A reader asked a question which gave me a great idea for a post. You will find lots of information on the web about the cost of retiring and living outside the USA. Many articles talk about all the benefits of retiring in places like Panama, Ecuador, Colombia, and Mexico. This is because it is very easy to live on a fixed income in Central and South America. Others seem to say otherwise. I think the best way to answer this is by looking at average wages comparison across all American Countries. I’ll explain why this is important in just a minute. Here is the table.
Why Do You Care About “Average Income”?
That is a great question, and I’m glad you asked. The primary reason this is important is that this is all the income most locals have available to cover all their living expenses. If you assume that both spouses work, then for example in Colombia, total family income would be $1,032 per month. If they can successfully live on that, then imagine how you can live on your Social Security! Even taking the average amount for a couple, this is 2 1/2 times what locals have to live on.
According to the Social Security Administration, the average individual receives $1,461 and the average couple receives $2,448. These are 2019 amounts and are before withholding for Medicare. Even if you are in that average category, can you see why it is very possible to live on your Social Security in Colombia? And the same goes for Mexico, Peru, and Ecuador. For some reason, Panama was not included in this study, but my guess is that Panama would be between Costa Rica and Mexico. We lived in Boquete, Panama for 17 months.
Auto and Transportation Costs
Here is some more information to consider. In many of these areas, a car is not necessary. They can actually be a nuisance and much more expensive to buy than even in the US. Lots of places in Latin America have public transportation that is excellent and very inexpensive because people cannot afford to own cars. Rides on the Metro and local buses cost about $0.75. And we can get anywhere we want on a bus and the Metro. And the Taxi and Uber are very reasonable. We took an Uber across the city yesterday for about $4.00.
Healthcare and Insurance
Another key cost area is health insurance and healthcare. We are part of the national health insurance program in Colombia. Many of the countries have similar plans. We pay about $35 per month total for both of us. Our doctor visits and labs cost about $1.00. Our prescriptions are free. We are very satisfied with the quality of care we have received, and our friends tell us the same thing about their experiences. I have used a private dentist for crowns, a root canal, and even a 3 tooth bridge. The cost was about one-third what it would have been at my dentist in Houston. Even if you decide to use private care, the cost is much lower than even your out-of-pocket costs in the U.S.
One more big cost difference is housing. The climate in many countries in Latin America is much more moderate than in the US. The primary reason is the altitude. Even though we are much closer to the Equator, there are mountains everywhere. Unless you live on the coast, your weather will be quite comfortable.
Here in Medellin, Colombia our temperatures range from 60 to 80 degrees Fahrenheit, EVERY DAY OF THE YEAR! Our apartment does not need air conditioning and most places are not built with air conditioning or heating. Therefore our utility bills average only about $125 per month. The picture to the right is our apartment in Medellin. We live on the top floor, have 3 bedrooms and 2 baths, and a “killer” view of half the city and surrounding mountains. And we also have a nice pool, workout room, stationary bike room, sauna, and steam room. We are 2 blocks away from 2 large, modern malls and 1 block from our 24-hour grocery store.
Last Point – Safety
We all had to get comfortable with our new environment. One question on everyone’s mind is “Will I be safe?” As I previously mentioned, we have lived and visited in 6 different countries. In every one of them, we have taken relatively long bus rides and walks both during the day and night. Occasionally we read about robberies and other crime. But there is nothing here that is not found anywhere in North America. We aren’t foolish. Going to outdoor ATMs late at night after having a few drinks is just as dangerous here as it is anywhere in North America. We are careful. Pedestrians aren’t automatically given the right of way here, so we wait for the walk light to turn green. We have felt very comfortable and safe everywhere we have gone.
Conclusion and Recommendations
Before we retired, we read this same kind of information and honestly, it sounded too good to be true. We talked about it with some of our family members, and they were not excited about us moving to another country. So to complete our research we decided to visit Panama and see for ourselves. My sister decided she would go with us because she thought the whole idea was crazy. The bottom line was that everything we had read was true. My sister even admitted that although it would not be her choice, it made sense for us to try it out.
We moved to Boquete, Panama and stayed for 17 months. But we were anxious to see more of the world, so in the last 3 1/2 years, we have lived in Roatan Honduras (3 months), Cuenca, Ecuador (3 months), and San Jose, Costa Rica (1 month). We have now lived 14 months in Medellin, Colombia and our intention is to live here for the rest of our lives. It was only after living here for a while that we realized that the average wages comparison was the reason why we could live here so cheaply.
I highly recommend that you consider visiting several places that appeal to you including Colombia and see for yourself. Do a “check-it-out” trip. Or visit several countries for a few months each. That is a nice thing about being retired – you can stay gone as long as you like. Thanks for reading and I wish you good fortune in your travels.
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