How much do you really need to retire comfortably, safely, and happily? It may be less than you think. In many locations around the world, we’ve already established that it’s possible to retire with what we’ve already accumulated. Let’s take a detailed look at one possibility for a $1000 retirement: Cuenca, Ecuador.
What Constitutes A Comfortable Lifestyle?
Let’s figure out the kind of life we’re looking for. Because we’re planning for a very modest retirement budget, but still want the best possible amenities, our housing will include a one bedroom apartment in a safe and upscale area. The budget will prioritize the use of public transport where it is available and safe. Eating out frequently, eating fresh food at home, and occasional nights out should be included. Any location we consider should include access to good, inexpensive health care. Most people will want high speed internet to stay in touch with friends and family, as well as for entertainment purposes. Ideally, free or cheap fitness options will be available, but we’ll plan for gym memberships just in case.
Let’s talk about what we don’t really need: a maid, a cook, a driver, or a gardener. Those things might be feasible on a higher budget, but for now we’ll forgo them. We don’t need the newest tech gadgets when they come out. We don’t need to take taxis everywhere since we are happy taking public transport (when safe and not packed-to-capacity).
With all of that in mind, here is our must-have list of expenditures:
- One bedroom apartment in a safe area
- Utilities (electric/gas/water)
- Monthly public transit passes for two
- Biweekly meals out for two
- Broadband internet
- Monthly Insurance payment
- Gym memberships for two
- Movie night for two, twice a month
To formulate a grocery budget, I will determine the cost of the following staples. Then, I’ll multiply by 1.5 to give a huge “fuzz factor” to allow for processed foods, other staples like flour and butter, and some other food-related luxuries:
- Two dozen eggs
- Two gallons of milk
- Two pounds of rice
- Ten pounds of chicken breasts
- Two bottles of wine
- One six-pack of beer
- Five pounds of potatoes
- Five pounds of apples
- Five pounds of oranges
- Five pounds of tomatoes
- Two pounds of cheese
Of course, everyone has expenses like clothing, other entertainment, charity, travel, and emergencies. We’ll see what’s left over at the end to determine just how large those budgets could be on $1,000 a month.
$1000 Retirement: Cuenca, Ecuador
With our modest retirement budget in mind, let’s answer the obvious question: Why Cuenca? In short, Cuenca is a gorgeous colonial city in Ecuador filled with beautiful architecture, friendly people, and a vibrant expat community. It is also insanely, insanely affordable. Helpfully, the currency of Ecuador is also the US dollar, so there’s less of a culture shock in using your hard-earned cash.
Given our goal to use public transportation as much as possible, Cuenca is actually very walkable. The center is roughly twenty square blocks, so if you live in that area, you may be able to forgo the public transport pass entirely.
Ecuador contains part of the Amazon rain forest, beautiful mountains, and a beautiful beaches (though they’re several hours away from Cuenca). Weather is mild year round, getting neither very hot nor very cold. You can adventure in the jungle in the morning and potentially be on the beach by the afternoon.
Cuenca is one of the cultural capitals of the country, so there are ample music, theatre, dance, and art exhibitions year-round. It’s also a work of art unto itself, with multiple cathedrals and other breathtaking examples of colonial architecture along cobblestone roads.
If your Spanish isn’t quite up to snuff (I’m working on mine!), you’ll be relieved to know that Cuenca is quickly becoming one of the most popular expat retirement destinations, so there are clubs, meet-ups, and other opportunities to compare notes as you adjust to local culture. Just don’t let yourself be isolated! The point of taking on the adventure of moving to another country is to steep yourself in the culture and experience it’s beauty!
Using crowdsourced cost of living data from Numbeo, here’s what we get for our must-have list.
|Apartment (1 bedroom) in City Centre||$412.50|
|Basic Utilities (Electricity, Heating, Water, Garbage)||$48.60|
|Internet (10 Mbps, Unlimited Data, Cable/ADSL)||$32.37|
|Meal for 2, Mid-range Restaurant, Three-course (twice a month)||$30.00|
|Public Transport Pass for 2||$30.00|
|Gym Membership for Two||$76.00|
|Movie for 2 (twice a month)||$20.00|
|Monthly Grocery Cost (Outlined Above)||$178.68|
|National Health Care Buy-in for Two||$140.00|
With our requirements, the monthly budget comes out to $968.15. Obviously, there’s always going to be some miscellaneous expenses, so this is cutting it a bit close, but the $1,000 budget is certainly doable. I wasn’t sure whether to trust the crowdsourced figure of $412/mo rent, so I checked into current listings over at Gringo Post, a forum for expats living in Cuenca, and found this budget to be realistic. It’s possible to do it a bit less expensively (I saw rents as low as $300/mo) and of course, more expensively (luxury houses for $700-800/mo).
I also looked into the insurance options available and learned that in 2014, the Ecuadorean government created an option for all legal residents, regardless of age or pre-existing medical conditions, to buy into the national health care system for $70 a month. Many procedures take place in the national social security hospitals, but expats also have the option of seeking medical care at private clinics which are under contract with the government. Best of all, aside from the membership cost, all care is completely free. This could be a game changer for potential early retirees who worry about ballooning medical costs.
The bottom line is that it is possible to retire on $1,000 a month in Cuenca– and that’s for a couple. It doesn’t leave much wiggle room, though, so I would strongly advise building more margin into the budget. You may want to do some travel, purchase other goods, expand the entertainment budget, or upgrade to a better apartment.
Round trip flights to Miami from Quito can be had for as little as $500 round trip, though that means getting to the capital first. Flights from Cuenca to Miami start at about $650, with the average being closer to $750. The budget is very tight, but the money would be there for an annual or bi-annual trip if you are retiring alone or find savings elsewhere.
How Much Work Does It Take To Build $1,000/Month?
Based on the 4% rule, you’d need about $300,000 in stocks and bonds (somewhere between a 75/25 to 90/10 split) to withdraw $1,000 per month indefinitely. Another option is to use cash-flowing real estate to fund your monthly income. Building a safe $1,000 a month in income could cost you as little as $50,000-$60,000 in down payments on rental properties. Personally, we’re pursuing both of these approaches– we plan to meet in the middle somewhere.
I’ve discussed it in the past, but Personal Capital has a great set of retirement planning tools to allow you to run different scenarios and see how close you are to being able to sustain a retirement like this.
Obviously, retiring on a $1,000 a month budget isn’t for everyone. It’s unforgiving and it affords you little flexibility; you’d need to be very disciplined. I wrote this article because I am often troubled by the many people approaching retirement age who genuinely believe that a comfortable later life is completely impossible for them. I genuinely do believe that it’s possible, and I want to help to show how.
Is this kind of post interesting? Should I look at other $1,000 a month retirement destinations? I had fun writing this, so I think I just might! Do you know any other great, cheap retirement destinations? If so, please share them with me in the comments!