How to Retire Overseas on Under $25,000 a Year
A new book's authors offer tips on doing it and living well, too
Growing numbers of Americans asking themselves where they might live in retirement are answering with places like Panama or Portugal.
If you’re one of them, you’ll be interested to hear what I learned when I interviewed Dan Prescher and Suzan Haskins, authors of the new book, The International Living Guide to Retiring Overseas on a Budget.
The married couple are senior editors at International Living — a media company specializing in retiring abroad. I happened to catch the itinerant journalists by phone during one of their rare stops at home, which these days happens to be a condo in the Andes mountain village and healing mecca of Cotacachi, Ecuador.
(MORE: Best Places in the World to Retire: 2014 Edition)
This is their second stay in Ecuador; they originally moved from Omaha to the capital city of Quito in 2001. Prescher and Haskins have also lived in Mexico, Nicaragua and Panama — where they’re heading in two weeks for an International Living conference.
Next Avenue: Why did you leave Omaha for Quito, Ecuador?
Haskins: I was tired of the winter in Omaha. We had a marketing company and it was a stressful time in our lives and I felt life was passing us by. It felt like this would be the time to make a move and a change in our lives for the better.
You could have gone to a place like San Diego. Why Ecuador?
Haskins: I don’t think we could have gone to San Diego. At the time, we still wanted to keep working, but if we weren’t able to find work, we wanted to know we’d be in a place where we could afford to live. That meant going to an inexpensive country.
I had been in contact with International Living because I felt our career skills were a good fit for them. Ecuador was where they needed people. We moved there kind of on blind faith. It’s worked out very well.
(MORE: Retiring in Latin America Is Easier Than You May Think)
It does seem like a bargain. You say in the book that it costs the two of you $1,397 a month to live in Ecuador, right?
Haskins: Yes, it’s very inexpensive. We own our property so we’re not paying rent.
Why are so many boomers retiring overseas these days?
Prescher: It’s not a scary idea anymore. The Internet has changed everything. It used to be you’d read magazines, books and newspapers about people living these exotic lives. Now you can Google ‘Placencia, Belize’ and get three blogs written by people living there and learn their stories. Being able to see stories of people doing it really lowers the bar.
Haskins: Because of technology, you can stay connected to your family and friends back home. We videoSkype to see our grandbaby or talk to our mothers in the states.
Prescher: Another thing is economic uncertainty. Almost everybody realizes they probably won’t be able to afford the retirement they thought they could 10 or 20 years ago. And the idea of being able to move someplace with better weather that costs you half as much as what it would back home — or less — is pretty compelling.
The subtitle of the book is How to Live Well on $25,000 a year. How easy is that?
Prescher: We think it’s very easy in the countries we outline in the book without sacrificing the quality of your life.
We’re talking predominantly places like Mexico and Central and South America. There are also incredibly affordable places in Southeast Asia and Europe.
Prescher: There have always been wonderful places in the provinces of France and Southern Italy where you can live a perfectly affordable life.
Haskins: Portugal is inexpensive, too.
In the book, you urge people to “ruthlessly profile yourself” before moving abroad. Why?
Prescher: You have to figure out what you really want and can’t live without before you make this journey. The better you do that, the happier you’ll be.
How do you wish you had ruthlessly profiled yourselves better?
Haskins: Living in Omaha, we always thought that someday we’d want to live by the ocean. And then when we got the opportunity to actually spend more time by the ocean, we realized we like being in the mountains where the weather’s cool.
We still love to go to the beach on vacation, but we don’t necessarily like full-time heat, or mosquitoes or sand.
Is it better to rent than to buy when you first move abroad, so you have the flexibility to move if the area isn’t quite right?
Prescher: Indeed. And if you haven’t spent any appreciable time there, definitely rent. You may end up loving the city, but not liking the neighborhood you’re in.
You live in a two-bedroom condo. So you don’t think someone retiring abroad needs a place with a lot of room for visitors from the states?
Prescher: We have been visited, but not often enough to justify maintaining a huge place. And as we’ve lived abroad we’ve realized that the physical things we need to be happy can be reduced almost to what can fit into four big suitcases.
Our happiness comes from what we’re doing and where we’re doing it, rather than the stuff that we own.
When our friends and family do come down to visit us, we can get them in at a beautiful B&B down the road for $25 and nobody gets on anybody’s nerves. It works out well.
Let’s go through what you call in the book the most common questions people ask about moving overseas. The first is: Do I need to give up my citizenship?
Haskins: No. Dan and I would never recommend giving up your citizenship.
The next question: Can I still get my Social Security if I live overseas?
Haskins: Yes, of course you can. Social Security will direct deposit in many banks around the world. Or you can have it deposited into your U.S. bank and withdraw funds from your ATM.
Prescher: But it varies from bank to bank, so you need to check.
Another common question: Will Medicare cover me overseas?
Haskins: Nope. Some people keep Medicare and return to the states if they have any major medical issues. But most people decide to get healthcare coverage in the country where they decide to move.
Prescher: Most of the countries we talk about have a two-tier health system.
The public side, where healthcare is provided to everybody — citizens and residents — is very low cost because it’s government subsidized. That has all the benefits and drawbacks that socialized medicine has always had.
There’s also a private healthcare system, where you can go directly to a doctor or a hospital and pay out of pocket or work out a private health insurance plan.
With Obamacare, will Americans under 65 living abroad need to pay for U.S. health insurance or face a penalty?
Haskins: If you are a resident of another country, you can opt out of Obamacare and there’s no penalty.
You say that if the cost of living is very important to you, consider moving to a higher-elevation climate of a tropical country. Why?
Prescher: The best example is where we live now. We’re up in the Andes, but we’re close to the Equator, which means we pay nothing for heating or air conditioning. We don’t have a furnace or an air conditioner. Imagine how much that saves your bottom line if you’re coming from a place like Chicago or Arizona.
And you don’t necessarily need a car if you retire abroad, right?
Prescher: That’s correct, if you pick your place right.
In the book, you say that life is often noisier abroad. What do you mean?
Haskins: Our neighbor’s roosters don’t just crow when the sun comes up.
And people often live life loudly around the world. Where we live, the city will sponsor a holiday where the music blares until 3 in the morning. That wouldn’t happen in the states, because of noise ordinances.
How important is it to be able to speak the language of the country you’ll be living in?
Prescher: If you’re moving to a place where English is not the official language, it’s always a good idea to learn as much of the language there as you possibly can. You make more friends; you know what’s going on in the community.
But there are places you can go with big enough expat populations that you can live your life pretty comfortably without ever speaking the local language and where they’re used to English speakers.
You suggest spending time in an area during its worst season before making a move. Why?
Prescher: That’s the difference between having a vacation attitude about a place and a resident attitude. You might go to the beach on vacation for a few weeks, basking in the sun and drinking margaritas when it’s cold back home. Go there in their summer and the heat may be sweltering; the humidity may be 100 percent. If this is a place you’re thinking of living full-time, you really want to know how you’ll react to the worst part of the year there.
Can American retirees find jobs abroad if they want to work part-time?
Prescher: Work permit requirements differ from country to country. And there are some professions in some countries that are reserved for nationals. The websites of consulates can tell you the rules or you can post a question on Facebook forums.
But people with transportable careers — like writers, copyeditors, designers and consultants — can do those things from anywhere on the planet with an Internet connection. We’re pretty good examples of that.
You can pick any place on the globe to work, so you might as well pick a beautiful one.
Haskins: Typically, the people we know who work overseas are entrepreneurial. They have started businesses to fill a niche, sometimes for the expat community.
Let’s talk about some popular countries Americans retire to. What are the pros and cons of Mexico?
Prescher: The pro is that it’s so close to the United States, there’s something familiar about the lifestyle.
There are two big cons for me: Mexico is a big country and there are a lot of potential places to settle, so you’ve got to make a choice between the coasts, the tropics, the desert, the mountains, a city, a community and whether you want expats around. The amount of choices can be daunting.
And the news cycle Mexico is going through in the U.S. is terrible, even though most of the country is very safe. But if you tell your friends or family you’re moving there, you’ll be bucking some storms. They’ll worry about you until they come to visit.
Now let’s go down the globe to Central America. You say Belize is one of the most beautiful spots in the world. What should people know about it?
Haskins. It’s a very small country; about the size of Rhode Island. You’ll want to be a beach lover to live there. Since English is the official language and people are extremely friendly, it’s a very easy place to start as a retiree.
But Belize may not be as inexpensive as some other countries in our book because it imports most of its foods beyond citrus and seafood.
You write that Nicaragua has changed a lot since you lived there in 2007. How so?
Prescher: The infrastructure has gotten much, much better. The roads are better; Internet service is better and medical services are better.
You say Panama may have the world’s best retirement program. What do you mean?
Haskins: When you move there as a retiree, you get the same retirement benefits as a Panamanian citizen. They’re pretty extraordinary and better than you see in other countries. You get discounts on your electricity bill, your healthcare, restaurants, movie theaters and hotels.
Going down to South America, you call Ecuador a great value proposition. Why?
Haskins: The growing season is year-round, so we can get just about any food any time of the year, so that’s inexpensive. Gasoline now costs less than $1.50 a gallon. And we get some great discounts as retirees.
Finally, what’s your advice for couples about moving overseas?
Prescher: They should both be in agreement that it’s what they want to do. It’s challenging enough to move to a new culture and deal with unfamiliar things. If you also have to deal with somebody you love who doesn’t want to be there in the first place, it’s not going to be an enjoyable experience.