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Stretching Your Savings in Retirement

Written by Nickel - 8 Comments

I just wanted to point out an interesting comment that a reader named ‘cheepy‘ left in response to my article on saving for retirement at the last minute:

How about moving to a developing country where a dollar can get you a lot further? Of course, the downside is that it is so far from friends and family, but you can get almost the same lifestyle with much less money… I am an Indonesian who lives in Australia. So if I go back to Indonesia, I practically quadruple my spending power…

This ties in nicely with the idea of reducing your expenses in retirement, although I suspect the majority of retirees aren’t going to be crazy about the idea of moving partway around the world to make up for a savings shortfall.

Published on January 17th, 2008
Modified on February 19th, 2008 - 8 Comments
Filed under: Frugality, Retirement, Saving & Investing

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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8 Responses to “Stretching Your Savings in Retirement”

  1. 1
    Lily Says:

    I wouldn’t mind moving to Mexico, since my family is in Texas. It’d be more of a stretch if they were in, say, Oregon.

    Retirees might not be crazy about leaving the States, but at some point they’ll have to make a decision between being an expat or being unable to afford the lifestyle they want (or any lifestyle) in retirement.

  2. 2
    ChristianPF Says:

    I have a friend who was considering moving to South Africa, because (evidently) the average middle class American can live like a king there. Personally, as dangerous as it is there, I don’t think it is worth it… I’d rather take my chances here…

  3. 3
    Brett Says:

    That is a great idea and many people have successfully done this. There are many opportunities in Latin America and other countries.

    One opportunity that many people do not consider is the Peace Corps. Many people who join are in their 50s or 60s.

    You will have very little expenses — maybe just maintaining your home back in the US and for some regional travel. Your health care and living expenses are covered and you receive typically good support from the regional office. Plus, language and cultural training. Finally, at the end of your service you receive a payment — something like $250 for each month of service. A term is typically two years but you can extend for an additional year.

    So the Peace Corps could give you up to three years of nearly free “retirement.” Obviously you have to do a job, but usually it is interesting and 50 hour work weeks are not required. You will meet interesting people and get to see a part of the world in depth.

    After the two years in the Peace Corps, you will also have better skills and information to follow the retire abroad advice. It is like retiring abroad on training wheels. Another advantage is that it helps transition you into retirement which is difficult for many people.

    Check out PeaceCorps.Gov to find out more information. (I don’t work for the Peace Corps but was a volunteer.) YO must be a US citizen, but I believe that other countries have similar organizations.

  4. 4
    planner Says:

    I know a couple of people who plan on doing something like that. Moving to a cheaper area is a good idea to lower expenses, and it doesn’t have to be around the world to have an impact. Isn’t that why some people retire to Florida? It doesn’t have to be for a savings shortfall either. If you want to leave more to your family or favorite charity this is a way to help you do it and still have enough to get by on.

  5. 5
    Minimum Wage Says:

    Question – not necessarily just for retirement -

    Are there any countries where an unskilled American worker can move to and actually improve their standard of living?

    I used to think not, but I’ve noticed a bunch of European countries are welcoming foreign guest workers.

  6. 6
    kitty Says:

    Moving to a smaller place e.g. a one bedroom co-op may work too. Two people don’t need that much space. Living modestly.

    Additionally, if someone’s income is low one can qualify for low income housing. There is housing specifically for low income retirees. These places aren’t necessarily in bad neighborhoods, even my town in overpriced Westchester county, NY has one. To qualify one doesn’t need to be very poor. Someone with 200-300K savings may qualify since their income – Social Security+interest on 300K may still be low enough.

  7. 7
    deepali Says:

    It’s actually quite common for people to retire to Mexico because they can’t afford health care in the US. Starting to overburden the Mexican health care system…

  8. 8
    Minimum Wage Says:

    Additionally, if someone’s income is low one can qualify for low income housing. There is housing specifically for low income retirees. These places aren’t necessarily in bad neighborhoods, even my town in overpriced Westchester county, NY has one. To qualify one doesn’t need to be very poor. Someone with 200-300K savings may qualify since their income – Social Security interest on 300K may still be low enough

    Unless you are over (I think) 55, it’s pretty hard to get low income housing. Unlike food stamps, housing is not an entitlement and the demand far exceeds the supply. I tried several years ago, but the Section 8 waiting list was closed (as it is 95 percent of the time). When the waiting list was finally opened last year, a lottery was held and 8,000 people competed for 3,000 spots on the waiting list, so 5,000 people applied and didn’t get anything, and will have to wait at least several years until the waiting list is opened again.

    While “low income housing” is very unpopular because it evokes images of crime and drugs, and nobody wants it in THEIR neighborhood, low income ELDERLY housing is extremely popular because nobody considers elderly people a danger, and such housing allows (upper) middle class people to claim that they’re not the NIMBYs some people make them out to be.

    So it wouldn’t surprise me one bit to see low income elderly housing in, say, Scarsdale or Pound Ridge.

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