For retirees looking for both financial security and exciting new experiences in their golden years, this article provides a unique possibility. With the world becoming a smaller place, this notion investigates the feasibility of retiring abroad or staying close to home while still receiving Social Security payments. The promise of making retirement savings go further due to lower living costs in some countries or states is a major selling point.
Let's have a look at these affordable retirement destinations!
1. Costa Rica
As “the Switzerland of Central America,” Costa Rica is a popular retirement spot for Americans and Europeans. This tropical paradise is well-known for its peace and tranquility because of the elimination of its army in 1948; it is also home to a diverse collection of plant and animal life and the friendly “Ticos.”
The attractiveness of Costa Rica is enhanced by the country's first-rate healthcare system and healthy eating options. Enjoy the country's dedication to environmental preservation while participating in exciting outdoor pursuits like canopy tours, jungle and volcano climbs, sea kayaking, and white-water rafting. It's a utopia with beautiful scenery and exciting activities to choose from.
The Malaysia My Second Home (MM2H) program extends visas to foreign retirees for up to 10 years, making the country an attractive destination. The country's beautiful beaches and dense jungles are sure to please nature lovers, while those searching for a more metropolitan atmosphere can find plenty of exciting places to call home in Malaysia. In particular, George Town has become known as one of the best places in the world to retire.
An average one-bedroom apartment in George Town costs just $278 in the city and $174 in the suburbs, which may come as a shock to someone from a big U.S. city. You won't have to worry as much about a culture shock in Malaysia as you may in other Southeast Asian countries because English is widely spoken, and the country has a high ranking on the Global Peace Index.
Florida, known as the Sunshine State, has been a cherished retreat for retirees, lured by its sun-kissed beaches and mild winters. It's a haven with a reasonable cost of living and the added benefit of no inheritance tax, estate tax, or state income tax, a significant advantage for retirees relying on various sources of taxable income like Social Security, pensions, and retirement accounts.
While Florida boasts famous destinations like Orlando, Miami, and the Florida Keys, numerous other coastal and inland cities offer enticing options for retirement. Furthermore, Florida's retirement-friendly environment promises camaraderie with fellow retirees and amenities tailored to older adults throughout the state.
Virginia is truly a one-of-a-kind jewel on our list, as it provides retirees with a beautiful combination of beach and mountain living. The Virginia Creeper track, a picturesque 35-mile track ideal for leisurely biking, is a hidden jewel in this terrain that beckons retirees to enjoy the outdoors.
In addition, residents of Virginia can deduct up to $12,000 from their federal tax returns for pension and retirement income, and residents of other states pay no taxes on Social Security benefits. It's a great retirement destination because of the state's combination of scenic beauty and economic advantages.
5. Czech Republic
If you're drawn to Eastern Europe, the Czech Republic provides an enticing blend of affordability and safety, boasting an impressive 8th rank on the Global Peace Index. Real estate costs here are notably lower than in much of Western Europe, as reported by Expat Focus. For history enthusiasts, the Czech Republic is a treasure trove, often referred to as the “castle capital of the world,” with the enduring Prague Castle dating back to the Middle Ages.
Moreover, the country proudly hosts 20 UNESCO-listed cultural and world heritage sites. Keep in mind that after a 90-day stay, securing a visa requires proof of health insurance, so plan accordingly.
Those who dream of retiring in the beautiful Alps but can't afford to do so in France or Switzerland should look into Slovenia as an attractive alternative. Triglav National Park is home to various stunning mountains, perfect for nature lovers and thrill seekers.
According to International Living, the capital of Slovenia, Ljubljana, is among the top 10 places in the world to retire to. According to Live and Invest Overseas, a couple may rent a nice flat in Ljubljana for around $720 per month, making it a great option for retirees on a tight budget.
7. North Dakota
North Dakota might not be your initial retirement destination, but it consistently ranks among the top retirement spots, thanks to factors like a reasonable cost of living, abundant doctors, and excellent walkability. Fargo, specifically, earned the 14th position in the Milken Institute's 2017 ranking of small metro areas for successful aging, highlighting its strong economy, quality of life, community engagement, and healthcare.
However, suppose tax considerations weigh heavily in your retirement plans. In that case, North Dakota does impose state income taxes on Social Security benefits above specific income thresholds, and its sales and property tax rates align closely with the national average.
The cost of living in Australia is lower now than it was a few years ago, but it is still higher than in many of the countries we compared it against. Numbeo estimates the cost of living in city centers to be between $1,000 and $2,000 per month. The country's appeal comes from the relaxed vibe it exudes and the abundance of beautiful beaches at which to do so.
Tourists interested in seeing native animals, such as kangaroos and wombats, can do so on designated trips. However, there are some obstacles to retiring in Australia because the Retirement Visa was eliminated in 2018. This makes the procedure more complicated than in other places on our list.
Minnesota, the 12th largest state in the U.S. and the 22nd most populated, shares borders with four states (Iowa, North Dakota, South Dakota, and Wisconsin) and two Canadian provinces (Manitoba and Ontario). This strategic location is an excellent starting point for road trips and adventures.
Known as the “Land of 10,000 Lakes,” the state boasts vast natural resources and abundant wildlife to explore. While it may not be the most tax-friendly state due to relatively high income tax rates, it doesn't offer meager sales and property tax rates.
Peru offers a diverse range of scenery, from vibrant cities to mountainous regions and tranquil farming towns. The cost of living is relatively affordable when compared to other Latin American countries. For instance, in the upscale district of Miraflores in Lima, you can secure an apartment for approximately $740 per month. Peru also boasts a renowned cuisine that utilizes fresh ingredients from the sea to the mountains. Retirees with at least $1,000 in retirement savings can obtain a Rentista Visa, allowing them to live in Peru, albeit without working, for at least six months annually.
After seven years, a permanent visa becomes attainable. While Peru ranks 101st on the Global Peace Scale, it still maintains a “high” level of peace, according to the organization that designs the scale.
Portugal, ranking sixth on the Global Peace Index, stands as one of the safest countries globally, boasting sandy beaches and a warm climate ideal for retirement. To settle in Portugal, you'll need to demonstrate proof of health insurance at the local consulate, although many U.S. health insurance providers extend their coverage to Portugal, simplifying the transition.
Portugal has also made its tax code expat-friendly, offering benefits like the Non-Habitual Residence (NHR) status, granting a 10-year exemption from income tax, including earnings from investments and pensions sourced both within and outside Portugal. This tax incentive makes Portugal an appealing choice for expat retirees.
The Global Peace Index ranks Austria among the top ten most habitable countries despite its higher cost of living compared to other nations on our list. In a recent research by the Economist Intelligence Unit, Vienna was recognized as the most livable city in the world. The city is replete with museums, fine art, and notable architecture. Numbeo estimates the monthly expense of a Vienna apartment to be approximately $960.
After six months, retirees in Austria must obtain a residence permit, which requires confirmation of income, making it an attractive option for those who value quality of life and culture.
Panama secured the top spot on the International Living Global Retirement Index, emphasizing its growing appeal to expats. What's particularly enticing is that Panama doesn't tax income earned outside the U.S., making it advantageous for retirees with ongoing investments in American retirement plans. It offers two noteworthy visas: the Friendly Nations Visa and the Pensionado Visa, the latter accessible with a pension, annuity, or Social Security income of $1,000 or more monthly.
The Pensionado Visa extends valuable perks, including flight, transportation, and restaurant discounts. Panama's cost of living varies based on your preferences, with the potential to live on $500 a month or opt for a more standard lifestyle at around $2,000 monthly.
Spain stands as a top European choice for retirees, offering a low cost of living and a peaceful atmosphere. Frequently featured on lists of ideal retirement destinations, the country boasts a rich history that provides endless opportunities for sightseeing and cultural exploration, particularly for art enthusiasts. Spain's public healthcare program is accessible to expats meeting certain criteria, such as those contributing to the country's social security system, recent divorcees from Social Security beneficiaries, and state pensioners.
While Madrid is the country's most expensive city, even here, you can find affordable living options, with a one-bedroom apartment in the city center averaging around $1,055 per month. To retire in Spain, you must register for a visa after a 90-day stay.
Mexico is another superb retirement option. Mexico offers a variety of locations, ranging from bustling cities to tranquil beach villages. The climate is optimal for retirees, and the cost of living is generally lower than in many Western nations. In addition, Mexico's proximity to the United States facilitates maintaining ties to one's native country.
The country's culture, cuisine, and friendly atmosphere make it a popular retirement destination for retirees from around the globe. Additionally, Mexico provides retirees with multiple visa options, including the Temporary Resident Visa and the Permanent Resident Visa, making it relatively simple to retire in the country.
Many Retirement Destinations
The world is filled with enticing retirement destinations, each offering its unique blend of advantages. Whether you seek a peaceful, low-cost lifestyle in Spain or Portugal, the cultural richness of Austria and Spain, or the adventures of Panama or Mexico, there's a retirement spot to match your preferences. These countries provide not only financial incentives but also opportunities for exploration, relaxation, and cultural immersion. The key to a successful retirement abroad is research, planning, and the choice that aligns best with your vision for your golden years.
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.