According to the study Expats: Expectations & Reality, conducted by Best Places in the World to Retire, the most popular reason people move overseas is to achieve a lower cost of living. Is this a good reason upon which to base your choice or a bad one?
An evaluation of the responses in the study and of answers provided by more than 400 expats to questions such as “What are the best reasons to retire overseas?” and “What are the worst reasons to retire overseas?” yields this conclusion: It depends.
Why Moving Overseas for a Lower Cost of Living Can Be a Horrible Idea
There are two reasons you should not move overseas for a lower cost of living.
1. It may not be true. Of course, for almost everyone and in almost all circumstances, it would not be cheaper to live in places such as Paris, Monaco or Singapore, than in Boise, Idaho. However, somewhat surprisingly, it can also be more expensive to live in Cayo, Belize than in Boise. How can this be? Items that have to be imported to a country outside the U.S. tend to cost more overseas than in the U.S. If you live in Belize and insist on purchasing American brand Skippy peanut butter and California wine, these items will have to be imported to Belize, thereby making them more expensive than if you walked in to your local supermarket and purchased them in Boise.
2. If you move overseas solely in order to reduce your cost of living and don’t like anything else about where you moved, even if you do achieve a lower cost of living, the benefit you receive could be overwhelmed by the other things you don’t like. What are examples of other things you may not like? The list is virtually endless. We have seen complaints ranging from being frustrated by the lack of efficiency to not wanting to learn or experience anything new. Whether, for example, you would view a lack of efficiency as a bother or as a refreshing emphasis on life outside of work, or if you would view newness with curiosity or with suspicion is an issue of how you, personally, respond to the world.
Why Moving Overseas for a Lower Cost of Living Can Be a Great Idea
Here are the two main reasons moving overseas for a lower cost of living can be a great idea.
1. For many places overseas, it is, indeed, much less expensive. This is especially true in developing countries such as Panama, Belize, Nicaragua and Mexico. The extent to which you actually do lower your cost of living in these places depends almost entirely on how much you shift your mix of consumption toward locally produced goods and services. While it is true that the peanut butter and wine mentioned above will cost more overseas than they does in the U.S., other items can be very inexpensive. For example: you can pay $225,000 for a 2,150 square foot American quality home on a gorgeous beach in Pedasi, Panama, less than $13 total for a gardener for six hours in Mexico, $10 – 15 per week for fruits and vegetables for a couple in Belize, or $10 for a 90 minute massage in Nicaragua in the comfort of your own home!
2. A lower cost of living can make possible a better quality of life. Many of our respondents told us that, after being freed of the worry of not having enough money, as well as the time and effort required to make more and/or spend less, their life improved dramatically, including their physical health. Repeatedly, we received reports of weight lost and blood pressure lowered. On an emotional, psychological and spiritual level, for a very large quantity of our respondents, less concern about money also enabled all sorts of other benefits, including the ability to pursue a hobby, time and money to travel, a better social life, and better interpersonal relationships. (One woman couldn’t get over just how “less grumpy” her husband was.) In addition, a very large number of our respondents reported getting much more involved in helping others, which greatly increased their happiness, and made a lot of other people happier at the same time.
Written by Chuck Bolotin of TheStreet