9 Reasons You Can’t Retire on $1000 Month Overseas.
Many of my videos share frugal cost-of-living estimates ranging from $800 to $1400 per month.
So, why am I now giving 9 reasons why you will be unable to retire on $1000 per month overseas? Because I want you to think through your challenges so you can create a softer landing overseas.
After sharing all 9 Reasons, I will share who is best suited to help you get your budget down to a manageable level the quickest.
I am not a financial planner and I am not qualified to give financial advice. Plus, we each have our own spending behaviors and lifestyle needs and I know nothing about you. So, all I can do is tell you how I think about money.
9 Reasons You Can’t Retire on $1000 Month Overseas
One. They Have Higher Budgets: Most people retiring in the low-cost-of-living paradise countries are not living on $1000 per month. Why? Because they have large retirement incomes and nest eggs. They don’t need to live on so little.
The overwhelming majority of the people I meet in paradise overseas have budgets ranging from around $1400 to $3500 per month. They don’t live on so little because they don’t need to.
About 10% of the people I meet have budgets of less than $1200 per month and 10% of the people I meet are budgeting more than $3500 per month. Most people are in that middle range. So, they are not even trying to live on $1000 per month.
Two. They are Paying too Much in Rent: I received a comment today from someone saying they are trying to live on $1000 per month. They started off by listing their expenses. I knew why they were in trouble when I saw their first expense, rent.
The first expense they listed was $400 per month for rent. Rent and food are going to be two of the biggest expenses for many people. Whatever your monthly budget is, you should divide it by 5. That should be your target amount for rent.
So, if I were trying to live on $1000 per month, my rent goal would be $200 per month plus utilities. I can hear some of you right through the Internet, “You can’t rent around here for $200 per month.” Very few people will be able to maintain a budget long-term if their rent exceeds more than 20 to 25% of their monthly budget. Ask any banker.
Over the weekend, I got a message from my friend Robert. He just rented a place in Puerto Galera for 7000 pesos per month, which is $127.00 USD per Month. You may remember Robert was my guest star for Bali, Indonesia (see the first link below).
Robert’s secret is putting his feet on the ground and scouring neighborhoods until he finds what he wants for his budget goals. You won’t find gems like Robert does online. You see, internet-connected landlords get 2 to 3 times as much in rent. Check out my report, How to find perfect apartments around the World.
Take the time to lay a firm foundation for meeting your budget goals starting with rent.
Three. Cost of Living Table. The cost of living table in the retire cheap reports, starts with just the basic recurring costs of living. Such as rent, groceries, utilities, restaurants, cell data, laundry, drinking water, Internet, and transportation, and then adds additional optional amounts of alcohol and entertainment.
Notice that it doesn’t include haircuts, shoes, clothing, doctor visits, healthcare, medicine, dentists, hobby supplies, batteries, new electronic toys, online dating applications, flights home to visit family, and a bunch of other stuff that you probably spend money on in your home country.
I don’t know you well enough personally to estimate all the little details that will differentiate your unique budget from another person’s unique budget.
That is why my reports ask you to add anything to the estimate based upon everything you spend money on in your home country that is not in the above table. I give a link to a web page that shows some of the additional items you would want at your desired location: Numbeo.com.
But that isn’t the whole story. You are likely to spend more on some items and less on others than I show in my cost of living table. Maybe you will want a nicer place? Maybe you will want to upgrade your transportation or eat and drink only in Western-style bars and restaurants.
So, you really won’t know your unique cost of living until you do an exploratory visit and put your feet on the ground. You have to pick an apartment, pick restaurants where you will eat, pick markets where you will shop and things you will buy, and pick products and services you will buy. Then sum all of that up to get your unique budget.
So the table just gives you the basic cost for a frugal person and you have to decide what other costs you are willing to incur based on your budget, lifestyle, and needs. And that is not completely ascertainable until you have your feet on the ground.
Four. Emergencies. Whether you move overseas or stay home, you are likely to experience unexpected emergencies in life.
Before you leave your home country, and on top of the assets creating your monthly cash flow, you also need savings that you can access in an emergency. You can’t rely on your monthly retirement cash flow for this. Your monthly cash flow pays for typical living expenses and is not designed to pay for large emergencies.
In an emergency, if you start dipping into the principal that is the source of your retirement monthly cash flow, that will reduce your monthly cash flow in future months. So I suggest a separate fund for emergencies and you should never dip into your emergency fund to supplement your monthly expenses.
Your emergency fund needs to be immediately available to you in an emergency. Assets that take time to liquidate may be unavailable to you when you need them most.
Some emergencies can be anticipated and covered by insurance, such as medical expenses. Most people prefer to cover this risk with healthcare insurance. Others, like me, just pay for medical and dental out of pocket, as needed.
But I am only willing to assume the risk of an unexpected healthcare emergency because I have lived overseas for 16+ years. I have been in a hospital bed overseas so this is not a theoretical discussion for me.
I have a better understanding of medical tourism countries and what it would cost to obtain care in an emergency, or otherwise, so I just set more emergency money aside for this risk instead of buying insurance. I do not recommend that you do this.
But most of you will buy medical insurance and then add that to your monthly cost of living estimates. For a better understanding of why I choose to self-insure and increase my emergency fund for medical, read this report on VagabondBuddha.com.
Five. Don’t Become Somebody’s Mark. When you first move overseas, you need to watch your budget closely. You are not in Kansas anymore Dorothy. It ain’t the Tin Man or the Scare Crow that will be offering to show you how to get down the yellow brick road once you leave Kansas.
The funny thing is, when people are first thinking about moving overseas, they think all the criminals live outside their home country. Take my home country, for example, the USA. All of the major lessons I learned about being taken to the cleaners have come in the USA.
Sure, I pay ten cents extra per KG to buy fruits and vegetables from time to time overseas. But that sting is delightful compared to the tens of thousands of dollars I have lost in business and marriage in the good old USA. So try to keep this in perspective as I explain this one.
Don’t run around telling everyone how you made a killing investing in Yahoo or Google. Nobody needs to know that your uncle is Warren Buffet or that you retired from Microsoft after 20 years as a Senior Software Engineer. In life, loose lips sink ships. Don’t put a target on your forehead.
You are already a big deal when you move overseas just because you are from another country. So you will get enough attention just by flying across the world. You don’t have to talk yourself up to get people interested in you.
Also, don’t share your electronic equipment with anyone. If you bring somebody new into your life overseas, don’t share your computer or cell phone with them. That has all of your sensitive financial information on it. You don’t want money suddenly being transferred out of your accounts.
Buy a cheap extra computer and cell phone if you have to, so people don’t need to use yours.
Share very little about your finances with your new love. If they need money to help their family, set some boundaries around that. If they keep asking you to breach those boundaries, it is time to find a new love. Check out my report, How to Avoid Conartist Lovers Overseas.
If after reading that report, you decide to give your new lover money each month to help their family, add that to your budget.
Six. Celebrations. When I first left the USA in 2007, I first moved to India on business. India has more celebrations than any country in the world as far as I know. Indians love to get together and celebrate one thing after another.
No matter where in the world you decide to retire overseas, one of the most enjoyable things you will experience is seeing your local friends celebrating their unique culture. When you get invited to a wedding, spiritual celebration, or regional fair, you will quickly learn that you may need to wear specific clothing or bring a gift to the host.
Every time I have experienced one of these celebrations, the overall experience has always been more fun and valuable to me than whatever minimum cost it took to experience the event.
But you may have to spend a few bucks here and there which is hard to budget for since it will be so sporadic. Just try to stay a little under budget each month ($20 to $30) so you have a little extra each month for these unique sorts of experiences.
Seven. Kid in a Candy Store. When you first live overseas, the prices will seem so cheap to you. It will be like you are a 10-year-old kid that walks into a candy store with a $100 bill in your pocket.
With your favorite candy on sale for 3 for the price of one, you are not going to walk out of the store with much money. In life, when prices are way below average, we tend to hoard things and store them for the lean times.
But when you are on a fixed tight budget requiring you to act more reasonably, this can become a problem. That is why when you meet first-time expats in paradise, they are spending like drunken sailors on shore leave.
Go crazy for a few days, but after that, start setting budgets on how much per month you are allowed to spend on items you tend to go overboard on spending. Also, think up alternative behaviors, where you can get the candy you love without busting your budget.
For example, if you are spending too much dating new prospects, start meeting just for coffee during the day and only take the good ones for the second date out to dinner. Or, make dinner at home and invite them over to your house.
Think up alternative ways to get the same things you enjoy for less. Instead of meeting in bars, just go for walks on the waterfront or central parks where it is easier to talk and see the city.
If you are already in a relationship, go on self-guided tours of the area you live instead of joining expensive guided tourist tours. Try to think up a bunch of different ways you can stay within your entertainment budget when you are the new kid in town.
Otherwise, you are probably going to load up on more candy than you need.
Eight. Buying Stuff You Don’t Need. In our working years back in our home countries, some of us bought things we didn’t need, often as a reward for dragging ourselves back to work on Monday mornings.
But when we are getting ready to retire overseas, many of us end up selling a bunch of that stuff in garage sales. We sell that junk to raise a little pocket money and to empty our lives of junk before we move overseas. Trust me, don’t ship the junk overseas. More on that later.
If we pay close attention, we will realize we didn’t really use all of that junk as much as we thought we would when we convinced ourselves how badly we needed it. If we think carefully about it, we don’t have to buy all that stuff when we move overseas.
You see, we will not be bribing ourselves to go back to work on Monday morning anymore. Our future days will consist mostly of creating new experiences in our life instead of having a bunch of stuff we rarely use hanging around our necks and weighing us down.
But some of us will be tempted to ship a bunch of our old stuff with us or to buy all new stuff when we arrive overseas.
If that is you, then you can easily add a few thousand bucks to your budget each month for the first few months. That is true whether you will ship your old stuff overseas or buy all new stuff when you land overseas. But if you are more like me, you will just need one or two comfort items in your luggage that you actually love and will use.
I love coffee, I love music, and I love to cook. So, I bring (a) expresso dark roast grind and a 3-inch expresso filter, (b) my favorite cooking spices, (c) a knife to cut things before I cook, and (d) a JBL Bluetooth clip speaker that places music streamed from my smartphone.
We stay in furnished places with kitchens so we can listen to music, cook, and drink coffee. That and all of my photos saved to the cloud are all I need from my home country. Everything else in my life is focused on living in the present and creating new experiences.
But if you like to buy stuff, set a monthly budget limit for how much stuff you want to be able to buy per month, and add that to your budget table.
Before I share the 9th reason you can’t retire on $1000 per month, I will share who is best suited to help you get your budget down to a manageable level the quickest.
Nine. Inflation. Some of us will receive cost of living adjustments (COLAs) on our monthly retirement pensions. That will help offset some of the ravages of inflation if you are on a fixed monthly retirement pension.
Others either have no pension or it represents only a small portion of our retirement nest egg. In that case, COLAs will not help us much. So, how do we offset the ravages of inflation? Here is how I plan on dealing with it.
I am setting my monthly budget below my monthly retirement cash flow. That means I am living a more simple life. By spending less than my cash flow, I am able to add to the principal of my retirement nest egg each month.
By slowly growing my principal balance, my monthly cash flow tends to grow also. So if prices continue to rise, hopefully, they won’t rise faster than my monthly cash flow tends to grow. There are no guarantees in life, but that is how I tend to deal with inflation.
In a nutshell, I will just slowly grow my retirement nest egg during retirement, so I am better able to deal with systemic economic problems that occur such as inflation.
Who can help you reduce your budget best?
I promised to share who is best suited to help you get your budget under control in a foreign country.
Did you know that in most of the retire cheap in paradise countries, the locals often live on much lower budgets than the retiree expats? In fact, the cost of living is so much lower in most of these countries that people like you and I can live a better life there on less money than in our home country.
Since locals often live on a fraction of your intended budget, they can often teach you how to do things for much cheaper than expats can. Many new ex-pats hang out almost exclusively with other ex-pats when they move overseas. So they don’t understand how locals live so cheaply.
So locals are the best people to help you achieve a tight budget overseas. Just don’t ask a local that is trying to get you to spend money on them, like a new lover. Click on the video appearing in the upper-right-hand corner of your screen right now to learn more about why locals can teach you to live cheaply in paradise overseas.
Thanks for reviewing my report, 9 Reasons You Can’t Retire on $1000 Month Overseas. This is Dan of Vagabond Awake, the YouTube channel for VagabondBuddha.com. The world is your home, what time will you be home for dinner?