A guide to finding the right country for you to retire to based on your own personal affordability criteria
We are so often asked our advice or simply our opinion about where in the world someone can retire to cheaply. However, as we showed in our earlier report today, cheap is such a relative term. Cheap for you could be expensive for me, and so I could list out a whole load of potential countries, all of which you may find undesirable.
Yet, search the Internet for ‘cheap places to live abroad’ and you will find hundreds of thousands of results returned. This is because there are ways that you can quantify cheap based on the cost of living abroad compared to living in London or New York for example. What’s more, there are obvious examples of nations where it’s very affordable for accommodation and food for instance.
However, we wanted to be able to present for you some seriously viable considerations for all those seeking an affordable – yet quality – place to retire abroad. Therefore, driving our decisions below are certain key factors that you need to know about and which we will discuss before we present our recommendations for you…
What You Need to Consider When Looking for an Affordable Place to Live Abroad
As stated and reiterated, (sorry!), ‘cheap’ and ‘affordable’ are relative terms. Quite possibly you will have a budget in retirement that you will need to live on each month. This may have to cover your accommodation and living expenses, a rainy day fund, health care and leisure activities including flights back ‘home’ to visit friends and family. Therefore, you need to think, in advance of your move, how large, (or otherwise), your budget is going to be, and how you can get the most out of it.
If you have assets in the form of real estate in your current nation, can you turn them in to cash? I.e., can you sell assets to free up funds to buy a home abroad to reduce your monthly outgoings? Or, perhaps better yet in this economic climate, can you rent that property you own out to bring in an income that could fund your rental payments abroad on a home?
Next up, can you and do you want to supplement your income in retirement when you relocate overseas – either by doing something locally where you’re going to be living, or by using the Internet for working purposes for example. What about finding a way of minimising the taxation erosion on your income by thinking about structuring your investments, pensions etc., offshore or in a low tax country – is that a viable option for you? You will need to speak to an adviser to find out of course.
There are some countries in the world where you can reduce your taxable income to zero if you become a part of that country’s retirement incentive programme – is this an option you would consider to have more money in your pocket to play with? However, the countries we can think of are located a long plane ride from the UK – this in itself can add more to the financial demands on you in terms of transportation and accessibility – particularly if you intend keeping close ties with family and friends back home.
There are also countries where the cost of living is incredibly cheap – countries such as Uganda, India, Oman, Pakistan for four random examples – but these are not necessarily nations you want to retire to for a traditional retirement that we usually associate with first world countries and a decent and secure standard of living perhaps?
So, for you, you will need to determine how much money you have to work with each month, how far that money has to stretch and whether there are ways and means open to you to save money or make it go far further – from saving tax to investing your money offshore, from moving to a tax free country to continuing to work perhaps part time…
These are the considerations to bear in mind before researching your preferred country choice. And if you want Shelter Offshore’s suggestions for the five cheapest countries to retire to, they follow – and following each suggestion, we’ll tell you why the nation in question has been chosen.
You can live like a millionaire on a millionaire’s lavish salary in Panama – or you can enjoy a comfortable, modest and decent standard of living on a modest amount of money in Panama. Therefore, Panama is proof that ‘cheap’ is a relative term, but that you can ‘afford’ to live in Panama no matter how relative the concept of cheap is for you!
If you move away from the high rise, glitz and glamour of Panama city and get into the heart of the country, discover where real estate is more affordable because there is less employment, and learn how to haggle and shop like the locals do, you will find your money goes far in Panama.
What’s more, because of this nation’s exceptional strategic importance, it is heavily watched and protected by the likes of the US who have massive reliance upon the Panama Canal. This will likely prevent anything in the way of serious political or economic upheaval in the future, making your cost of living and affordability far more stable, and far less likely to be undermined by heavy inflation or strong currency fluctuations ‘in country.’ Also in this country’s favour are their benefits for retirees such as discounts on entertainment and even doctor’s visits.
We have chosen Belize because of it’s Retire Persons Incentive Programme that can allow qualifying individuals to live tax free in Belize. Naturally, without the erosion of taxation on your income, you will have up to 50% more to play with! However, you may need to move fast as there is a buzz that this programme may cease to exist soon because its popularity has proved overwhelming.
Belize, like Panama, is well protected externally, this time by the UK. What’s more, English is the business language in Belize and the locals are welcoming of Britons. Move away from the main tourist hangouts and the most built up areas and you will discover how far your tax-free income can take you.
Turkey is a volatile choice because it’s a country that’s seemingly divided in its thinking. On the one hand you have those pushing hard to position the nation for EU accession, and these people are happy to see the cost of living and the price or everything in their country rise. On the other hand, you have Turkey how it is today – a peaceful country, where people live like kings or peasants with massive room for movement in between the two camps. There is huge poverty in Turkey – and incredible wealth…
As an expat moving in, you will likely be attracted to the tourism resorts along the southern coastline – but step away from them and off the beaten track and you will find a place for you according to your level of affordability. Turkey offers it all depending on how relative for you the concept of cheap is…but beware of political volatility that could undermine the stability of the nation’s current economic position.
Another country with a retired person’s incentive programme, the ‘Special Resident Retiree’s Visa,’ The Philippines can offer a good standard of living, what’s more, the benefits of this country’s programme is that it’s open to you from the age of 35 and still allows you to work in the nation.
You can earn your pension and annuity income tax free under this programme and come and go to and from the country as often as you like. However, The Philippines has a seedier side and it does attract some lower life forms who like the local girls and boys, and having to live amongst such people can make the cheap cost of living suddenly not seem so worth it.
We hope The Philippines will clean up its image – but then if it did, perhaps it would have no need to offer such an attractive incentive programme and the cost of living would rise? Definitely a country to consider – but do so carefully and ensure you visit for a while before you commit.
For most things, the cost of living in Argentina is far cheaper than in the UK – even with the decline of the pound. Exceptions may be rent in the most stylish quarters of the most popular cities – however, then again, if you compare like for like you should be comparing renting such properties with renting similar in Knightsbridge or Manhattan…and again, you will see Argentina is soooo much cheaper.
Food and excellent drink (in the form of some stunning red wines) are much more affordable, and if you move outside the tourist traps and speak the local lingo, your money will go far further because you will be taken more seriously.
Some retiring Brits have issue with Argentina because of the Falkland’s war – which is understandable. What’s more, Britain and Argentina are again niggling over oil rights in ‘disputed waters’ – so that may be enough to put you off considering the nation. However, at Shelter Offshore we have a strong love affair with many aspects of this massive and diverse nation and believe it’s well worth a look if you want somewhere that is relatively affordable to live well.
There are affordable countries out there – and there are nations that go out of their way to attract retirees with their tax free incentive programmes, thus making them all the more affordable perhaps. But because ‘cheap’ is a relative term, you need to calculate your budget and then find a country where you can get the right balance between cost of living and standard of living so that you can be happy and comfortable in retirement abroad.
When it comes to retirement, affording the best lifestyle is key. Those who want to retire abroad should consider getting offshore financial planning advice early on so that they can explore all their options. There may be tax advantages to transferring a pension offshore for example. From QROPS to offshore bank accounts we cover everything an expat needs to know.
If you want to retire abroad you will probably discover that you have a whole heap of questions that need answering! From concerns about healthcare, pensions and property laws to worries about your pets, family and friends we’ve got your top 10 concerns covered…
The dampened fiscal state of the nation is doing nothing to deter British retirees from wanting to move to live abroad – if you share the desire to retire overseas you cannot risk making the move before you’ve understood these 3 critical considerations…
Some nations are geared up for foreign retirees, and life living abroad in retirement can be great – other countries have too many negative aspects and can turn the dream of retirement into a nightmare for expats. We urge would-be expat retirees to do their country research carefully and to ditch the rose coloured glasses when it comes to Turkey for example.