Retire Abroad: December 2015 ($879)

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The Retire Abroad series inspired me to build a special tool for the FIRE community: The Earth Awaits. It’s a tool made to build you budgets for hundreds of cities worldwide, taking your family size, budget, housing needs, and a bunch of other things into account. I think it’s the best way to explore the places in the world you can retire– right now.

The Series Continues!

Back when I was first starting this blog, I wrote a post about retiring abroad on the budget our retirement savings of that time would safely support: $774 a month.  Thanks to some reader encouragement and my own desire to keep playing the “drop everything and run away from home” fantasy game, I’ve decided writing a post every six months along the path to early retirement would be fun.

Today, we’ll look at some more awesome places that are made possible by having increased that safe withdrawal rate by over $100 in the last six months.  Let’s check out five cool places that you can have a dignified retirement for $879 a month, far below what many Americans receive for Social Security.  I admit up front: Most people would want more breathing room.  As always, this is a research exercise about what is possible, not necessarily what is optimal.

I’ve changed my methodology somewhat to make this list more truly viable on the stated budget.  I’ve started using it in other retirement destination posts, but here it is for the record.  I’ll list the Numbeo cost of living index score next to each location.

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 movie 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 (in or out of city center, whichever is cheaper)
  • 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

Other items like clothing, travel, and charity would need to fit into whatever remains of the budget.  I acknowledge up front that some of these locations will mean little headroom for “nice to have” purchases (though I think the lodging and food expenses could easily be trimmed to allocate more to luxuries). Because we’re talking about small monthly budgets here, it’s important to bear in mind that most people would want to save well beyond this safe monthly budget to enable more “extras.”  Still, you’d struggle to make ends meet on this budget in the US, and if your idea of retirement is sitting on the beach just taking it all in, you might be able to make it work.

5. Penang, Malaysia (42.56)

Penang is technically a whole state in Malaysia, comprising an island and small portion of mainland in the country’s far west.  George Town is the capital and largest city, and it is a destination for tourism, business, and retirement.  The inner town of George Town is a UNESCO world heritage site, and contains hundreds of colonial structures in pristine condition from the period of British colonization.  The cost of living in George Town itself is actually less than the overall averages for Penang state.

Penang and Malaysia have a high human development index, surpassing Mexico, Costa Rica, and several other known retirement destinations.  It also has an international airport and other amenities that make it an ideal jumping-off point for explorations of the rest of Southeast Asia. Penang is also blessed with an abundance of excellent beaches and the water temperature is over 80 degrees year round!

Malaysia is consistently ranked highly in medical care destinations for retirees, as the quality of care is excellent and the costs so low that many people prefer to simply pay out of pocket.  Private health insurance is available, and prices vary by age.  A person in their 50s can expect to pay between $400 and $1000 a year for their coverage.  To make estimates as strict as possible, I have calculated based on the high amount in this article.  Despite stacking the deck against myself, the total cost of living comes to only $664.54, leaving over $200 every month for additional entertainment, travel, gifts, and anything else– and with Penang being as inexpensive as it is, that amount would go an awful long way.

ExpenseApproximate Cost
Total$664.54
Apartment (1 bedroom) outside City Centre$167.25
Basic Utilities (Electricity, Heating, Water, Garbage) $40.54
Internet (10 Mbps, Unlimited Data, Cable/ADSL)$36.42
Meal for 2, Mid-range Restaurant, Three-course (twice a month)$28.10
Public Transport Pass for 2$32.78
Gym Membership for Two$67.12
Movie for 2 (twice a month)$13.60
Monthly Grocery Cost (Outlined Above)$112.07
Monthly Insurance Premiums for Two (High End)$166.66
4. Chiang Mai, Thailand (32.76)

I won’t lie, the inclusion of Chiang Mai in this list is at least partially inspired by Jeremy of GoCurryCracker’s move to the city.  Chiang Mai is far more relaxed, and the climate more moderate, than Bangkok.  If you’re seeking a placid place to reflect, write, read, and relax, Chiang Mai might be for you.  It’s an ancient city surrounded by rainforest, so there are plenty of exotic outdoor activities to do like hiking and exploring the many local temples (Wats).

The city is also home to famous night markets, where arts, crafts, antiques, pets, and still more food is at your disposal.  Though we’re not about consumerism here, walking the markets is a cultural experience all by itself.

Most expats prefer to be treated in the private hospital system in Thailand.  There are over 450 private hospitals across the country and the standard of care can meet or exceed western standards.  My own experience with Thai dentistry has been astoundingly good so far.

There is a lot of confusing information about the cost of private medical insurance in Thailand.  You can receive a private medical policy with a local provider (which is less expensive than picking a catch-all international policy), which is guaranteed to be renewed through age 70, at which point the company may cancel your policy if you have been diagnosed with an expensive condition.

You may also seek an international insurance policy, which will be more stable, but also more expensive.  There is also always the option of self-insuring and paying for any treatments in cash.  As of the writing of this post, a healthy 50 year old from a professional/office occupation (the insurer’s actuarial tables take into account the profession of the insured) with basic outpatient coverage (The “Ultimate” plan + Basic OPD, if you’re checking) from international insurer BUPA would cost $1,096 per year.  The number goes down if you’re younger, and up if you’re older or from a more stressful occupation class.  This is the number we’ll use for our estimates.

All of these expenses get us a bare minimum monthly budget of $729.80, leaving about $150 in the budget for additional entertainment.  Thailand is also a land of exceedingly inexpensive but delicious food and fun, so it’s possible to make it work.

ExpenseApproximate Cost
Total$729.80
Apartment (1 bedroom) outside City Centre$193.06
Basic Utilities (Electricity, Heating, Water, Garbage) $45.63
Internet (10 Mbps, Unlimited Data, Cable/ADSL)$16.12
Meal for 2, Mid-range Restaurant, Three-course (twice a month)$27.88
Public Transport Pass for 2$72.50
Gym Membership for Two$58.34
Movie for 2 (twice a month)$13.40
Monthly Grocery Cost (Outlined Above)$120.21
Monthly Insurance Premiums for Two (High End)$182.66
3. Cali, Colombia (28.06)

Known as the “World Capital of Salsa,” Cali is a city in southwest Colombia, about sixty miles from the Pacific Ocean.  It’s a big city of over two million people, but still maintains a well preserved old center with a number of colonial cathedrals and other historic buildings.

Cali is also known as the sports capital of Colombia, having hosted the Pan-American games in 1971.  The city is home to two professional football (soccer) teams, and rivalries are fierce.  La Feria de Cali (The Cali Fair) is a major annual cultural event, and it includes parades, bullfights, competitions, and other traditional fair activities.

Cali is known for medical care, and more specifically, for cosmetic medical tourism.  Over 50,000 cosmetic procedures are performed per year in the city.  Health care is guaranteed as a basic human right under the Colombian constitution, and any resident may buy into the national health care scheme.  Generally this costs 12% of income, but for most retirees, this amounts to 12 of the basic minimum wage, or around $100 per month.  Quality of care in the private hospitals is quite high.

Bare minimum expenses bring the total to $675.19, leaving a few hundred dollars for additional activities.

ExpenseApproximate Cost
Total$675.19
Apartment (1 bedroom) in City Centre$182.94
Basic Utilities (Electricity, Heating, Water, Garbage) $43.91
Internet (10 Mbps, Unlimited Data, Cable/ADSL)$27.71
Meal for 2, Mid-range Restaurant, Three-course (twice a month)$32.18
Public Transport Pass for 2$51.48
Gym Membership for Two$44.40
Movie for 2 (twice a month)$10.28
Monthly Grocery Cost (Outlined Above)$82.29
Monthly Insurance Premiums for Two$200.00
2. Ho Chi Minh City, Vietnam (40.33)

Ho Chi Minh City, also sometimes still referred to as Saigon, is no longer the war torn battleground you or your parents may remember.  Liberalization of economic policies in Vietnam and the country seeing the west as allies against Chinese aspirations in the region means the country and city have become hospitable to western expats and retirees.

Ho Chi Minh is the economic heart of Vietnam, and hosts many thriving industries, not the least of which is information technology. Of course, the region also has numerous cultural destinations, and the whole region thrums with the energy of a country on the rise.  If you’re interested in entrepreneurship in a rapidly developing country, Ho Chi Minh City might be for you.

Vietnam’s healthcare facilities are adequate, but basic.  In this area Vietnam lags behind other medical tourism destinations in the region (and in this post).  Most expats retiring in Vietnam prefer to take a quick flight to Bangkok for more serious medical needs.  For safety’s sake, we’ll presume $100 a month in medical expenses per person, which should probably be kept in a reserve account for inevitable medical needs.

The total of our standardized budget comes to $753.65, leaving precious little headroom for extra expenses, but Vietnam is still very inexpensive, so it might just be enough.

ExpenseApproximate Cost
Total$753.65
Apartment (1 bedroom) outside City Centre$264.98
Basic Utilities (Electricity, Heating, Water, Garbage) $51.16
Internet (10 Mbps, Unlimited Data, Cable/ADSL)$10.74
Meal for 2, Mid-range Restaurant, Three-course (twice a month)$26.68
Public Transport Pass for 2$10.68
Gym Membership for Two$43.00
Movie for 2 (twice a month)$17.80
Monthly Grocery Cost (Outlined Above)$128.61
Monthly Insurance Premiums for Two$200.00
1. Cuenca, Ecuador (50.79)

OK, I’m cheating a tiny bit here.  I’ve actually written a whole article on retiring in Cuenca.  Of course, you’re probably wondering why the total budget is cheaper here, and the answer is that I opted for the less expensive lodging numbers listed in Numbeo rather than just picking one random current listing.

The reason I’m cheating, aside from not wanting to duplicate effort, is that Cuenca is just a really, really good retirement destination.  It’s safe, it’s friendly, it’s affordable, the health care is good, and an absolute ton of westerners are moving there to retire in comfort and peace.  The currency is the US dollar.  There’s tons to do outside and in the mountains.  If you love South American culture, food, and history, Cuenca just might be the ideal fit for you.

With this budget, we come in just barely over our budget at 883.77.  That said, it would be trivial to find the savings needed to get it under the budget.  Only go to one movie each month.  Only eat out once.  The point is to exercise our core value of flexibility.

ExpenseApproximate Cost
Total$883.77
Apartment (1 bedroom) in City Centre$328.12
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
What Comes Next

The next time I write this type of article should be in mid 2016.  Looking ahead, I’m planning to close on one or two investment properties by then, and continue my relentless saving and investing.  There’s a very real chance we could be at or near the $1500/month mark, which opens up a huge number of retirement possibilities.  Rather than having to rely on Southeast Asia and South America for most of the destinations, places in Europe, Mexico, and even the Caribbean start to be genuine possibilities.  I can’t wait!

20 thoughts on “Retire Abroad: December 2015 ($879)

  1. Mick

    I would love to retire early and abroad!

    Cali is a great city. The market is incredible!

    A one room apartment in the city center is not my ideal retirement locale though.
    Could you not live cheaply further out of town with fruit trees, a garden and some chickens?
    I can see not wanting to drive, especially as the driving is much more high paced than I am used to.
    And not sure how a gym pass is essential? each to his own a guess. A good pair of shoes and set of binoculars!

    1. The Vagabond Post author

      Hi Mick, thanks for the comment!

      There’s absolutely a lot of “slop” in this budget methodology! The problem is that I’m trying to walk the fine line between comfort and affordability. If I pare the budget items back to the minimum, then the complaint would be that it’s merely surviving rather than enjoying retirement! Kind of a damned if you do, damned if you don’t thing. So, I put in a number of things like movies, eating out, and having a gym membership that show that they’re affordable within the given budget.

      I’m with you, though… I’d just go out running!

  2. Travelling Biologist

    Another great post! We’re in a similar situation where we don’t have enough to retire at home, but it’s fun to dream about all of these other places. I love that you are doing all the research and I can just enjoy the posts. Our SWR is currently just over 2k. That includes one rental but I don’t know if we’ll keep it.

    1. The Vagabond Post author

      Thanks again!! 2K is awesome– we home to be very close to that by the end of next year (three rental purchases next year will ratchet it up pretty fast). I’ve been telling people that once we hit the 2K mark, it’s going to get harder and harder to stick around! Realistically we will probably hit the tipping point around 4K, and certainly no more than 5K… I’m too impatient!

  3. Shane

    This post is great! Thanks for doing all the work for the rest of us. I’d like to visit all of the places you mentioned. Just reading about places is interesting, but I won’t know where I’d like to live for longer until I’ve gone there myself to check it out. I’m definitely in the don’t need a gym membership group as well. I’d rather walk, run, swim in the ocean or whatever, than go to a real gym.

    1. The Vagabond Post author

      Thanks for the gracious words, Shane, and thank you for the comment! Yeah, you’re totally right on both accounts- our tentative plan in FIRE is to arrive in each new place and commit to a month or two with the option to extend the visit as desired, that way we don’t end up stuck someplace for six months, a year, or longer that turns out to be a total dud. A large chunk of our anticipated budget is likely to be short and long duration travel costs, so we’d probably run and swim too, putting more towards planes, trains, and activities.

    1. The Vagabond Post author

      That’s one way of looking at it, but you might also say that our ability to earn in such a powerful currency gives us an unparalleled ability to live well in places all around the world!

      1. Mr. Enchumbao

        That’s an awesome ability! I’m glad that we figured this out and are looking at the possibilities of living abroad! Keep these coming. We’re heading to Punta Cana for 2 weeks in February and will do a report of the cost of living there.

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  5. Otec Fedor

    Numbers for a 1br outside of city center on Numbeo are too low based on my experience in a number of cities in Asia and Latin America.

    This is what a local (or longer term expat) would pay for an average quality apartment outside of the center. Average quality in third world countries means third world quality. If you are ok with that, no problem. It’s just something to keep in mind for those who read this blog and thing they can live very comfortably for 600-800/month in these cities.

    1. The Vagabond Post author

      Hi Otec, thanks for your comment. To clarify, I don’t just blindly use Numbeo when I select places for these articles– it just allows me the ability to quantify various costs and compare costs between very different places somewhat objectively. I also do a lot of research into people actually living an expat lifestyle in each of the places, and give extra preference to places that I’ve visited myself and can trust published numbers on. Here are a few examples of expats listing their actual expenses in the places listed in this article at or near the goal price of $879 per month (and none of them in third world conditions):

      http://jetsettinglivingwell.info/cost-living-penang/ ($882 in Penang)
      http://www.bankerinthesun.com/2014/09/cost-living-chiang-mai/ ($880 in Chiang Mai)
      http://finance.youngmoney.com/credit_debt/paradise-for-pesos-columbia-south-america/ ($750 in Colombia as a whole, but Cali is cheaper than Medellín and that can be done for even less)
      http://www.nomadicnotes.com/travel-blog/cost-of-living-ho-chi-minh-city/ ($724 for Ho Chi Minh City in 2012)
      http://www.theworldlyblend.com/why-you-should-start-your-digital-nomad-journey-chi-minh-city/ ($750 for Ho Chi Minh City in 2015)
      http://gringopost-realestate.blogspot.com/ (Current rental listings for Cuenca, where I found a very nice, modern, two bedroom apartment for $350/mo– and that’s without even looking at the spanish-language listings!)

      In each of these cases, there’s tons of fat one could trim to get prices down even further if necessary. Also, remember that the article is “Retire in…”, meaning we’re talking about long term stays, not vacation-style costs.

      More importantly, and it’s something I try to communicate loud and clear in these articles, these budgets leave little room for flexibility and extras (let alone major travel or a medical emergency), so most people can and should save to allow margin (a little or a lot depending on the risk tolerance of the person).

      Thanks for the input and the caution to save extra– I agree!

  6. Pingback: Retire Abroad: May 2016 ($993) - The Frugal Vagabond

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