The bulk of any budget is given over to housing--rent or a mortgage, if you have
one--so start here. Are you going to rent or to buy?
I strongly recommend that you rent at least at first, for 6 to 12 months, to
give yourself a chance to try the place on for size before committing. However,
if you do eventually decide to invest in a home of your own, recognize that
property ownership comes with carrying costs. As a home-owner, you'll have
maintenance and repair costs, insurance, in some places property taxes, maybe
grounds-keeping, etc. As a renter, you have none of these liabilities, which is
why renting long term can make a lot of sense for the retiree abroad.
The other key housing consideration has to do with where in a country you want
to settle. In Panama, for example, your rent could be US$1,500 a month, for a
two-bedroom apartment in a nice building in Panama City with a doorman and a
pool...or it could be US$300 a month, if you choose instead to settle in a
little house near the beach in Las Tablas, on the coast of the Azuero Peninsula,
a beautiful, welcoming, more remote, and therefore much more affordable region
of this country.
Here are other key expenses to factor into your retire-overseas budget:
Condo/Building/Home Owner's Association (HOA) Fee
The monthly condo or HOA fee is your contribution to the costs of maintaining
and managing the apartment building or private development community where
you're living. It covers your share of shared expenses, including security,
grounds-keeping, internal roads, the swimming pool and other amenities,
sometimes a concierge in an apartment building in Paris or Buenos Aires, for
You may incur this expense as an owner or a renter. It's called different things
in different places. In Paris, for example, the building fee is the "syndic"
fee, and it covers the costs of maintaining the courtyard, the lobby, the
elevator, the building faηade, etc.; in Panama, it is referred to as the "PH"
fee (that is, the propiedad horizontal), and, again, it's to pay for the cost of
maintaining and improving public areas, the elevators, and, important in Panama
City, the building's "area social" (or Social Area), which typically includes a
pool, a game room, sometimes a gym, a children's play area, and a bar-b-que.
You won't be liable for any in Ireland or Croatia, for example, nor in Buenos
Aires (though you will pay annual tax on property you own elsewhere in
That is to say, not every country imposes property tax, and, for those that do,
the cost to you will likely be less, perhaps considerably less than you may be
paying for property tax now, either because the percentage is less, the value of
the real estate is less, or both. If you intend only to rent, of course,
property tax won't be an issue for you anywhere.
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Will you need a car where you're thinking of relocating? If so, this likely will
be your greatest expense after housing. In some places, in fact, the cost of
owning a vehicle can be greater than the cost of your rent.
In the friendly, pleasant mountain town of Santa Fe, Panama, for example, you
could rent a two-bedroom house for US$200 or US$300 a month. However, unless
you're comfortable with the idea of using your own two feet or a taxi to get
around town and the national bus service to travel the rest of the country,
you'll need to invest in a vehicle. In a remote mountain region like this one,
where roads can flood during the rainy season, maintaining your vehicle won't be
easy. It might seem as though you're repairing tires and replacing shock
absorbers almost as often as you're filling the gas tank.
If you're not up for the expense or the hassle of car ownership, consider less
remote options and cities with good public transportation. Living without a car
in many of the places I introduce you to in these pages, the cost of
transportation could go from being one of your biggest expenses to a negligible
line item in your monthly budget.
Often used for cooking and typically a negligible expense--a few dollars a
We're spending as much for electricity living in Panama (where we run the air
conditioning day and night) as we did for gas and electricity in Paris (where we
needed both heat and air conditioning, depending on the season). The truly
budget-conscious should think about places like Medellin, Colombia; Cuenca,
Ecuador; and Santa Fe, Panama, where the weather is spring-like 12 months a year
and you can get by most of the time without either heat or air conditioning.
This cost varies greatly country to country and region to region. France is a
big winner when it comes to telephone expense. You can buy a phone package from
Orange, for example, for about US$50 a month that includes unlimited free
calling to the United States and Canada, much of Latin America and the
Caribbean, and all Europe.
In most of the world, though, if you're not careful, your monthly phone bill can
be a shock, even the most costly item in your entire budget (including housing
and transportation). Over the years, we've had phone bills of more than US$1,000
Finally, Lief put his foot down. Fortunately, this didn't mean we could no
longer stay in touch with family back in the States, because, by this time,
Voice Over Internet Protocol (VOIP) technology had advanced to the point where
it's possible to use this strategy almost anywhere in the world. It is by far
the most cost-efficient approach.
Many providers now offer VOIP service, but I recommend Skype, which I've found
to be the most reliable. The only limitation is your Internet connection. If you
have a good one, your Skype service will allow you to chat at will with friends
and business associates anywhere in the world. You can call from Skype to a
telephone for a few cents per minute, and Skype-to-Skype calls are free. Set
your kids and grandkids up with Skype accounts (if they don't already have
them!), and you can speak with them whenever you want for as long as you like.
For local calls, maybe all you need is a pay-as-you-go cell phone. These are
easier to obtain than a phone with a contract with a cell phone service
provider. In Panama, a US$10 calling card for my pay-as-you-go cell phone lasts
me all month.
The cost of Internet can be a significant part of your budget if you need
uninterrupted access 24/7 and aren't relocating to a city. In Panama City, for
example, you can have wireless Internet for as little as US$30 or US$40 a month.
But for reliable service in the interior of the country, at the beach or in the
mountains, you'll have to invest in satellite Internet. This would cost you
about US$500 in hardware and set-up and then US$200 a month or more.
Again, this is a significant budget issue only if you're living outside the
cities and developed regions of most countries. In a main city, such as Panama
City, for example, basic cable costs about US$20 a month.
This can be one of the big benefits of living overseas. You can arrange
full-time help around the house for as little as US$150 a month in Nicaragua or
Uruguay. The going rate for a good maid who'll also cook for you and do your
laundry in Panama City is US$250 a month, half as much in the interior of the
country. A gardener can cost as little as US$100 a month (in Uruguay, for
example). In Panama, you'll spend US$500 a month for a full-time driver/Guy
Groceries are a hugely variable expense anywhere. Your monthly food spending
depends on how you want to live and eat. Here in Panama, a couple could spend
less than US$300 a month on groceries. On that budget, you could eat well, but
you'd be eating like the locals.
Or you could shop at the Riba Smith super-store every week and load your cart
with imported cheeses, specialty hams, wine, and prepared foods, in which case a
couple's monthly grocery spend could be as much as, say, US$600.
Grocery costs also vary according to region. In Paris, we lived in the 7th
arrondissement, in the historic heart of the city. We discovered that prices in
the grocery stores in our neighborhood were sometimes 25% more than prices for
the same items in grocery stores in the 15th arrondissement, for example, a more
This is another big variable that you control. Sticking with Panama City as an
example, you could budget US$100 a month for entertainment. That'd allow you two
or three dinners out at modestly priced restaurants (Panama City boasts many
good ones) and a couple of nights out at the cinema each month (a ticket for a
first-run movie in English costs as little as US$3, depending on the day of the
On the other hand, you could spend US$100 on a single dinner for two at Market,
Panama City's best steakhouse. You get the idea.
Miscellaneous (dry cleaning, haircuts, household bits and pieces, etc.)
In the places I recommend to you in these dispatches, these little everyday
expenses can cost a fraction what they're costing you now. In Panama City, my
husband has his hair cut at the barbershop down the street for US$3 (and, no,
I'm not embarrassed to be seen with him). I have mine trimmed at the salon on
the corner for US$7. Dry cleaning costs an average of US$1.25 per item (compared
with US$12 per item in Paris, for example).
Travel (within your new country of residence and for visits home)
How often will you want to return home? Your biggest related expense will be
airfare. Allow for it in your budget, as well as for in-country travel. You're
taking a big step and making a big effort to relocate somewhere new and exotic.
Once you're there, you'll want to get out and see the place.
Now let's get specific. What would your monthly budget look like in each of the
world's top overseas retirement havens for 2012?