said, it may offer the opportunity to live a more lavish lifestyle at a much more affordable price than what you would find in the United States.
For example, come to Buenos Aires, Argentina, and enjoy beautiful beaches, world-class restaurants and museums, and a city rich in historical culture. The best part, however, is that the average furnished apartment in a posh part of the city costs less than $ 600 a month, according to the expatistan expatriate resource. Even if you only benefit from social security, you can live a relatively lavish life in a city where the cost of living is lower.
Before you start packing, however, it is important to do your research to determine if going abroad is the right decision for you.
To weigh the pros and cons
A low cost of living is a definite advantage of moving to a new country, but there are also risks. Some countries may have insufficient health care, for example, or high crime rates – so the appearance of affordability can have a negative impact on your health or safety.
Even if you find a safe and affordable city with an excellent health care system, you will still need to consider the cost of a trip back to the United States to visit your friends and family. your family, as well as expenses related to the move and the potential purchase of new furniture. , vehicles, etc.
There is also the culture shock that accompanies moving to a new country. For some people, the idea of learning a new language, tasting new foods and immersing yourself in a new culture sounds like a thrilling adventure. For others, it sounds more stressful than pleasant. Understanding how ready you are to venture out of your comfort zone will help you decide if going abroad is the right choice.
If you decided that moving to a new country was the retirement adventure you were looking for, it's time to start looking for your options. Before choosing a destination, think about factors such as your willingness to leave home, your willingness to learn a new language and the amount of your housing expenses and other necessities. Also be sure to determine the conditions necessary to legally reside in your potential country. For example, will you have access to health care even if you are not a legal resident? Will living as an expatriate limit your ability to own property? These are important questions to ask before you pack and move.
Also, be sure to calculate how much you can reasonably afford – and stick to it. It can be harder to find a job in a new country than if you stay in the United States. Therefore, if you move and realize that you can not afford your new lifestyle, your options may be limited.
Test the waters
Sometimes the best way to decide if retiring abroad is the right decision is to test it for a few weeks. Do your best to live as a local and not as a tourist in your new potential city. you want to be sure to move to a safe and affordable neighborhood with access to everything you need.
It's also a good time to see how friendly the city is to newcomers. Although you probably do not make new best friends after spending a week or two in the neighborhood, you can find out if most people are welcoming or not for expats. You can even meet groups of Americans living in your new city, which can ease the transition.
Finally, consider important factors such as affordability and health care. Will you be able to pay for your ideal lifestyle in this new city? How much will you pay for health care? Keep in mind that even if your social security benefits will follow you in your new country, Medicare will not do it. You will need to find other ways to cover your health care needs. You will also be subject to US tax on withdrawals from the retirement account if you move abroad (after all, Uncle Sam still wants his piece of the pie, no matter where you live), so make sure you take into account these expenses when you determine how much you can afford.
Deciding to retire abroad is not an easy choice, but it may be one of the best decisions you can make. If you research and choose the right destination, you can spend your retirement relaxing on the beach with a drink in hand, without breaking the bank.
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