A common theme in discussions about retirement in a foreign country is that a life in a warm, sunny retirement paradise can be experienced at low cost. This belief applies in particular to retirement destinations such as Mexico, Belize, Panama, and Costa Rica. According to some folks who have tried it, this belief is only half-true.
In his first article on Belize, Scott had this to say about the fantasy of a low-cost retirement in a foreign paradise:
If you have such fantasies— and many struggling Americans near retirement do— let me share a lesson I learned while living on Mallorca long ago. You can live a luxurious lifestyle in a poorer country for far less than the same lifestyle would cost in America. But you’ll be hard pressed to live a low-cost lifestyle in a poor country without adopting the poor living standard of the poor country.
The reason that it may not be possible to live a frugal lifestyle in a foreign country for less than in the U.S. is that we have a highly efficient and competitive system for distributing goods and services. (This assumes that you can live near a Walmart and big box home center!) Most foreign countries lack this system. Therefore, non-luxury goods and services will cost more there than they would here.
This reality is confirmed in Burns’ second article, in which he interviewed some experienced expat early retirees. This is what they had do say about low cost retirement living in a foreign country:
A lot depends on your lifestyle. If you try to bring your (U.S.) lifestyle here, it will be very expensive,” Akaisha said. “We try to buy local products rather than imported brand products. A lot of would-be expats like the idea that it’s just like living in the states, but less expensive. It isn’t (if you try to live that way).
Living in another country, both observed, requires adaptation and flexibility. Part of that adaptation is a willingness to live in a genuinely removed area. They, for instance, prefer places like Caleta de Campo, a tiny village south of Manzanillo on the Pacific coast.
Source: Finding a Low-Cost Paradise
All of this makes sense to me. I’m more inclined to seek out a desirable lifestyle here in the states, taking advantage of our country’s built-in economic advantages. There is plenty of cultural and geographic diversity available here. If you find a location that you can afford on a middle class retirement income, it would be difficult to beat achieve that lifestyle overseas at a lower cost. On the other hand, if you are looking for a high end lifestyle with a beach house and servants, that may be more affordable elsewhere.
What’s wrong with making your own paradise, right here?