Why Retiring Abroad Can Help You Retire Earlier

Financial independence, retire early, known as FIRE, is an early retirement movement that encourages people to retire from life as early as possible instead of waiting for old age.

Easier said than done.

The reality is that most Americans are not preparing for retirement, don’t have enough savings for retirement, or are unable to save for retirement.

Many Americans may end up working part-time throughout retirement to make ends meet. While there are many successful FIRE retirees in their 30s, 40s, and 50s, they are not the norm.

Many Americans are envious of the FIRE lifestyle with no hope of replicating it.

However, you can get close by retiring abroad.

It is not a decision to make lightly. You should have $20,000 to $60,000, or more, saved. You need to pick a developing country that is relatively safe, has health care, and has a weak currency against the dollar. 

You need to budget and have a stable monthly income of at least $2,000 to $2,500.

If FIRE abroad is not a thing, it should be now. Here are two reasons why your best option to retire early in life is to retire abroad.

Stronger dollar

The biggest problem for many Americans who want to retire in the United States is the high cost of living. And with the high cost of living coupled with rising inflation, you will incrementally need more money every year just to maintain the same lifestyle.

For example, the current inflation rate is over 7%. If your annual retirement expenses were $40,000 this year, they would become $42,800 the next year, about $46,000 the next year, and so on. 

Even if you live the exact same $40,000 lifestyle, the cost of living and fluctuating inflation will make you spend more.

If you retired to the Philippines, however, $1 equals about 55 Philippine pesos. That means $40,000 equals about 2.2 million Philippines pesos. If you retired in Manila with significant savings and at least $2,500 in monthly income, then $40,000 could potentially pay off two to three years of expenses when strictly budgeted.

The point is, if you calculate which preferable developing country has a currency that is weak against the dollar, then you could live out your entire retirement with a lot less money relative to living in the United States.

These foreign countries currently have weak currencies against the dollar:

  • Peru
  • Mexico
  • Spain
  • Vietnam
  • Philippines
  • Panama
  • Thailand
  • Hungary
  • Columbia
  • Portugal

You don’t have to wait for old age

If you live in the United States then you have to wait until your early or mid-60s to retire. Every penny that you have saved might depend on it. 

Some people approaching retirement age are on such a fixed income that they may work part-time until 70 and then apply for Social Security. If you wait until age 70 to claim Social Security then you get 132% of any qualifiable benefits.

It’s hard out here for an American retiree.

But look at it this way; unless you are rich in your 40s or 50s, it may not be financially feasible for you to try retiring early in the United States.

But if you are in your 40s or 50s, retiring early by moving abroad could be a better bet. As long as you have significant savings, a steady income, and a strict budget, your dollars will stretch a lot farther.

And you will be able to start stretching those retirement dollars a lot farther much earlier.