Not Enough Money to Retire? Move Overseas

Some Baby Boomers Moving Overseas in Search of Low Costs


Tony** never spent much time thinking about his long-term finances. He worked and paid the bills, he bought a house and took an occasional vacation. But he never planned for retirement. He assumed Social Security would pay his bills.

After all, Tony reasoned, he lived simply, with no extravagances, and his mortgage would be paid off by the time he reached retirement age. Surely, Tony assumed, Social Security would be enough for to buy groceries, keep the lights on, fuel his used car, and pay for home upkeep, insurance and property taxes, right?

As Tony approached his 60s, he started realizing that Social Security would be a tiny drop in the bucket compared to his basic living costs. No matter how much he pared-down his expenses, he couldn't force his Social Security income to match his costs. Tony needed to face the brutal truth: he hadn't saved enough to retire, and now he was stuck.

He pondered what to do. Years earlier, he had visited Costa Rica and absolutely loved it. It felt like a lush, tropical paradise. He also remembered that it had a low cost of living.

Tony had been born and raised in Nebraska, and had lived there his entire life. Did he dare make such a bold and dramatic move in his 60s?

Tony and his wife began talking to other Americans who had visited or lived in Costa Rica. They also started meeting Costa Rican immigrants in their hometown. They had an armload of questions for each person they met.

They read books on retiring abroad in general, and books on living in Costa Rica in particular.

They visited Costa Rica a few months later. They chatted about the idea with their children. And finally, they decided they would move there for retirement.

** (This is a true story, although their names and identifying features have been changed to protect their privacy.)

The term “geographic arbitrage” refers to the practice of spending your working years in an area with a higher cost of living (and higher payscale), and spending your retirement years in an area with a low cost of living.

Some people, like Tony, move outside the country, while others simply move to a lower-cost area of their home state.

Chasing a Lower Cost of Living Domestically

In the U.S., this might take the form of living in Manhattan during your working years, but moving to Brooklyn, Queens or Long Island when you retire. Plenty of people move to these lower-cost neighboring areas during their working years, enduring the expense and time of a lengthy commute. As a retiree, you don’t have to make the daily commute, so this option becomes even easier.

For more of a leap, you could live in New York or San Francisco during your working years, but move to Atlanta, Cincinnati, Sedona, Ariz., or Ft. Collins, Colo., for your retirement.

Magazines like Kiplinger’s Personal Finance and Money Magazine publish list of some of the “best places to retire” based on cost of living, safety, attractiveness, weather, and fun things to do. Check out these lists to generate ideas, or take a road trip around the country to find a place that you might consider making your new home.

Chasing a Lower Cost of Living Overseas

If you’re interested in saving money while having an adventure, you could opt for an extreme route: spend your retirement in a country where the dollar-exchange rate works in your favor.

There are large “ex-pat” communities in beautiful, low-cost places like Bangkok, Thailand or Bali, Indonesia.

(“Ex-pat” refers to citizens of wealthy nations – such as Americans, Europeans and Australians - who have moved to countries with a lower cost of living.)

If you opt for this route, tap into those ex-pat communities for advice and friendship. Follow these other pointers as well:

Study: There are plenty of books, magazines and blogs dedicated to retiring abroad. Read as much as you can.

Meet: Meet people face-to-face in your home community who have lived overseas. Some people spend half a year abroad and half a year in the U.S., while others lived overseas until the birth of a grandchild (or some other life event) prompted them to come back home. Look for these people on the web through or

It's also a good idea to meet immigrants from that country who now live in your hometown. They can share insight, information and tips about life in that country. They can also introduce you to relatives, recommend doctors, and help you create a network. Look for local associations or organizations of immigrant communities in your hometown or region. For example, try running a Google search for the term "association," "Nepalese" and "Midwest" or "Ohio" to meet Nepalese immigrants now living in the Midwestern U.S.

Test Drive the Idea: Also, go to those cities, states or nations for an extended visit – perhaps 1- 3 months – before you commit to moving there. You may find that Costa Rica doesn’t live up to your expectations, but Colombia would be a great place to retire. Domestically, you may discover that Sedona, Arizona doesn't meet your expectations, but Austin, Texas does.

Check out Clinics: The medical care in many of these nations is advanced and inexpensive. Many countries that cater to ex-pat retirees have medical clinics that are fully staffed by English-speaking doctors, or that have a thriving international hospital wing. When you visit the country that you’re considering, ask ex-pats to recommend their favorite local health clinics. Then drop by those clinics to see it in person. Look at the waiting room; ask to meet the doctors. Get a sense for how clean the clinic is. Find out how well the receptionist and doctors speak English.

Many retirees report that they felt more comfortable with the idea of living abroad after they found a doctor’s office or hospital that met their standards.