10/2/2013 10:00 PM ET|
How to retire on a small budget
If your money is tight in your retirement years, you might want to consider moving overseas.
A woman named Hazel, now in her 90s, raised five children with her husband in southern California in the 1950s. One day a neighbor came over and proudly announced he had set aside $500 for his daughter Loretta's college education. Hazel envied that neighbor. Hazel and her husband had nowhere near that much money. How was she going to put five kids through college?
No one knew. But Hazel went out and got a job as soon as her kids were a little older, saving what she could for the kids' college. In the end all five kids graduated from college, and somehow the bills got paid with Hazel's savings, student loans, scholarships based on financial need, summer jobs, and after-school jobs.
I think life often turns out like this. We wring our hands about not having enough money--in this case, to send the kids to college — yet we somehow get the job done in the end. We find a way.
Americans are going through similar hand-wringing today over retirement. Hazel's five kids and 80 million other baby boomers are reaching retirement age. As a group, boomers have nowhere near enough money to retire. In a recent Employee Benefit Research Institute poll, 57 percent of the U.S. workers surveyed report less than $25,000 in total household savings and investments excluding their homes. The survey also found that 28 percent of Americans have no confidence they will have enough money to retire comfortably — the highest level in the study's 23-year history. So no one knows where the retirement money will come from.
I'm reminded of Hazel and her five kids to put through college. She and the kids somehow managed it. And I'm sure that most Americans will somehow manage it, perhaps, I’d suggest, by moving overseas.
Let's be clear. Money rarely falls from the skies, even if you move overseas. And the truth is that it costs as much or more than in the U.S. to live in many places around the world. Even low-cost countries like Thailand and Mexico have become more expensive as the dollar weakens against the local currencies. So if you lack the money to retire, you're going to have a tough time of it regardless of where you choose to live.
Still, for those on a budget, I see three advantages to moving overseas:
No. 1: You have more housing choices, especially in the third world.
Those of us who have lived abroad for some time have met many retirees who seem to live on nothing at all. They happily wander throughout the expat community, often in bars or cafes, without spending any money. These people live in very small quarters, what the English call a bedsit and New Yorkers call an SRO (a small room with a bed and a shared bathroom down the hall). Bedsits have largely disappeared in the developed world. But you still find them in Latin America and Southeast Asia, in cities and small towns.
Often these people take up housesitting once they get to know other expats. The bedsit then becomes a storage room that they can sleep in between gigs. Housesitting offers the chance to live in bigger, better housing and even get paid for it at times. It's not too bad if you're forced to live on $1,000 a month.
Most retirees in the U.S. collect more than $1,000 a month from Social Security. But I know a woman who retired on less than that. She moved to Thailand and spent her life savings to buy a town house and a motorcycle. Her small check now goes a long way, covering utilities, a little gas for her motorcycle, low-cost health care, and then all the things that make life worthwhile. She found a way.
No. 2: You get away from peer pressure
Downsizing back home, if you're forced to do it for budget reasons, makes you feel bad. Sure, you can handle the blow to your self-esteem. But you can avoid that blow altogether if you move overseas and into a new community with new faces and new outlooks.
No. 3: You become more flexible
The first move takes a lot of work. You get rid of stuff, set up an internet-based banking routine, maybe sell your car and house and go through the emotional hit of leaving behind a lifetime of familiar people, places, things and joys.
Once you've made the first move, succeeding moves become easier. So if the first country you choose becomes too expensive, dangerous or dull, you can easily move again. You may even follow one of your house-sitting clients to a new country, if that client has come to rely on you for six or seven months each year.
Perhaps you will find yourself among the 28 percent of Americans reaching retirement with very little money saved, with only a small Social Security check to carry you through. If this is the case, you'll have to be creative to make retirement work. But you'll find a way. One option, if you enjoy trying new things and approach life with a spirit of adventure, would be to retire overseas. You'll have at least three things going for you.
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What is wrong with just being happy with the simple things of life. Never a good idea to move to a poor country just to make yourself feel rich. There is a lot more to think about than what I can buy.
I am 49 and my wife 47. The kids are out of the house. Yes we had our kids early in life. This past week was the first time we both had vacation at the same time. What a blessing. We had a nice breakfast together each morning. Followed by doing simple things together. Working in the garden. Freezing and canning the veggies we picked. Went to the coffee shop for lunch. Took a nice nap in the afternoon. Spent time next to each other at night watching TV.
If I am lucky our future retirement will be spent together, enjoying the simple life and our grand-children. No need to move to a new country.
March to your own drummer and don't try to compete with "The Jones". Forget the ego and Madison Ave. hype!
Modest aspirations and take joy from simple pleasures! I retired almost 8 years ago and haven't looked back!
offers a pension, This last crash took all of our savings, job and house. took SSDI bought a used
Motor Home, And have not regretted in the least.
We Get by and do so on just my social security. Its not a lot but its enough. Could we do it if we
had to rent an apt and pay utilities? Doubt it.
Retiring overseas, away from decent medical care and family (for most of us) is not the ideal way to retire on a small budget.
What I foresee happening is parents moving in with their kids, or splitting living costs with a friend.
My Social Security is not quite that. Not after Medicare, then Medigap. That takes 27 percent of my income but medical care is covered completely minus medication and that isn't much. Rather than switch countries, find an area in the US that is generational family friendly. If something happens to one of us it is like this. Lot rent, house payment or in 4 years, only lot rent. Combined it is $585. If I pay off the house I'll pay at today's prices $375 for the lot per month. Food is my medicine, so that is what I pay for the best and freshest expense that I have. Utilities, well I have a membership at the local family center, family membership 66.50 per month, much less for a senior or senior couple, So that's our entertainment/exercise for the most part. Michigan offers the state parks pass with driver's license for $10.00 annually. Plenty of State Parks (and national parks close enough) and our city is connected by parks and walking/bike paths anyway. Medical care where we go is stellar.
As we age, we have our base. Plenty, PLENTY of things to do here. My days are spent currently driving grandkids to cheerleading, gymnastics, and taking family to The Center for physical therapy and recreation. If we want to travel we will rent a car, and head down to the Smokeys ,,,,again. A favorite place which feels like home or take any one of those day trips we so love. We can fly out from several major airports within an hour or so from us and see the world, or we can do the same with trains or bus here and in Canada. We don't need to leave this country and be an expatriot giving up anything because we have it here, where family is. We can live independently, and still grow old and see our families thrive. Here in this country and still have affordability. We could house sit in this country, people do it. Or drive rental cars back from areas, or do volunteer work here or abroad. We can do all that and still live with purpose and on a budget and not live where medical care and medicare doesn't cover. We can live here, have state of the art medical care and not be concerned about such things as local kidnappings, guirella warfare and whatnot. We can live in a community where everybody has to get a criminal background check in order to live in the place, so you know that your neighbors are better than in some neighborhoods. I can walk to shop, or drive in the 4 seasons here. I can walk in the woods and parks and still feel safe because I grew up in the area. Everybody has their place to be content. However, if I want to have a base, here is fantastic, there is a place to put up with. Why sacrifice when living on a budget? Life is meant to be experienced, and well, I'd rather experience it from this base camp than where the author talks about rooms with a shared bathroom (and pests, and,,,disease). I am in my own home, which has stood the winds for 21 years. It is much larger, but not too big, about 1000sh square ft. with 2 bedrooms 2 baths and it is quiet. We don't share walls, so no loud music,etc. The most we here is a dog, the birds, and the laughter of children when they run home from the bus.
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