Money Management

How American Expats are Stretching Their Retirement Dollars

By  Karen Banes

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We all know the importance of saving for retirement. But how much do you need exactly? The answer depends on a lot of factors, including where you’ll be spending that retirement. Your retirement funds will go a lot further in some countries, so if you’re heading towards retirement, but still have a strong sense of adventure and a taste for the unknown, living abroad can be a good decision, financially as well as personally.

Here are a few of the countries where your retirement dollars will go a lot further than in the US. We’ll be looking at the cost of living index (which covers the cost of all consumer goods) and the rent index, which covers the cost of (you guessed it) rent. Both figures are relative to New York City. If a city has a cost of living index of 50 and a rent index of 30, it means it will be 50% cheaper to buy what you need on a daily basis there, and 70% cheaper to rent somewhere to live. Remember that these comparisons are based on major cities, so you can usually find somewhere cheaper to live in each country. You can check out the results for cities around the world (in the US and abroad) at this link.

Costa Rica

A popular destination for US expats, Costa Rica was one of the first countries to offer a benefits package aimed at expat retirees. You can apply for a Pensionado visa to live there in retirement, as long as you can prove you have $1000 a month income from a qualified pension source. And that $1000 will go a long way. San Jose rates 60.16 on the Cost of Living Index, and 18.68 on the Rent Index.


Spain is brimming with expat retirees, mostly from the UK and other Northern European countries, but you’ll stumble across plenty of US and Canadian citizens there too, especially in the popular expat areas. To retire there you’ll need to obtain a Long Stay visa, which will require proof that you can support yourself without the need to work. Costs vary, but in the highly desirable southern city of Seville, for example, the cost of living index is 53.73 and the rent index is 20.34.


South East Asia is home to some of the most affordable expat and retirement destinations on the planet, and there are US retirees scattered throughout the region. Malaysia can claim a better housing than many countries in the region, a high level of safety and an excellent health care system, as well as a tropical climate. Retirees can apply for the Malaysia My Second Home (MM2H) program. This allows you to stay in Malaysia long-term, as long as you can support yourself without working. The beautiful island city of Penang has a cost of living index of 41.56 and a rent index of 9.20.


Many people in the US assume that US-Mexican migration only goes one way, but they couldn’t be more wrong. Mexico is one of the top three countries for US retirees, according to social security figures compiled by MarketWatch. And according to International Living, the area of Lake Chapala, near Guadalajara, is home to the largest community of US retirees outside the US.  US citizens can get a temporary resident visa, suitable for retirees, if they can prove they can support themselves on their pensions or other income. Guadalajara has a cost of living index of 34.70 and a rent index of 10.33.


It may seem odd for those of us who dream of a warm, sunny retirement drinking cheap local wine on a palm fringed beach, but Canada is one of the top destinations for US retirees. This could be due to the similar culture and the proximity to friends and family back home, or maybe to family who have already moved there, given how common it is for US and Canadian citizens to live, work and study in each other’s countries. Retiring to Canada isn’t as easy as you might imagine. You’ll still need a visa to live there full-time, and there’s no official retirement visa available, so you’ll need to talk to an immigration lawyer about your options. The city of Victoria on Vancouver Island has a cost of living index of 72.05 and a rent index of 37.96.

Things to be aware of:

Check your tax situation. Many countries don’t charge their citizens tax once they’re resident somewhere else, but the US is an exception. There may be deductions you can make on foreign earned income, but unearned income (which is what you are most likely to be living on in retirement) is still taxable, and you’ll still have to file a US tax return. Consult a professional, or check out IRS guidelines to work out what your tax situation will be.

Make sure you’ll still be able to receive any social security benefits you’re entitled to. Generally speaking, US citizens who retire abroad can still receive any retirement, disability or survivors’ benefits they would be entitled to if living in the US, but there are a few exceptions, depending on the country you’re living in.

Remember things don’t always go to plan. While you’ll stretch your retirement dollars and live a better quality of life in many other countries, you shouldn’t plan for retirement assuming that will be the case. Circumstances change, and that might mean a return to the US. You may get sick. You may get grandchildren. Either one can change your plans in an instant.

Going on vacation somewhere is very different to living somewhere. It’s important to really do your research into a new country and what it’s like to live there as an expat. Expat forums like the one at can be useful. So can actually visiting the country and talking to residents (locals and expats) to get a really clear picture of what life is like for those who live there full-time.

Karen Banes

Karen Banes

I’m a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a content creator for hire, helping brands and businesses tell their stories, grow their audiences, and reach their ideal customers. I’ve lived, worked and studied in six countries, across three continents. Stop by my blog to learn how to run your own (very) small business on your own terms. You can also connect with me at my website or follow me on

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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