Personal Finance

If you want to save millions on your cost of living in retirement, here's a simple strategy

Here's how to save millions when you retire
Here's how to save millions when you retire
Key Points
  • Some retirees who are worried about making their assets last through what could be decades of retirement are moving overseas.
  • Many countries offer affordable housing, accessible health care and of course the opportunity to travel. 

Dream retirements can vary, from relaxing on the front porch to swimming in a pine-circled lake.

What most dreams don't include? Money worries.

Yet that's a top anxiety in retirement, with most people concerned about paying for health care.

But there's another way. Instead of staying home and trying to cut costs so you can survive, why not move overseas?

You could save millions on your cost of living, according to a report from, which surveyed several couples who found overseas bargains when they relocated. Cheaper housing. Cheaper health care. Cheaper meals out. Cheaper travel. And maybe best of all, cheaper luxuries.

Cynthia and Edd Staton
Source: Cynthia and Edd Staton

Edd and Cynthia Staton say moving to Ecuador rescued their retirement savings, which had been crushed in the financial crisis of 2008.

The Statons, who have written several books about their journey, live large in Cuenca, Ecuador. A weekly housekeeper is at the top of the list of luxury items that wouldn't have been affordable in the U.S. Their normal routine includes massages, facials and mani-pedis – services many people use only for special occasions.

They also found huge discounts on everyday costs. Housing is remarkably cheaper, Edd Staton said. The couple rents a 4-bedroom luxurious penthouse apartment with 4 ½ bathrooms for $700 a month.

Since the Statons are both over age 65, they pay 15 cents for local transportation (which would otherwise cost 30 cents), and a crosstown cab ride is between $2 and $3.

They pay less than $60 for the month's utility bills, including electricity, water and sewer, and gas. Perhaps most surprising was that when costs do rise, it's by a tiny amount. "When a head of broccoli is 70 cents instead of 60 cents, that's a big percentage increase, but so what?" Staton said.

Before you go

Although it's possible to survive in many countries using just English, it's always a great idea to learn some basics of the language of your new home. You'll have a much better chance of integrating and feeling more at home, says the website Expat Info Desk.

Your research should include looking into what type of visa would best suit your situation. Ecuador, for instance, has seven types of visas for permanent residents, according to the website Gringos Abroad.

Finding good health care is a concern for most retirees. The website Live and Invest Overseas is a good resource for information on health-care systems and insurance access in more than 30 countries.

If you want to check out local prices in cities around the world, visit Expatistan or Numbeo.

Health care is a tremendous bargain. "Our $81 per-month health insurance premium is for 100 percent coverage with zero deductible and no restrictions for age or pre-existing conditions," Staton said. After a recent health issue, the Statons were surprised when the doctor stopped by their apartment to see how Cynthia was feeling.

Since their monthly budget is less than $2,000, the Statons afford all this on their Social Security alone. They do not have to touch their savings, which allows interest to grow and compound. Another surprising advantage of living abroad is the generous return on investments. Using a local financial institution, "we have one-year government-insured CDs earning 9.5 percent per year," Staton said.

"You can live for more or less than this, depending on the location and lifestyle choices," Staton said. "In any case it's important to have some amount of savings to draw on in case of emergencies or unexpected expenses."

Tips on planning

Amy and Bill Keane had long dreamed of a "see the world" retirement, since busy careers limited their vacation time. "We've been living that dream now for nearly seven years," Amy Keane said.

The Keanes visited Ecuador twice before deciding to move to Cuenca.

On each trip, there were meetings with realtors, visa attorneys, insurance brokers and other expats. They went grocery shopping for item-by-item comparisons. The trips weren't really vacations, but true research.

Keane says she and her husband like having a solid game plan. "We try hard to get questions answered upfront."

Ecuador was an easy transition – the country uses the U.S. dollar – with a low cost of living and a large North American community. Local Ecuadorians are very welcoming. But the Keanes missed the beach and got tired of the high altitude, so they moved on to Europe.

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Their European circuit of Spain, France and Portugal brought them to Cascais, also known as the Portuguese Riviera.

Ecuador was a relative bargain, with $50,000 to $60,000 enough to support everything they like. "In Portugal, it's running 30 percent to 40 percent more over the past three years," Keane said, mostly because of euro-dollar exchange rate, and their high rental costs.

The couple chose to live at the high end. Keane says it's likely other expats spend far less than they do, and others much more.

"Cascais/Estoril is the No. 1 most expensive place to live in the entire country," Keane said.

It's not easy to directly compare their living costs with what they spent in the U.S. seven years ago. For one thing, they were still both working. "I would imagine that health-care costs would be significantly more in the U.S., even with Medicare," Keane said. "We've toyed around with some what-if numbers, and it looked like we'd need to budget another 20 percent per year in the U.S. for a similar standard of living."

The Keanes pay just more than 3,000 euros (about $3,400) a year for private health insurance. The coverage is excellent and complete. "You can't buy insurance like this in the States anymore," Keane said. "No pre-existing conditions and an outstanding network of doctors and hospitals. We pay for our limited drugs out of pocket – they are that cheap."


Tricia Pimental and her husband live a more modest budget life in Portugal in the Alentejo region. In their last year in the U.S., in 2012, their monthly expenses were about $4,000, but travel, gifts, taxes and unexpected expenses boosted their annual spending to about $70,000.

Their life in Portugal costs a fraction of that. Their monthly expenses are lower by about $1,750, which adds up to huge savings over time. One significant savings is in property taxes: $600 for their home in Portugal, versus about $3,000 a year in the U.S.

"We were living just to work," says Jim Santos, who with his wife traded a waterfront condo life in the U.S. for a home in Salinas, Ecuador. Back home, their monthly expenses totaled about $72,000 a year. Now, they spend about $21,600, meaning that after five years, they've saved a total of $252,000.

Another benefit to life overseas, Santos says, is the healthier eating and great weather, which encourages the regular walking that helped him shed 110 pounds. The weight loss, in turn, allowed him to reduce and then drop some medications altogether.