How Long Will 1 Million Dollars Last in Retirement?
BALTIMORE November 09, 2017
One million dollars: It was once a huge aspirational monetary goal.
However, these days, conventional wisdom says $1 million is almost a necessity if you want to retire comfortably in the United States. And that $1 million isn’t per couple, it’s per individual.
But, depending on the local cost of living, that seven-figure nest egg may not stretch nearly as far as most would imagine. Take a high-cost place like Hawaii, for instance: Enjoying an average lifestyle, a retiree would likely run through $1 million in just over 11 years.
Yet the experts advise Baby Boomers to expect and plan for a 20-year retirement. So that Hawaii retiree? He’s looking at a rough last, unfunded decade.
“In some of the more affordable locations in the United States, $1 million in savings would comfortably take a retiree through 25 years of retirement,” says International Living Executive Editor, Jennifer Stevens. “But the vast majority of retirees don’t have $1 million set aside.
“So what do people do? They work longer to save more. Or they retire but scale back their plans. Or they don’t, in fact, retire at all, ever.
“What we at International Living wanted to explore with our report is just how far a Baby Boomer’s savings can go overseas, by comparison. That $1 million might last 13 years in Jackson, MS or 11.5 years in Durham, NC or in Phoenix, AZ.
“But take that nest egg with you overseas, and you can watch it effectively buy a retirement that’s five times as long. $1 million retirement nest egg in Costa Rica? That’ll last 47 years. In Panama? 49 years. In Colombia? 38 years.
“But the bigger point to be made is this: A retiree doesn’t need anywhere near $1 million in savings to retire for 20 years or longer in many safe, warm weather, good-value havens overseas. In fact, on a Social Security income alone, a Baby Boomer can live comfortably in many locales.”
International Living’s new report pits three popular U.S. retirement locations against three Latin American counterparts, illustrating just how stark the contrast can be in terms of how far money can stretch overseas.
The report compares Medellin, Colombia to Phoenix, Arizona; Boquete, Panama to Durham, North Carolina; and Tamarindo, Costa Rica to Jackson, Mississippi.
Taking into account the costs for accommodation, utilities and healthcare, the report highlights how extraordinary an American retiree’s buying power can be in the right places beyond the U.S. borders.
Medellin, Colombia v. Phoenix, Arizona
The annual cost of living for one person in Arizona is $44,843.
The average annual cost of living for a couple in Colombia, by contrast, renting a furnished, two-bedroom apartment, including healthcare, entertainment, groceries, utilities and transport is $26,292. With $1 million for their retirement, this couple could live for 11.5 years in Phoenix or 38 years in Colombia.
“Medellín is truly First World,” says Jeff Raheb of his and his wife Heather’s new home. “We are now living for 30% to 50% less than back home,” says Heather.
And what a wonderful life they have for it. Foodies at heart, they spend time trying out the many restaurants and cafés around the city. “A four-course meal, including a glass of wine, is between $15 and $20 per person. Back home in Florida it would easily be $50 to $60 a person.”
Nestled in the valley between the western and central ranges of the Andes Mountains is Colombia’s second largest city, Medellín. Blessed with perfect year-round spring-like weather and First World infrastructure, it is attracting more and more expats seeking a cosmopolitan experience and an excellent quality of life.
Boquete, Panama v. Durham, North Carolina
The annual cost of living for one person in North Carolina is $42,207.
The average annual cost of living for a couple in Panama, by contrast, renting a furnished, two-bedroom apartment, including healthcare, entertainment, groceries, utilities and transport is $20,322. With $1 million for retirement, this couple could live for $11.5 years in Durham or 49 years in Panama.
Becky and Ken Campeau moved to Boquete, Panama in 2010, after Ken began having health issues due to the cold winters in Grand Junction, Colorado. “Every winter, I was getting ill with pneumonia,” says Ken. “My doctor informed me after my fourth bout that I probably would not survive another one.”
Today the couple have created a comfortable lifestyle in Boquete full of fun and volunteering—and all while enjoying a remarkably low cost of living. Ken says, “We pay around $150 a month for electricity. But our house is all electric. Freezer, clothes dryer, hot water. The only gas appliances that we have are the stove and barbeque. Propane runs about $72 every two years. Our water and trash pick-up is $93 a year. Try that in the States.”
Boquete is nestled in the highlands of the fertile province of Chiriqui in western Panama. It’s a town of about 6,000 people, where English is commonly spoken, and is a retirement haven for expats looking for a simpler lifestyle.
Tamarindo, Costa Rica v. Jackson, Mississippi
The annual cost of living for one person in Mississippi is $37,964.
The average annual cost of living for a couple in Costa Rica, by contrast, renting a furnished, two-bedroom apartment, including healthcare, entertainment, groceries, utilities and transport is $20,916. With $1 million for retirement, this couple could live for 13 years in Jackson or 47 years in Costa Rica.
“My husband and I used to pay $1,325 for a tiny one-bedroom apartment in Chicago's Wicker Park—about 500 square feet,” says IL Coastal Costa Rica Correspondent, Jackie Minchillo. “Now we live in a private home about 15 minutes outside of Tamarindo. We have 3 bedrooms, 2 1/2 bathrooms and our own pool overlooking the mountains—not to mention within 20 minutes driving distance we have access to more than 15 gorgeous, exotic beaches to choose from—and we pay $1,150 in rent.”
A popular surf town, Tamarindo lies along Costa Rica’s Gold Coast, along its northern Pacific. Not only is it known for its golden-sand beach, but also for its continual sunshine and warm weather.
International Living’s comparisons report can be found here: A Comfortable Retirement Overseas…Without a $1 Million Price Tag
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About International Living
For 37 years, InternationalLiving.com has been the leading authority for anyone looking for global retirement or relocation opportunities. Through its monthly magazine and related e-letters, extensive website, podcasts, online bookstore, and events held around the world, InternationalLiving.com provides information and services to help its readers live better, travel farther, have more fun, save more money, and find better business opportunities when they expand their world beyond their own shores. InternationalLiving.com has more than 200 correspondents traveling the globe, investigating the best opportunities for travel, retirement, real estate, and investment.
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