In this report, I explain why most people do not retire cheap overseas. I am not saying that you won’t retire overseas. I am also not saying it is impossible to retire cheap overseas. I am just saying that the majority of people will not do it cheaply. They will end up spending more. So I thought I would talk about the different kinds of people who are able to do this cheaply, those who are not, and why.
I have posted hundreds of reports about the best places to retire cheap overseas. I do not write these reports doing research sitting in an ivory tower back in my home country. My feet have been on the ground all over the world since I left the United States 15 years ago–67 countries so far.
On almost every report I write, someone makes a comment like this, “I don’t know where you got your cost of living numbers. But I actually live here, and I am spending three times as much.” When they write comments like that, it is very likely they are telling the truth. You may be surprised to read my responses. I often respond with something like, “Thank you for sharing your numbers. We are not all the same. It is good for people to hear other people’s cost of living numbers.”
You see, in every culture in the world, people’s incomes and expenses are spread across a large spectrum. This is not news to any of you. Like in the USA, where I was born, there are people living on less than $1000 per month. I know that sounds impossible to some of you. But that is all they have so they have to make it work. They get creative.
Similarly, there are different kinds of people that retire overseas and their incomes and expenses are distributed over a large spectrum. There are extremes on both ends of the spectrum. But this report will focus on people living overseas who have reported cost of living numbers ranging from about $600 per month to $10,000 per month.
People living outside their birth country call themselves expatriates, or ex-pats for short. No matter where you go in the world, there are ex-pat communities that help each other with information and friendship. These communities are on various online forums such as Facebook, Internations, etc.
I will split ex-pats into three major income and expense levels so you can get an idea of the various price points for retiring cheap overseas. Three levels are enough granularity for me to get my point across.
But these levels are not bright lines. You may be able to achieve various features of a higher income level even though you have a tighter budget. But that will take a higher degree of creativity or picking one of the cheaper countries to live in.
I do not intend to insult anyone with my levels, but I will try to paint a picture of the three levels that will make it easier to understand what might be your comfort level. I will approach the first level historically because it is easier if you understand how that mindset evolved.
Nuevo Colonialist
Most of the retire cheap in paradise places around the world are former colonies of nations that conquered them a few hundred years ago. At the time of colonization, the colonists often lived in fortified walled communities with armed guards at the gate.
Almost all of these former colonies have regained their independence and are now self-governed. With very few exceptions, many regained their independence so long ago that almost nobody is still living that suffered under colonization.
All of these former colonies opened their borders to international tourism decades ago and many have foreign retirees living there now. Some of the people retiring in these countries live in larger homes in gated communities with guards at the front gate.
That is why I call this mindset a Nuevo Colonist. Here are some of the features a Nuevo Colonialist will need to feel comfortable living in a retire cheap in paradise country. They will likely want to buy or rent a home in a gated guarded community. They prefer having neighbors that can afford to pay for this higher socioeconomic status.
Some Nuevo Colonialists would not be able to afford such a nice home in their home country but they can take a step up in life by moving overseas. In some parts of the world, these communities have features that would not be available at that price in their home country, like country clubs and other recreational facilities. People that live inside the gates feel safe socializing with others that are similarly situated.
They often have an expensive car or two in their garage, and some even have full-time drivers. Many have all sorts of toys on large estates inside the community. They often go outside the gated community to enjoy restaurants, nightlife, and other cultural activities, but they feel more comfortable returning to the gated guarded community in the evening. Some of these communities have restaurants and other activities inside the gated community.
It is important to note, that Nuevo Colonialists are not necessarily segregated from citizens where they live. These gated communities are available to anyone with enough money, whether local or foreign. So in many cases, a Nuevo Colonialist’s main objective is not segregation from the local population, but comfort, safety, and being around others of a similar socio-economic group. In that regard, they are often very different from the original occupying colonialists.
It varies based upon country but about 10 to 20% of ex-pats fit into this Nuevo Colonialist category. But not all wealthy ex-pats live this way. More on that later. The Nuevo Colonialist life is not available anywhere in the world at the retire cheap in paradise estimates I share in my reports. The Nuevo colonialists spend a good deal more.
The Nuevo Colonialist spends anywhere from about $4000 to $10,000 per month, and even more, depending on the country they select, whether they pay cash for their home, how ornate their lifestyle, and the number and kinds of toys they have.
Majority Ex-pats
Most ex-pats I meet around the world fall into what I call the Majority. The majority of ex-pats live in a nice part of town, but not a wealthy area. They live in a comfortable house, apartment, or condo, with furniture that reflects the local style and custom. In some parts of the world, the Majority ex-pats are able to afford gated communities but the homes inside are much more modest.
Majority ex-pats don’t all have cars, but if they do, it is more often a more modest but reliable older car that doesn’t draw attention or cost much to maintain. They are just as likely to ride a scooter, motorcycle, or bicycle depending on the distance they need to travel to restaurants, grocery stores, and other entertainment.
Majority ex-pats shop in both large supermarkets and neighborhood fruits and vegetable stands often walkable from their home. They may eat in high-ticket foreign restaurants from time to time for special occasions but are more likely to eat in healthy family-owned neighborhood restaurants near their home or cook at home most of the time. They will eat at food carts from time to time but more as a novelty rather than a regular habit.
The Majority would be able to live this kind of life in their home country for about $1500 to $5000 per month, depending on their home country, but can probably live like this in many of our retire cheap in paradise countries for around $1000 to $2500 per month.
But you will have to do an exploratory visit in order to determine what it will cost you to live in any particular retire cheap in paradise country. I estimate that about 70 to 80% of retiree ex-pats around the world are Majority ex-pats.
That means that some of you will be able to achieve this Majority ex-pat lifestyle at the numbers I quote in my retire cheap in paradise reports if you are careful at budgeting and making the right choices.
However, some of you will not be able to meet your budget requirements without adopting at least some of the behaviors I will now describe as full localization.
Full Localization
Some of you will be trying to live on a low fixed budget overseas. In order to accomplish this, you will have to be mindful of your budget and take certain steps to reliably stay within budget from month to month.
The first test will be to find rents that fit nicely within your budget. A good rule of thumb is that your rent should be no more than 30% of your available budget. If you are able to accomplish that rent goal, then the other parts of the budget might fall in place more easily.
But no part of the budget should be ignored if you plan on being successful at retiring cheap overseas.
One of the most important ways to create and verify a budget is to do what I call an exploratory visit. During an exploratory visit, you will travel to and stay in a retire cheap in paradise location for a few weeks or months and identify what expenses you will be able to maintain.
You will have to do this with a rent survey. This can be accomplished by walking neighborhoods and writing down phone numbers you see in rental signs. Contacting landlords and verifying rents and meeting them at the property for interior expectations.
If you are finding that rents are in excess of your 30% goal, then should make adjustments to your search area. Are there other neighbors where you can meet your goal, or do you need to look further away from the city center in more rural areas?
Do rents include utilities and if not, what will your utilities be.
If you need to move further away from the city, how will you get back into town for shopping and other necessities? Will you need to buy an old car (or motorcycle) or are there public buses that run back and forth to the central area? Ride those buses and see what they cost and if you feel comfortable?
When you finally accomplish your rent and utility goals, look at the surrounding community. Are there grocery stores and fruit and vegetable stands?
What do restaurants cost in the area and how often will you eat out? What will your groceries be? What other expenses do you have at home and what will they cost here. It is good to keep a budget in your home country for a few months before you go on your exploratory visit. Then during your exploratory visit, make sure to get cost estimates for every line item on your home country budget.
There is no substitute for your exploratory visit. It doesn’t matter what anyone else spends in that city, it is your needs that need to be satisfied and accounted for in the budget.
If your estimated budget begins to exceed your available budget, you may need to adopt more localized behaviors or look for a cheaper place to live. So what is a full localization?
Remember above when I said that some ex-pats comment that it is impossible to live in a place for my estimated cost of living. But how could it be impossible when there are any local people living in that place for less than my estimate?
One option you have is to consider complete or partial localization of your budget. That means acting and living like a local. You live where they live, you eat what they eat, and you do what they do for entertainment.
This can be most easily accomplished by making friends with locals that live in the budget range you are trying to accomplish, and learning from them directly how they are able to do it. Once you know how they do it, you have some choices to make.
You can do a full localization and live as they do. Or, you can adjust parts of their budget until you end up with a life you will be happy with.
For example, if you have a budget of $900 USD and you learn from a local with a budget of $500 USD, then you can adjust upward and get a little nicer place, some different kinds of food from home, or add some entertainment that you miss the most.
So at the beginning of this video, I mentioned I would explain why most people do not retire cheap overseas. Here is why.
Why most people do not retire cheap overseas
The first reason is the easiest to explain. Most people do not need to live so cheaply because they have a higher budget. They have more money so they either create a higher budget or they just go over budget each month without worrying about expenses so much.
As I said before, around 80% of the people have a higher budget so they don’t need to watch it so closely. That is what most Majority Expats do.
Other people go on exploratory visits but decide they just don’t want to pull the trigger and retire overseas. Others move overseas for a few months or years but decide to come back. They miss their family and friends and they give up and move home when they are lonely.
Others are like me. They have a great time doing exploratory visits. They enjoy it so much, they just keep moving forward. I call people like me slow travelers. The excitement comes from exploring the world rather than settling down into a routine life in one overseas destination.
That leaves the final two groups. The Nuevo Colonialists buy a big house and join a higher social-economic group than they could in their home country. The final group of people is those that weaver themselves into the local community almost completely by living with the locals adopting almost all of their traditions and behaviors.
Expats that are able to do a partial or complete localization are the ones that are actually able to retire early for cheap in paradise. They represent about 10 to 20% of ex-pats I run into. Luckily there is a world out there for everyone. So you don’t have to force yourself to live a life that does not feel natural to you.
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