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".
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.) 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 2013, the average monthly benefit for retired workers in the Unites States is $1,261 (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 US. Weekly rates in 2013 are €230, which translates into €986 per month (about $1,325).Let's use the lower of the two amounts as our bench line for cheap places to retire. Where can you live comfortably for less than $1,200 a month?
Start your research with the various "Cost of Living" or "Quality of Life" indices published for example by International Living or Mercer. The "Quality of Life Index 2011" by InternationalLiving.com let's you sort the countries by column, or you can search for a specific country. Clicking on the column "Cost of Living" will sort the cheapest places to the top (the higher the number, the lower the cost of living).
According to this list, Iraq and Gambia are the cheapest places on earth in 2011 (but who would want to move there?), and Bermuda is the most expensive one. In 2009, Ireland had topped the cost of living category. Seems I had chosen the most expensive time for my stay in Dublin.
Here are my favorite cheap places to retire, where a paycheck of $1,200 not only covers all the 'normal' expenses, but even allows you to have a maid coming 5 days a week:
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.