Discover the best cheap places to retire, where you can live comfortably and even enjoy some luxuries without straining your retirement budget.
Instead of sweating over the burning question “Can I afford to retire?”, you will answer it with a smile and a confident “Yes”.
How Do You Define Cheap or Cheapest Places to Retire?
What’s cheap to you and me won’t be cheap to a person living in the poorest parts of Africa or Asia, which makes defining “cheap” a tricky issue. To narrow down the range of budgets to consider, we are going to assume that most of our readers will be from the United States, Canada, Europe or Australia.
AARP, the American Association of Retired People, states that nearly two out of three current retirees rely on Social Security for most of their retirement income.
However, the average American needs to replace about 70 percent of the amount they earned while working. Currently, Social Security replaces only an average of about 40 percent of that pre-retirement income. Sounds like a dilemma to me.
This scenario leaves you basically with two choices: either supplement your retirement income from additional sources (personal savings, 401(k), part time job, etc.) and smart money management, or move to a country where your Social Security paycheck covers ALL your expenses easily.
Speaking in absolute numbers, how high is this paycheck? In 2020, the average monthly benefit for retired workers in the United States is $1,503 (source U.S. Government Social Security website).
How is the situation for retirees in Europe? I am going to take Ireland, where I lived from 2007 to 2010, as an example. The “Non Contributory State Pension” is similar to Social Security in the U.S.
Weekly rates in 2020 are €237, which translates to €1026 per month (source citizeninformation.ie). With the current exchange rate from Euro to USD, we are talking about a monthly pension of about $1,137.
The situation for European retirees gets worse every year since I’ve been tracking these numbers, at least if they want to retire in a country with a dollar based economy like Ecuador, Panama or Nicaragua.
Between 2013 and 2020, the non contributory state pension – when measured in USD – has dropped from $1,325 to $1,137.
Let’s use the average of the two amounts as our bench line for cheap places to retire. Where can you live comfortably for $1,300 a month?
Related: 11 Cheap Places to Buy Property in Europe
How to Find the Cheap Places to Retire
Start your research with the various “Cost of Living,” “Quality of Life,” or retirement indices published for example by International Living, Numbeo, or Mercer.
Numbeo.com is a website where thousands of users across the globe enter prices for household goods, rent, gas, etc. Based on those entries, Numbeo keeps a constantly updated cost of living index, not only by country, but by city.
At the time of writing (February 2018), the top 5 places in this index are firmly in Swiss hands, featuring Zurich, Geneva, Basel and Bern. The only non Swiss city is Hamilton, Bermuda, on place 2.
Towards the bottom of the list are many cities in India, indicating that India is right now the country with the lowest cost-of-living – but not necessarily with the best retirement locations.
Here are my favorite cheap places to retire, where a paycheck of $1,300 not only covers all the ‘normal’ expenses, but even allows you to have a maid coming 5 days a week. This list is by no means exhaustive and can change over time:
We’ll cover each country one by one, including typical monthly expenses. And you know what? Since I started looking into these most affordable places to retire, I feel much more at ease with the question “When can I retire?”
Hopefully you’ll feel some of this relief too.