How to save money by retiring overseas: advice from an expert

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lower food costs by retiring overseasSo your 401K has been hammered and you'll have to work to the age of 100 to afford retirement? Not necessarily, according to Kathleen Peddicord, an expert on retiring to less expensive places outside the U.S. There are, she told me, spots only a few hours of plane time south of the U.S. where an American could find a lifestyle much like at home for only $1,200 - $1,500 a month. If you're willing to 'go native', you could "live very well for under $1,000".

Peddicord, author of the new book How To Retire Overseas, now lives in one such place, Panama City, Panama. She told me in a phone interview that, while not the bargain it once was, lodging, food, utilities and medical care are up to U.S. standards there, yet far less expensive.According to the count of Social Security checks mailed to addresses outside the U.S. each month, at least half a million U.S. retirees are living outside this country. And the number, she said, is growing fast. In most popular retirement enclaves, chances are good you'll find fellow U.S. natives with whom to socialize.

Are you a good candidate for this move? Peddicord said that those who are most successful have an open mind, a wide comfort zone, and a sense of humor. "Leave your expectations at the border," she said. You'll need to become accustomed to differences large and small; how Christmas is celebrated, how business is conducted, how shopping is done.

Lodging
A nice one-bedroom apartment in a safe, clean neighborhood of Panama City currently runs $700-$800 a month, Peddicord said. Outside the city, the deals are even better. One of her friends rents a two-bedroom house five minutes from the ocean in rural Panama for only $400 a month.

Food
A typical $100 bag of groceries in the U.S. might cost only $25 in Panama, Peddicord said, especially if you take advantage of locally grown fruits and vegetables. Those who like to shop in organic stores such as Whole Foods will find that option in Panama City, as well.

The city markets offer even better deals. A friend of hers recently went on a buying binge at a market, spending $7 and ending up with so much produce he had to give some of it away.

Transportation
U.S. citizens have come to depend on cars, and the thought of living without one may seem scary. However, Peddicord tells me that in many major metropolitan areas such as Panama City or Quito or Buenos Aires, public transportation is so convenient and inexpensive (even the taxis are cheap) this option is feasible. Even in rural locations, public transport plus a bicycle can take care of your needs. It can also make a big difference in how far your income will stretch, too. A car, fuel, maintenance and insurance can take a big bite out of it.

Utilities
Water and gas charges in Panama are minimal, but since the city is in the tropics, 24/7 air conditioning could result in a higher bill than you might have in the U.S. Cable TV and high-speed Internet are readily available, as well. Peddicord pays $30 a month for high-speed Internet, a little less for cable television. That's half of what I pay in Ohio.

Medical
Panama offers two levels of medical care; a clone of the U.S. services, or local services. For those who want a hospital identical to what they would find in the U.S. (but at a lower cost), Hospital Punta Pacífica is operated to those standards by Johns Hopkins Medicine.

Using the local doctors and hospitals could trim your medical costs even more, which makes self-insuring a viable option for many. Peddicord told me that she recently got a full annual checkup for only $40.

Those who don't want to self-insure can take advantage of a couple of options, Peddicord said. They could buy a local health insurance policy for $50-$100 a month, without pre-existing conditions exclusions. They could also buy an international health insurance policy from BUPA which would cover them anywhere in the world. A policy that excludes the U.S. would run someone under 60 less than $1,000 a year, she told me.

Where to live
I asked Peddicord for some suggestions of places retirees could consider moving to if they were interested in retiring overseas. She replied that, for those on a tight budget, Panama, Nicaragua and Ecuador are good options. Nicaragua is not the politically-unstable country of our memory, she said, but now offers "very peaceful, charming and affordable" places to live.

For those unwilling or unable to tolerate the climate of Central America, Ecuadoran cities such as Quito and Cuenca offer a stable mountain climate at a budget price. According to the Numbeo Cost Of Living Price Index, a three-bedroom apartment in the city center of Cuenca would run around $475.

For those looking for the best cosmopolitan lifestyle in this hemisphere, she recommends Buenos Aires, Argentina. And while the country is a bit more expensive at the moment, she is confident the exchange rate will soon once again favor the American dollar.

In Europe, she favors southwestern France and Croatia's Istria peninsula. Southwestern France, she said, has not seen the same increase in prices one might find in the rest of the country. The Istra Peninsula, just south of Trieste, Italy and across the Gulf of Venice from Venice, offers Tuscany-style countryside at a bargain price. Language here could be a problem; most of the residents speak Croatian, with some Italian, especially near the coast.

In Asia, she likes Chiang Mai, Thailand, and another place that surprised me; mainland China. Unlike other countries that vie for retirees, China doesn't make it easy to establish permanent residency, but some retirees have found workarounds so they can take advantage of the inexpensive living.

No matter where you think you might like to live, Peddicord recommends visiting the area first to see if it is a culture in which you'd be comfortable. Retiring overseas, she says, is a big adventure.

And an adventure that could really stretch your retirement dollar.
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