Today we’re going to publish an article entitled ‘The 5 Cheapest Countries to Retire to’ because it is one of the most requested themes and topics at Shelter Offshore. However, before we can do so it’s really essential for us to cover how you can actually find a cheap country to retire to…after all, ‘cheap’ as a concept is relative.
A country that’s cheap for an American may no longer be cheap for a Briton because of the difference in the buying power of the American dollar and British pound. Additionally, a country that’s too expensive for a retiree living on the state pension may be more attractive to someone who has been able to build up a private pension pot during their working life…
So for us to just dive in and tell you our top 5 location tips for a cheap retirement destination would not be good, we need to frame our recommendations against a background of what is and is not cheap, what constitutes affordable and how, if you don’t like our 5 suggestions, you can find your own affordable retirement destination.
The Currency Questions
Let’s get right down to the heart of the matter for most retirees looking around for a place to put their feet up in the sun abroad at the moment. The issue at hand here is the fact that the British economy is in the doldrums, and so the British pound as the official national currency has basically been punished, and its value has dwindled.
This has a very real and impacting influence on retirees who will be retiring on a fixed income, paid in pounds sterling, if they want to move to live abroad. One has to look around and see where in the world the pound is worth ‘more’ than in the likes of the US and the eurozone. Unfortunately however, the pound’s value has universally fallen! Just take a look at a currency conversion site where there are historical rate tables such as http://www.xe.com - you can see the pound’s value today and on any previous date against all leading world currencies. It’s fascinating – but also a bit depressing.
However, currency fluctuations swing wildly all ways – meaning that whilst the pound is at an all time low for many of us, it is highly likely, going on historical analysis and adding a bit of hope for an improvement in the British economy into the mix, that it will improve at some point in the future. So, if you can find a country and a currency you can afford to live in and with now, just imagine how your buying power could improve in the future!
The key when it comes to currencies is threefold: -
1) Find a currency you can afford to live with now
2) Protect yourself as much as you can against any future negative movements by using a currency conversion brokerage that can help you fix your rate of exchange for months or even years in advance
3) Know that currencies move all the time and that one day the pound may move in your favour, but at all times try to shield your savings and income draw down from the erosion effects of fees and charges levied by banks
A Country’s Economy and its Influence on You
Whilst the buying power of your foreign currency certainly has a massive effect on your day to day living costs and how you can afford to live, you have to look beyond your currency and look more closely at the economy of the country you’re moving to before you can get a feel for how well or otherwise your purchasing power will develop.
You need to ensure that there is economic and political stability in your chosen country, that there are no indicators to suggest massive inflation could be just around the corner. Inflation pushes up the real cost of goods and services, and can impact even further on your buying power…so be careful.
Learning to Live Within Your Means
If you want to be able to afford to live anywhere in the world, there is one way you can do that more easily, and that’s by learning to live with what you’ve got. It’s an altered way of thinking about money and affordability – instead of saying ‘I haven’t got enough to buy xyz’ or ‘I can’t afford to shop at xyz,’ you think about what your money will buy you. You learn to live on the cheap, on a budget, you shop where the locals do rather than where the affluent expats and tourists do.
By so doing, you can afford your new life abroad – because you will have changed your expectations of your new life abroad. This may not sound like much fun to you, but it is a solution to your problem if you want to move abroad in retirement, you have your heart set on a certain destination, and your pounds won’t get you very far in that location at the moment.
Retiring Doesn’t Have to Mean Unemployed!
There are ways you can supplement your income when you move abroad. Perhaps you have valuable skills and experience that you can use in an advisory or teaching capacity? Maybe you could get a part time job helping out at a restaurant, a shop or an office? Perhaps you could offer translation services? Think about ways you can supplement your pension income on the side, and maybe if you simply earn just a little extra a week you could use it for going out and enjoying yourself?
In Conclusion
We have chosen our 5 cheapest countries to retire to, as you will see shortly, but perhaps you have your own choice of destination, in which case you have to work on making that country affordable for you. If you can increase your income, reduce your outgoings, eradicate fees and charges on currency conversions and lock in your currency transfers at a pre-agreed rate, all of these are ways you can work positively towards making your dream of a new life abroad in retirement a reality.
