Retiring abroad is probably not something your grandparents thought about. During the post-war period (1945-1960), American seniors had a decent shot at combining pensions, Social Security and savings to live happily ever after.
Not anymore. In their wisdom, American policy makers have arranged things so that huge swaths of the population cannot retire in dignity after a lifetime of work and service to their communities. The gigantic baby boom generation is rapidly approaching retirement age, and millions are looking for places to spend the next stage of their lives. As expat retirement goes mainstream, more seniors are seeking a better life outside U.S. borders, living out their retirement years in foreign countries.
The lure of simple, sun-dappled, low-cost living is powerful, but pitfalls like crime, cultural differences, political vicissitudes, and even something as simple as getting a phone connected can turn paradise into a dicey proposition. In a foreign country we may face language barriers, legal hazards and painful adjustments as we learn to move within a new community far from our networks and connections at home.
With that said, many Americans are taking the leap, and finding that a move abroad can increase their quality of life. Knowing your priorities, setting up a six-month trial period before making a permanent move, and studying the language and culture can increase the odds of a happy transition.
Here’s a look at five popular retirement destinations: the good and the bad.
1. Nicaragua
The Good: MSNBC has called it “The World’s Best Kept Retirement Secret,” in part because Nicaragua boasts a tempting retiree benefit program open to anyone over 45 years of age with a monthly income of at least $600. As a foreign retiree, you have a number of tax advantages, including the right to pay no taxes on earnings outside the country and permission to take along up to $20,000 of household goods for your home duty-free. Nicaragua is a budget-pleasing destination: Tanya Hartill, owner of NicaTour Group, told USA Today that retirees could do well Nicaragua for only $900 a month.
According to UN reports, Nicaragua is also one of the safest countries in Latin America. And it’s packed with beauty and charm, from the romantic Spanish-colonial cities of Granada and Leon to the dramatic beaches of the Pacific coast.
The Bad: Retirees in Nicaragua report a number of issues, many of which have to do with the changes they face from conditions in the U.S. The year-round warm weather can feel quite hot to somebody used to the Northeast, for example. The pace and expectations of timing are quite different, and that can drive type-A Americans crazy, as can language barriers for those who don’t speak Spanish. Nicaragua is still a very poor country compared to more developed neighbors like Costa Rica, and lacks all the amenities Americans are used to. Erratic electricity and water supply can be a problem. Though healthcare can be high quality, facilities need improvement, and sometimes high-tech equipment is unavailable. For that reason, retirees often purchase MedEvac insurance in the event they need to be airlifted to a facility in Miami or Houston.
2. Panama
The Good:International Living has named Panama “The World’s Best Retirement Haven in 2014.” That’s not surprising given its program of benefits for retirees, arguably the best in the world. For those with incomes of at least $1,000 a month, you get an attractive list of discounts on everything from airline tickets and entertainment to home loans and medical services. Another bonus is that the currency is the U.S. dollar, so you don’t have to worry about the exchange rate risk if your retirement savings and income are in dollars. Prices have crept up in Panama City, but budget-friendly living can be found in other areas of the country, like the temperate mountain region and the beaches west of Panama City.
Healthcare in Panama is considered excellent and inexpensive. English is widely spoken, and the country has a cosmopolitan vibe. Panama, known as the “Hub of the Americas,” is also easy to get to and from.
The Bad: Crime, especially robberies — which can occur in broad daylight — can be a problem in Panama City, as can nerve-jangling traffic congestion and high rents. While healthcare is cheap and generally good, the standards and price can vary wildly in different parts of the country. If you want to set up a business in Panama, say a bed-and-breakfast, you’re going to have to jump through a lot of bureaucratic and cultural hoops to do it. Many foreigners find they can’t rely on the court system, where the level of justice often depends on your connections. Problems with roads and traffic systems, as well as general infrastructure like water and electricity, can also be a headache.
3. Costa Rica
The Good: Costa Rica is one of the most politically and economically stable countries in the region, making it an attractive retirement option. Though not a bargain compared to other locations on this list, Costa Rica is still a good option for the moderate-income retiree. The country has been a retirement magnet for some time: According to the U.S. State Department, up to 50,000 Americans live there, drawn by the mild climate, proximity to private hospitals, high literacy rate, relatively prosperous economy, and natural beauty, including the best national park system in Latin America. Most retirees choose the Central Valley, which is home to the capital, San Jose, or the resort towns and villages along the Guanacaste "Gold Coast" on the Pacific.
The Bad: Costa Rica, particularly the capital of San Jose, has a high crime rate, with robberies being the most common, but violent home invasions and kidnappings are also prevalent in some areas. In addition, there is significant drug traffic through the country, and drug cartels have begun to use it as a warehouse and trading center. Costa Rica is famous for its bad roads and aggressive drivers, and you’ll find that traffic laws are poorly enforced. Medical care is generally considered very good, but there can be waits for attention at public hospitals.
4. The Philippines
The Good: International Living estimates that you can live quite nicely in the Philippines for $800 to $1,200 per month, which includes domestic help. A two-bedroom bungalow can be had for just $200 a month in rent. Private healthcare is low-cost, and a special retiree visa available to folks over 50 years with a monthly pension of $1,000 offer permanent residency. Many people find Filipinos to be exceptionally friendly people ready to welcome foreigners into their midst. Manila is hot and crowded, but the island of Cebu (the second-largest city), features a stunning coastline along with rolling hills and rocky mountains, and offers a low cost of living along with a fun, friendly vibe. English is widely spoken in the Philippines, and the official language, Tagalog, shares the same basic Roman alphabet, which makes it easier for Americans to learn.
The Bad: Again, developing world conditions can frustrate Americans, including transportation, electricity and water, telephone, Internet and mobile phone reception and the erratic postal service. Healthcare in the capital city is excellent, but the same cannot be said in the other cities or provinces within the country. Typhoons can be a problem, and such headaches as flooding are commonplace.
5. Vietnam
The Good: Vietnam is just emerging as an attractive place for Americans to retire after decades of negative associations. The low cost of living and beautiful countryside are enticing for budget-conscious retirees who like adventure. The climate is quite varied throughout the country, from humid jungles to cool mountaintops and sun-drenched beaches. Nha Trang, with its stunning coastal landscape is a popular destination, as is Hoi An, famed for its lively culture and excellent cuisine. The lovely island of Phu Quoc is also quite popular.
The Bad: Pollution is a major complaint for expats in Vietnam, and it is not uncommon to see people walking down the street wearing masks. Retirees can also expect daunting paperwork and the hassle of maintaining a tourist visa, since Vietnam does not offer a retirement visa. Property ownership restrictions can pose problems, and many find the chaotic traffic (Vietnam has one of the highest road fatality rates in the world), noise and the lack of Western influence to be drawbacks. Some expats experience the cultural divide as exhausting to overcome, and find it somewhat difficult to forge relationships with locals. Many end up retreating into an “expat bubble.”
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