In this article, we will explore the 15 cheapest countries for retirement. You can skip our detailed analysis and go directly to 5 Cheapest Countries for Retirement.
The Costs of Living in Retirement
On average, a comfortable retirement in the USA costs an estimated $1 million. With Americans spending $50,220 annually post-retirement, 25% have already begun delaying their retirement plans. A 40-year high inflation, rising interest rates, and pandemic-led supply-chain disruptions are all notable factors causing this delay. CNBC notes that one million dollars in a retirement account two years ago are worth $120,000 less when accounted for inflation today. As a result, 77% of people have no real retirement savings despite moderately saving for their golden years.
For those counting on Social Security to survive, funds are guaranteed through 2035 only. With payroll taxes covering only 78% of benefits and an expected 78 million retirees by then, benefits could be cut by as much as 24.9%. S&P 500, which tracks companies like Amazon.com, Inc (NASDAQ:AMZN), Welltower Inc. (NYSE:WELL), and Amgen Inc. (NASDAQ:AMGN) etc. has shed more than 12% in the past year. This shedding, in addition to decreasing consumer confidence has resulted in 21% of individuals putting away less for retirement altogether, notes BMO Real Financial Progress Index. Furthermore, Consumer Price Index data reported by the U.S. Bureau of Labor Statistics has shown an annual gain of 6.4% through the year. As a result, 64% of Americans are now living paycheck to paycheck, and more numbers are taking a dip into their retirement savings.
In terms of retirement costs, the most significant expenditure that retirees face is that of housing. Making up 35% of annual expenditures, it includes mortgage or rent, property taxes, insurance, maintenance, and repairs. Utilities are excluded. The Consumer Expenditure Survey notes that housing expenditure amounts to $17,472 on average, rising by 5.6% in 2021. The second highest expenditure encountered by retirees is transportation. Including vehicles, insurance, and gas, this expense adds up to $7,492 per year. Food expenses cost $6,599 annually, and utilities cost $3,810. Health care ranks third in the list with $6,833 spent per year. The bulk of this healthcare spending goes to health insurance companies.
With typical Medicare beneficiaries spending 25% of social security on out-of-pocket healthcare expenditures, the need for adequate funds is increasing tenfold. It is reported that the sickest seniors have to dedicate more than 90% of their social security funds to healthcare costs. With an estimated 70% of older adults requiring long-term service and support before they die, severe economic hardships are underway.
Maneuvering through the Financial Vortex
To maintain a pre-retirement income standard, experts agree that individuals should have at least a 70-80% income replacement rate. However, CNBC notes that only 25% of people are able to generate this income today. 51% are reaching retirement with a current income less than 50% of their pre-retirement income. The fall in retirement savings is also due to a dilemma Goldman Sachs refers to as the financial vortex. Baby boomers, millennials, and Generation X are maneuvering through varying financial priorities, complicating their plans related to retirement savings.
For retired boomers, fixed-income portfolios are under pressure due to high-interest rates. There is also a notable decline in equity portfolios, in line with an anticipated recession. Millennials are also impacted by high inflation and rising prices. Still, the most impacted is Generation X. Known as the sandwich generation, this generation marks homeowners, parents, and caretakers who are currently peaking their careers. With the most significant retirement balance held by this group, they are also most likely to be impacted by inflation and volatile markets.
As such, future retirees must consider part-time work to alleviate their concerns regarding retirement income. Moreover, employers must also play a role in introducing sponsored retirement plans such as the 401 (k) plan offered by major companies like Amazon.com, Inc (NASDAQ:AMZN) for their employees. Amgen Inc. (NASDAQ:AMGN) is another company offering some of the best retirement plans. Retirement plans by Amgen Inc. (NASDAQ: AMGN) help employees accumulate their savings for their golden years. Furthermore, society can also play a role in promotion of facilities for retirees. Welltower Inc. (NYSE:WELL) is one such company that has purchased three distinct senior-living portfolios in partnership with Senior Point Senior Living. Driving the transformation of healthcare infrastructure, Welltower Inc. (NYSE:WELL) invests in improving the health care experience of its customers.
Currently, 40% of private sector workers lack a retirement savings plan. SECURE 2.0 Act 2022 intends to lower this figure, meaning Americans are 12 to 15 times more likely to save for retirement in the future. If your retirement savings aren’t enough to help you sustain a decent lifestyle, you can relocate to a cheaper country instead. Many countries offer stable economies, beautiful landscapes, a cheaper cost of living, and easy relocation for a comfortable retirement.
Methodology
To find the cheapest countries to retire to, we compared the cost of living, including rent, groceries, and health care, among other factors, in more than 100 countries worldwide based on Numbeo’s 2023 Cost of Living Index. Next, the countries are ranked in ascending order; with number one being the cheapest country to retire to. Some countries with cheaper living costs did not make our list due to high crime levels, poor safety index, expensive healthcare, an unstable economy, and difficulty of getting a visa.
Here are the 15 cheapest countries to retire:
15. Croatia
Cost of Living Index: 46.7
Croatia is a country full of culture, great food, and good wine. Retired expats can enjoy a low cost of living, a high quality of life, and even socialized healthcare. On average, expats must spend $1200-1500 per month on their expenses. Moreover, living here is 39.4% cheaper than in the U.S. Mediterranean climate, proximity to European countries, and a clean climate are top reasons to move to Croatia
14. Portugal
Cost of Living Index: 45.3
Portugal is a famous country to retire to for foreigners due to its cheap cost of living, high quality of life, and warm climate. The most popular region is Alvare, having 100,000 retirees. With beautiful cities and fabulous beaches, foreigners can enjoy a 37% lower cost of living and consumer prices that are 74.9% lower than in the USA. Excellent quality healthcare is also available; which legal residents can access by registering with the National Health Service. A Portugal Retirement Visa can help retired expats move into the country.
13. Cambodia
Cost of Living Index: 44.5
Depending on your lifestyle, living in Cambodia can cost you $1,250 per month on average. The country is home to beautiful beaches, royal palaces, and ancient temples, making it an attractive retirement destination. Relocating to Cambodia is cheap, with a 35$ charge for a visa on arrival. One-year extension costs under $300, and expats can come and go as they like. Consumer prices are 34% lower, and rents are 64% lower than in the United States. The healthcare in Cambodia is moderate, with many people traveling to Thailand, Vietnam, and even China for treatment. Worldwide salary is also subject to a 20% Cambodian tax.
12. Slovakia
Cost of Living Index: 44.2
Slovakia is a popular retirement destination for expats. Besides having a cheap cost of living; a prospering economy, ancient temples, and natural landscape are top reasons to retire here. It is also reported that the cost of living in Slovakia is 54% lower than in the U.S. Housing is also affordable, and the people are warm and friendly. The healthcare in the country is good, and expats have to contribute to the national insurance system for them to be eligible for it.
11. Chile
Cost of Living Index: 44.1
One of the safest and most economically stable countries in South America is Chile. The average cost of living (excluding rent) is 42.79% lower than the U.S. The lifestyle you can get here is almost the same as in advanced economies, with clean cities, state-of-the-art infrastructure, and stable government. The country is also home to abundant wildlife, sparkling lakes, and vivid mountain peaks. Affordable housing, excellent healthcare, and easy transportation options make it an attractive option for retirees. English is not largely spoken here, which is why it’s best to learn Spanish.
10. El Salvador
Cost of Living Index: 43.3
El Salvador is one of the cheapest countries to retire to. It is 40% cheaper than the U.S. on average. This land of volcanoes houses a dramatic landscape with numerous volcanoes, mountain ranges, a Pacific coastline, and even rolling plains. The country is generally safe to retire to, and the people are warm and friendly. Lots of agricultural activities make fresh food readily available at a cheap rate. Moreover, healthcare is also good and rapidly catching up with the rest of the world.
9. Mauritius
Cost of Living Index: 42.2
Mauritius is the dream retirement destination of many across the world. Surprisingly, it has an average cost of living that is 44% lower than the U.S. Peaceful country, warm climate, beautiful beaches, golf courses, and hotels add to the beauty of the country. Retirees also have access to excellent healthcare services. As long as you don’t receive a salary or have an executive position, you can also invest in a business on the island.
8. Dominican Republic
Cost of Living Index: 41.8
An attractive retirement country with a cheap cost of living is the Dominican Republic. Retired expats can live comfortably for as low as $1200. What sets this country apart, besides its year-long sunshine and sandy beaches, is the European lifestyle it offers. The retirement application process is fairly easy too. Expat communities are growing the most in Rio San Juan and Santo Domingo. Healthcare is affordable here, and overall, the country is 40% cheaper than the U.S. and Canada.
7. Thailand
Cost of Living Index: 40.7
Thailand is one of the best countries for retirement. Retired expats can stretch their retirement savings further by moving to Thailand. This affordable country has a cost of living that is 40% cheaper than the U.S. on average. Rents are 70% lower too. A Non-Immigrant Long Stay Visa can help you move to the country, and the entire process is relatively simple. Thailand is especially appealing to expats, thanks to its sun-drenched climate and natural beauty. On average, a couple can live comfortably under $1,596.
6. Poland
Cost of Living Index: 38.6
Poland is one of the most economically developed countries in Europe. It is a top retirement destination due to its cheap cost of living and excellent healthcare. Consumer prices are 52.59% lower than the U.S., while the average cost of living is 71% lower. Citizens can enjoy free healthcare based on the national health fund, whereas American retirees can also get emergency care and medical coverage for pre-existing conditions. The country has a low crime level and is a cheap country to live in.
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Disclosure: none. The 15 Cheapest Countries for Retirement is originally published on Insider Monkey.