How To Figure Your Cost Of Living

How Much Does It Cost To Retire Overseas?

Feb. 3, 2011, Panama City, Panama: Your cost of living anywhere in the world is controllable within parameters, and the cost of living anywhere is a moving target.

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Dear Live and Invest Overseas Reader,

Our editors are busy updating budgets for the cost of living in the world's top overseas retirement havens. I want to share some of their cipherings with you today.

First, though, I want to add the usual caveats and disclaimers that I offer every time I take up this country budgets discussion.

How much will it cost you to live in Overseas Retirement Haven XYZ?

The only honest answer is, I have no idea. And neither does anyone else. The only one who can answer that question is you.

One section of the book I wrote for Penguin last year ("How To Retire Overseas") is given over to detailed budgets for living in the world's top 14 retirement havens. According to these budgets I've compiled (with help from contacts living in each place), Ecuador and Thailand are the most affordable of the countries I consider in the book, Argentina (specifically, Buenos Aires), Belize, and France the most expensive.

My publisher at Penguin may not appreciate my making this point, but, the truth is, these budgets, and any others you might come across for living anywhere in the world, are almost meaningless. At best, they're guidelines, starting points. Don't interpret them literally and don't bet your entire future on any promise they may seem to hold out.

Here's the most important thing to understand about budgeting your new life overseas: You can spend as much or as little as you want to live almost anywhere. Some places are generally more affordable than others, and a handful of places are absolutely cheap. But globalization means you can enjoy more or less any standard of living more or less anywhere on earth, if you're willing to pay for it.

The exceptions are some absolutely cheap locales such as Ecuador, India, Thailand (outside Bangkok), and the Philippines (outside Manila). In these places, your cost of living is artificially low because, frankly, there isn't much for you to spend your money on. This is not to say that, in these places, you couldn't enjoy a comfortable, interesting, exotic, even fun, exciting, and adventure-filled life. But you'd be living simply, because you'd have no option. The only life in these places is the simple life.

If cost of living is your primary motivation for thinking about moving to another country, I recommend you focus on these choices. If you're not looking to move on a super-fixed income (of, say, US$1,200 a month or less), you have many good options, and here's what I strongly suggest:

Stop obsessing over this cost-of-living question. Yes, of course, you need to know that you'll be able to afford to live in whatever country you decide to try on for size, but here are a few other things to remember, as well.

Most important, as I've pointed out over and over and over and over again, your cost of living almost anywhere is controllable. It will not be the same as my cost of living in that same place or, necessarily, the cost of living in that place for anyone else you might speak with.

Most expense items--everything from housing to health care, from travel to entertainment, from your monthly grocery bill to your phone/cable/Internet package--are hugely variable and can be managed.

I met a gentleman recently, an American, living in downtown Panama City on a budget of US$800 a month. I wouldn't have believed it if he hadn't itemized his monthly costs for me. He's renting a small furnished house (without air conditioning), in a local neighborhood, for US$400 a month and controlling his other expenses so effectively that they amount to no more than another US$400 a month.

Lief and I are spending more than five times that amount each month to live in the same city.

Maybe you could live in Panama City on US$800 a month, or maybe that lifestyle would make you miserable. Maybe you'd spend more than Lief and I are spending to enjoy the standard of living you're looking for. We know people who do. Panama City is a place where you can find almost any product or service you might be in the market for…and avail of it if you're willing to ante up.

Second, cost of living is a forever-moving target, especially if you're living in a country whose currency differs from the currency in which you derive your income.

Third, none of this is really the point.

The point is that you can control your cost of living, within parameters, almost anywhere in the world.

So, one more time, I can't tell you how much it will cost you to live in any of the places I recommend you consider launching a new life. I can, though, with the help of my far-flung network of correspondents already at home in these places, give you broad and general guidelines for reference...as a starting point.

One more thing before we get to the numbers. Just as a one-size-fits-all budget for living in any country is next-to-meaningless, so is any budget that claims to represent the cost of living in any country overall. A budget for Panama, Belize, France, Thailand, or Malaysia, is useless, because the cost of living in Panama City, for example, is nothing like the cost of living in Boquete or Las Tablas...etc.

Without further ado, here's what our correspondents figure it costs to live in...

• Las Tablas, Panama:

Rent: US$300
Transportation: US$50 (occasional bus and taxi fares)
Electricity: US$100 (more if you run your AC full-time)
Gas: US$5 (used for cooking)
Telephone: US$30
Internet: US$25
Cable TV: US$30
Full-time Household Help: US$150
Groceries: US$300
Entertainment: US$80

TOTAL: US$1,070

• Cayo, Belize:

Rent: US$600
Transportation: US$25 (occasional bus and taxi fares)
Electricity: US$85 (more if you run your AC full-time)
Gas: US$20 (used for cooking)
Water: US$55
Telephone: US$75
Internet: US$75
Cable TV: US$25
Full-time Household Help: US$350
Groceries: US$200
Entertainment: US$75

TOTAL: US$1,585

• Medellin, Colombia:

Rent: US$700
Transportation: US$15 (occasional metro and taxi fares)
Electricity: US$50 (more if you run your AC full-time)
Gas: US$25 (used for cooking)
Telephone: US$10
Internet: US$20
Cable TV: US$20
Full-time Household Help: US$350
Groceries: US$400
Entertainment: US$300

TOTAL: US$1,890

This would constitute a higher-end budget for living in Medellin. In a more out-of-the-way neighborhood, you could rent a small, unfurnished apartment for as little as US$210 a month (we know someone doing this). You could forgo the maid service. You could reduce your going-out expense...

Making those changes brings the total budget down to less than US$1,000 per month.

One more time...cost of living is a moving target.

Kathleen Peddicord

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