Retire Overseas...On Your Social Security...
If you’re of retirement age and you’ve decided to retire overseas, lucky you. And smart you. Not only are you about to embark on an adventure of a lifetime, but you’ve likely made a very wise decision. Because almost anywhere you might settle will surely cost less than living in the U.S. these days.
I’ve just done my monthly expense tally, for example, and all told, my husband Dan and I are spending less than $1,400 a month here in Cotacachi, a quiet little village in northern Ecuador. We own our home so we don’t pay rent…and I’ll admit we have no big-city temptations here.
Still, we eat out often…at least four times a week for dinner and about the same for breakfast or lunch. Even with a couple of beers each, dinner for two of us rarely costs more than $25 or $30. Lunch for two sets us back $10 to $13, on average.
Our biggest cost savings come from our property taxes and healthcare costs. The annual property tax for the home we last owned in Omaha is almost $8,000 these days. Here in Ecuador, our annual property taxes are less than $50…for the year.
Healthcare is crazy affordable here, too. I just bought a month’s supply of a prescription I take. It cost me $30 at my local farmacia. The last time I bought it in the U.S.: $80.
If you were to rent a furnished home or apartment here, you can expect to pay an average $400 to $500 a month. These basic costs, by the way, aren’t just characteristic of Ecuador. You’ll find low prices like this in most all the countries you read about in International Living. The key, of course, is to live like a local and not as if you were still at home.
This is all a long way of saying that if you’re wondering if you can really live on a small income overseas, the answer is yes. If you are a retiree living on the average Social Security income (the average per person payout in 2016 was about $1,340) you can live happily and comfortably overseas.
Yes, you are still eligible to collect your Social Security benefits when you live overseas.
There are a couple of ways to do this. The two most popular methods are to have your benefits direct deposited into a financial institution either in the U.S. or in your country of residence.
But…not all foreign banks can accept direct deposits of U.S. Social Security benefit checks, so if this is the route you prefer to go, make sure to choose a bank that does.
Keep in mind that if you have your funds direct deposited to your foreign account, your foreign bank will likely convert that amount into the local currency. (In countries like Panama and Ecuador, where the official currency is the U.S. dollar, this won’t be an issue. And in a country such as Belize, where the local currency is pegged 2:1 to the U.S. dollar, the exchange rate will always be easy to calculate.)
If you prefer to keep some of your benefits in dollars, an alternative is to have your Social Security deposited into your U.S. or Canadian account, and then make ATM withdrawals abroad or wire the funds to your local foreign account as needed. That’s the way most expats here in Ecuador do it. Some even write a check every month, drawn on their U.S. account, and deposit that into their Ecuadorian bank.
Here’s a tip: Before you ever leave home, assess your current bank and the services and fees it offers. If you haven’t already done so, make the switch to full online banking and use the online system enough to be completely comfortable with it. This way, if you have any issues you can go into the bank and work them out with a live person. Be sure to also switch to paperless, online delivery of your account statements.
If you will be relying on ATM/debit card withdrawals to pay your expenses, you’ll want to work with a bank that doesn’t charge foreign ATM fees. If your bank doesn’t offer this, it may be time to switch banks. With the right bank, it can be very easy to manage your money no matter where in the world you live.
I have many more tips like, this, of course, but the point is: Yes, not only can you live well and manage to do that on a small amount of money, you can also easily manage your Social Security and other finances from overseas…win-win all around.
Urgent: Claim Thousands of Extra Dollars in Retirement Income
By Steve Garfink
Did you know there is a little-known and legal strategy that can let you make tens of thousands more dollars in Social Security? This strategy, which most U.S. citizens don't know about, can dramatically increase your retirement income, letting you live a far more comfortable retirement at home or abroad. But it's about to disappear...possibly forever.
So generous is this Social Security strategy that, in November 2015, Congress made it illegal. But no worries: Thanks to a little-known exemption, millions of U.S. citizens can still take advantage of this strategy...but only for a limited time.
Let me give you an example of the difference a strategy like this can make:
Consider two couples: Franny and Scott and Maria and Frank. They are all 62 years old, and if they start their Social Security benefits now, each couple can collect $2,300 a month.
Each couple has found a retirement spot overseas where they can live on $2,000 a month and after arriving and settling in at their respective destinations, they have $225,000 in savings to begin their adventure.
They each settle in that first night at a cozy local restaurant and reflect on their good fortune. Life is good...
At age 85, the two couples cross paths.
After fond greetings, they compare notes.
Franny: "Scott and I are so grateful for Social Security. We took our $2,300 a month in benefits when we turned 62, and it's still basically enough to cover all our living expenses. We haven't touched our nest egg of $225,000 one bit. How have things gone for you guys?"
Maria and Frank exchange a nervous glance... "Well, it's worked out a bit differently for us," says Frank. "We followed a different claiming strategy, so our benefit is a bit over $4,000 a month, which is nice."
Scott: "Wow, you must have completely burned through your nest egg. Does that worry you?"
"Uh, not exactly," replies Maria. "Actually, we have about $340,000 in our nest egg now."
"Wait," stammers Franny. "You collect $1,700 more a month in benefits than we do and you have $115,000 more in savings? How can that be?"
How can that be, indeed? They are all exactly the same age, each started with identical potential benefits and savings, and both couples followed the same conservative investment strategy and the same monthly spending plan.
Yet one couple collects 76% more per month in benefits and has 50% more money saved in the bank.
The experiences of these couples illustrate the importance of using a claiming strategy to get the most out of your Social Security benefits.