The cost of living overseas is the biggest issue facing would be expats. In the previous link, a blogger from U.S. News and World Report discusses the difference in costs between Nicaragua and the United States. The blogger, who lives in Kansas City, claims to live more cheaply in Kansas City than the expat in Nicaragua. Is he lying?
No, I think he’s being honest. I investigated recently living in Kansas City for a possible job, and the cost of living was extremely low. I found a decent quality one bedroom apartment for US$500 per month including utilities in a safe neighborhood. As an American retiree eligible for medicare my healthcare would largely be free, whereas if I lived abroad I would most likely have to pay for private healthcare insurance which could cost in the area of several hundred dollars a month depending on a host of factors (retirees rarely qualify for the state run healthcare when living abroad).
If the cost of living in parts of the United States is actually cheaper than in a poor country like Nicaragua, what’s the point of moving abroad? The answer is simple: you retire abroad to maintain a level of sophistication you have grown used to. Would a lifelong New Yorker be happier living in Kansas City or Buenos Aires? Would a lifelong resident of San Francisco prefer Atlanta to Montevideo? If you are planning on retiring abroad solely to save money, you might want to reconsider. Retiring abroad is not just about your bottom line. It will always be a little bit about having an adventure and exploring a vibrant foreign culture.
For European expats on the other hand, particularly those living in very expensive countries such as the United Kingdom, moving almost anywhere to the developing world might actually save you money. The European average VAT (sales tax) adds sometimes as much as 20% to the price of goods, and you can reduce that dramatically by moving abroad. Americans have the luxury of avoiding sales tax in some states altogether, and where there is sales tax, it is usually far lower than in Europe. But again, while retiring abroad has an element of cost saving associated with it, the amount you save will be far less than you have been promised by many of the travel guides found online and in bookstores.
