Retiring Overseas: How Far Will $1 Million Go in Central America?
Retiring with a comfortable lifestyle on a $1 million nest egg may seem like a dream for many, but it could be a reality in Central America. With lower costs of living and a higher quality of life, many retirees are considering moving overseas for a more affordable retirement.
According to financial planners, the 4% Rule has been a long-standing guideline for retirement withdrawals. This rule suggests that you can withdraw 4% of your nest egg in the first year of retirement, adjusting for inflation each year after. With a $1 million nest egg, this could mean a $40,000 annual income.
However, if you’re willing to move to Central America, that $40,000 could go much further. Alec Kellzi, a CPA at IRS Extension Online, explains that expenses in Central America are significantly lower than in the US. Housing, healthcare, groceries, utilities, and transportation all cost a fraction of what they do in advanced economies.
Financial planner Rhett Stubbendeck has seen firsthand how retirees in Central America can enjoy a high quality of life on a lower budget. With lower monthly expenses, including rent, groceries, and healthcare, retirees can live comfortably while enjoying a relaxed lifestyle near the beach or in scenic mountains.
Different countries in Central America offer varying costs of living and levels of economic development. In countries like Guatemala, Honduras, and Nicaragua, a $1 million nest egg could last a couple 30 years or more with monthly budgets ranging from $2,500 to $3,500. Even in pricier spots like Panama, retirees can live comfortably for at least 20 years on $4,000 to $5,000 per month.
While retiring overseas may come with challenges such as adjusting to a new culture and language, the benefits of a more affordable lifestyle and higher quality of life are enticing for many retirees. Consider visiting several countries in Central America to explore expat communities and determine if retiring abroad is the right choice for you.