Counting The Costs Of A Retirement Overseas
How should you go about choosing where to reinvent your life in retirement overseas? Best made, this is a thoroughly personal decision. You should think about retiring to another country because you feel at home there and enjoy the way of life on offer. Bottom line, your heart should lead the way.
However, your head should have a say, too, of course. That is, while the best place for you to retire overseas is the best place for you simply because your gut tells you it is, you do want to look at more practical factors when considering your options.
For many, cost is key, both the cost of living and the cost of real estate. You may intend to purchase a home in your new situation overseas or only to rent one. Either way, this housing expense will be a significant part of your overall budget and should be considered separate from other monthly costs.
That’s why, for our hot-off-the-presses 2014 Retire Overseas Index, we look at three pieces of critical data for each of the 21 destinations featured—the cost of living minus housing; the typical cost of renting; and the average cost per square meter to purchase property.
For the purposes of this Index, we created a starter-budget template that includes utilities (gas, electricity, landline phone, cable television, and internet), groceries, and entertainment. These would be your basic costs (in addition to housing) retired anywhere in the world. You could, of course, add costs, depending on your lifestyle and priorities. Maybe you’d like to have help around the house. In many places around the world, household help can be a bargain, making full- or part-time help with the daily chores a potential big benefit of retiring overseas. The cost could be US$150 (in Nicaragua, for example) to US$300, say, per month. However, maybe you don’t want to make that investment.
The utilities figure for each of our 21 budgets is straightforward; groceries and entertainment, much less so. If you shop at local markets and stick to a basic, local diet, your monthly groceries bill could be US$150. If you shop at U.S.-like grocery stores (which exist in every place on my list below) and want to eat like you ate back home (prime rib, Entenmann’s, and French wine), your monthly food bill could be two, three, or four times US$150.
Likewise, entertainment. Our Index budgets include amounts for eating out once a week and going to the movies a couple of times a month, say, or perhaps taking one in-country trip per month to explore your new home. You could, if you wanted and your budget allowed, eat out four nights a week and take international vacations twice a year.
On top of the overall cost of living wherever you decide to retire you’ll have the cost of housing. I recommend renting first, to give yourself a chance to get to know your new home and determine if it is, in fact, the right place for you. For each of the 21 top retirement havens on our Index list, therefore, we indicate an average cost for renting a one-bedroom, one-bath residence in a neighborhood that would be appealing and appropriate for a retiree.
After you’ve been in residence for a while, you may decide you like the place well enough to commit long term with an investment in a home of your own. Buying a piece of real estate in another country can also offer the potential for return, from capital appreciation over time and from cash flow if you decide to rent the place out when you’re not using it yourself.
Therefore, for each of the 21 destinations on our Retire Overseas Index list, we also figured an average cost per square meter for the purchase of property. This is the best way to consider this. In fact, breaking down a location’s property market to an average cost per square meter for a particular kind of property is the only reliable way to compare that location’s property market with the property market anywhere else, the only apples-to-apples strategy.
In Nashville this week for our annual Retire Overseas Conference, we’ll be sharing the results of this year’s Retire Overseas Index, including the monthly budgets, the rental costs, and the average per-square-meter cost to purchase real estate for all 21 destinations featured…and a few others, to boot.
Here’s a sneak preview for some of the destinations being featured…
In the Americas:
Monthly budget: US$2,055
Rent per month: US$1,000
Purchase per square meter to purchase: US$2,000
Monthly budget: US$2,440
Rent per month: US$1,200
Price per square meter to purchase: US$1,900
Monthly budget: US$1,010
Rent per month: US$300
Price per square meter to purchase: US$1,100
Monthly budget: US$1,040
Rent per month: US$500
Price per square meter to purchase: US$1,500
Monthly budget: US$1,530
Rent per month: US$650
Price per square meter to purchase: US$1,050
Monthly budget: US$1,910
Rent per month: US$850
Price per square meter to purchase: US$2,490
Monthly budget: US$1,500
Rent per month: US$615
Price per square meter to purchase: US$1,960
Monthly budget: US$1,725
Rent per month: US$1,085
Price per square meter to purchase: US$5,500
Monthly budget: US$1,930
Rent per month: US$1,285
Price per square meter to purchase: US$2,300
Monthly budget: US$920
Rent per month: US$400
Price per square meter to purchase: US$1,100 (note that foreign ownership of real estate is restricted in Thailand)
Monthly budget: US$910
Rent per month: US$350
Price per square meter to purchase: US$1,200
Monthly budget: US$660
Rent per month: US$300
Price per square meter to purchase: Foreigners can’t own property
Continue reading: Risks Of Retiring Overseas