The Bottom Line: Budgeting for Retiring Abroad

“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” –Joe Biden


One of our biggest challenges in planning for retirement abroad was creating a realistic budget before we jumped into a new life. After our ‘pretirement’ experiment in Nicaragua in 2004-05, we set a goal to become financially independent. Many articles have been written about adjusting and assimilating into a different culture, but few articles stress the importance of financial planning before making the big jump.

The Bottom Lines for a Financially Secure Life Abroad

The Bottom Lines for a Financially Secure Life Abroad

  1. Do you want cheap or comfortable? 

    I’m telling you now, stop reading those International Living articles on how to retire abroad cheaply. They entice you with cheap locales around the world for their own vested interests…mainly for real-estate development and high-priced seminars.

    Instead, go to the source… talk to experienced expats, follow expat blogs, and avoid the articles on the internet that want to sell you paradise. Paradise does NOT exist anywhere in the world. In Nicaragua, to live a lifestyle in which you are accustomed, it may take more than your monthly pension or Social Security provides. For example, if you are accustomed to living with air conditioning, a dishwasher, hot water, fast internet, and all the amenities of a comfortable lifestyle…expect to pay more.

    The bottom line in Nicaragua for comfortable living in which you are accustomed and prefer is more than $1,000 a month. Of course, you can live a cheaper life without all the fancy amenities, but you have to ask yourself, “Is this the kind of lifestyle I want?” “Will I be happy and challenged or merely existing and struggling on a low monthly income?”

  2. Save for Unexpected Health Care Expenses 

    You’ve retired abroad, and are happy living on your monthly pension, then WHAM…you are in an accident or you get very sick with a mysterious tropical disease. Do you have a financial back-up plan?

    My next post in the Let’s Get Real Series will cover Health Care in Nicaragua, so I won’t go into much detail here. However, I can’t stress enough, the importance of financial planning for health care emergencies. Before your move abroad, make sure that you have a savings account that you only use for medical emergencies abroad.

    Depending on the country in which you retire, the country may or may not have health insurance for retired expats. If you have a serious or life-threatening health emergency, you will always need a way to get access to cash quickly…for a deductible, for procedures not covered under your health insurance plan, or for miscellaneous procedures where it is cheaper to pay out-of-pocket than to file a claim with your healthcare provider.

    Do you know what the borrowing limit is on your credit card?   If you have an emergency in Nicaragua and need to go to Vivian Pellas Hospital in Managua, then your credit card will be charged before any procedure takes place. What happens if your credit card limit is $2,000 and the operation you need costs $16,000 and you have No other means to pay, no savings, nada?

  3. Do You Want to be House Poor? 

    You sold your family house and most of your inexpensive belongings and retired abroad. You bought a darling old colonial house in a quaint cosmopolitan city abroad. Congratulations! You worked hard remodeling and furnishing your darling old home with a container of your precious belongings expensively shipped to your new abode, and now you want to relax and settle into life abroad.

    But, wait! The roof leaks like a sieve and needs to be replaced? The new pool leaks? You have to pay property taxes? Your title isn’t legal? You need to hire a lawyer? The geckos are pooping all over your expensive paintings you shipped to your darling home? Your library of expensive books that you shipped has been destroyed by the humidity and rain? The roof cats are eating what?

    Your new friends invited you to join them at a restaurant for drinks and dinner or a travel club to explore your adopted country. But wait! You can’t attend any of these fun activities because you have joined the ranks of the house poor expats. All of your expendable money is invested in a giant house with unexpected expenses.

    In Nicaragua, it may take years to sell a house. Your options will be limited unless you plan financially before buying a house abroad that turns into a money pit nightmare.

  4. Are you a Gringo Gourmet? 

    You packed your Henckels Professional S 8-Inch Chef Knife and are excited about spending your retirement abroad creating tasty treats unknown in your adopted country. You salivate through the grocery store isles, eagerly anticipating your first foreign culinary experience. But wait! Where are all my favorite ingredients? Why are they so damn expensive?

    I know, I know. You thought that you would be able to retire abroad and everything would be cheaper than your home country, right? I hate to burst your culinary bubble, but if you want imported ingredients, you will pay dearly for them. Include the cost of imported ingredients in your food budget before moving abroad. Either that, or learn to cook the “Nica way” if you retire to Nicaragua, or learn how to substitute local ingredients for the high-priced imported ones.

  5. Legal or Perpetual Tourist Status? 

    You’ve lived abroad for three years! Congratulations. You feel like you have beaten the odds. Most expat retirees have a shelf-life of three years before they decide that this life is for them or isn’t for them. Like in the Wizard of Oz, “People come and go so quickly around here.”

    The time has come for you to decide if you want to apply for Pensionado Visa status or continue to cross the border every 90 days to renew your visa. Receiving your 5 year cedula with a Pensionado Visa status in Nicaragua is not cheap or easy.  We spent over $2,000 for our Pensionado Visas, not including the price of numerous trips back to the states to get our documents.

    There are many excellent articles about the procedures for applying for legal residency status abroad. Only you can decide if this is the right thing for you. Illegal Immigrants and Perpetual Tourists in Nicaragua.

    Budget wisely for this expense. Remember, if you choose to remain a perpetual tourist, then there may be hassles at the border if you cross over for years and years to renew your visa. Also, you cannot work legally in most countries abroad on a tourist visa. On a Pensionado Visa in Nicaragua, in most cases you cannot work either.

    I am not an expert on financial planning, but we have lived abroad long enough to see some disastrous situations with expats who have not planned ahead or considered what is needed in making a budget for a new life in a foreign country. I am only trying to help. 🙂 Please don’t shoot the messenger.

    It is easy to see from our budget and financial planning what we value and what is important to us, namely living in a world without borders and our passions for cultural immersion.

    What does your budget show that you value most in your life?


10 Tips for Retirement Overseas

How to Make a Budget Warm Your Soul


15 thoughts on “The Bottom Line: Budgeting for Retiring Abroad

  1. Agree with point 5. Getting residency status in Nicaragua is certainly not as much fun as waking up to the howler monkeys but it makes those mornings so much more worth it.

    Just to clarify, you only have to leave the country every 180 days. After the first 90 days you can extend your visa for another 90 days, THEN you have to skip town down to Costa Rica or, well, anywhere that isn’t Honduras, El Salvador or Guatemala, really. But like it says, there are many places online that have information about residency. If anyone is interested, I have a guide prepared about the process here:

    Great article, by the way!

  2. Thanks for posting this. I 100% agree with point number 2. Though would add that you look into and pay for health insurance. When my husband was admitted to hospital. We stupidly did not have insurance. Thankfully i had done what you recommend and had a high credit limit on my cards. Cost me $50,000us..ouch. but thankfully had the cards to cover it. (This happened in Costa Rica at a private hospital and the care he got was worth every penny) On Jun 24, 2015 2:08 AM, “Rewired and Retired in Nicaragua” wrote:

    > Rewired and Retired in Nicaragua posted: “”Don’t tell me what you > value, show me your budget, and I’ll tell you what you value.” –Joe Biden > One of our biggest challenges in planning for retirement abroad was > creating a realistic budget before we jumped into a new life. After our > ‘preti”

    • Vaga, thanks so much for sharing your story. We did have the health discount plan for Vivian Pellas, but it didn’t cover many procedures and was basically a waste of money for us. Since we have residency, I went to the office of INESER to apply for health insurance and I was told that they do not insure anyone over 60 years old. Then, they handed me a death policy where I can have my funeral paid for by their insurance. Go figure! I am not sure what options are available to us, now. I’m still exploring our options.

  3. totally agree, we lived here in Ecuador comfortably on $1200 a month for over two years, but that didn’t include initial purchases we needed to make for essentials. Most rentals ( or if you build or buy) doesn’t include a lot of things you may need ( kitchen items, linens etc.) . When social security kicked in we upgraded with a television, Directv, a better internet and two comfy lounge chairs. It irks me that the international people who tout Ecuador don’t give you the nitty gritty.

    • Thanks for sharing this with us, John and Mary. Many future expats don’t consider the cost involved in buying initial items for your house or apartment. Those purchases can add up quickly.
      I have a question about your hospitalization and healthcare coverage in Ecuador. Do you have to pay a deductible? What out-of-pocket expenses did you have?

    I just returned from my first trip there and learned so much , met lots of people ,as I’m such a social butterfly,loved the place I stayed at in Ometepe,,Via Verde,,,,love Eileen,soooo cool and helpful,,,,LOVED GRANADA,,,,,found a house to rent ,,,,,met lots of people there too,,,and found out a few I haven’t met are from my hometown,,,super weird,but fun! Looking forward to my intense spanish classes upon my return,didn’t do too bad with my limited amount,,,,loved Hari’s horse place,,,,,so pretty,,,,and met an owner of a bigger hotel there whose also a photographer and shot the coffee table book named Nicaragua,,,along with 32 other photographers,,,,cool!
    Anyway ,I could go off,,,but lots to discover and new paths to take…AWAY I GROW!!!!!
    And now finishing up with my moms papers for her residency,moving forward,,,,and will see.

  5. I would like to see an itemized list of the expenses you had to get your residency and cedulas. There are services that can obtain and get documents, apostilles etc. without you having to return home. To be out $2,000 plus airfare even if you had to have a lawyer seems high to me, but I suppose everyone has their issues. Con suficiente conocimiento de español si puede hacerlo por su mismo si sabes qué documentos son necesarios.

    • Dean, we got our residency 3 years ago before the apostille process. At that time, we had no choice, but to return to the U.S. for our documents. Now, the process is somewhat easier and hopefully streamlined. Things change so quickly around here.
      I suppose it would have been cheaper if we had done everything ourselves. But, the process was a breeze with inside connections. We paid 5,900 cords apiece, just for our cedulas. That was when the exchange rate was 22 cords to the dollar. $520 for our cedulas, $750 in lawyer fees, $60 for translation of documents into Spanish. $150 for taxi trips to Immigration, documents in the states, including courier services $200, Nicaragua Consulate in Miami for authentication of documents $100, plus other miscellaneous fees…makes for an expensive process.
      Anyone applying for residency in Nicaragua or any country needs to be aware of the expense involved and budget accordingly.

    • Hi Dean,

      I lived in Mexico for 7 years. Cancun, Cabo San Lucas ( before they became tourist mecas) and Mexico City. I taught myself Spanish while living there and worked abajo el agua. I am looking at retirement in Nicaragua because Mexico isn’t as inexpensive as it used to be. I hope I am not being a Polyanna by thinking some of what I am reading is being written by very spoiled people that don’t do their own research.
      Please tell me I can still live on little if I make informed, intelligent decisions.

  6. This was a very informative post and I commend you for writing it. I think people who are thinking of retiring overseas should be aware of all the issues and things one might not know about or even think about. I agree that the magazine and travel brochures glorify everything and have no articles about what it really takes to make such a move.

    I need certain amenities in my life, even if I could live simply otherwise. For me, I wouldn’t have the budget to have the things mentioned above, such as A/C and fast internet. I know daily life would be a struggle. I would rather live closer to family too because airfare would also be out of the question, as I can hardly afford to visit my family now. Sometimes it’s years between visits.

    I also like to work PT and I’ve talked with people in Panama, Costa Rica and Puerto Roco where it’s senseless to think about looking for any work if you’re an expat. It isn’t going to happen.

    I think it’s great you’re doing this series of articles so someone doesn’t find themselves stranded there wondering what in the world they’d done. That would be awful!

    • Sunni, I appreciate your comments so much. Everyone has different opinions about retiring abroad or not retiring abroad. It is refreshing to hear your comments as to why retiring abroad wouldn’t work your you. You’ve put a lot of thought into it, which is why I write posts like this. Not only do I want to help people understand the process of retiring abroad, but I want them to think and plan carefully, according to their wants and needs.
      I forgot to mention the expense of traveling back and forth to your home country to visit family. Thanks for mentioning that. It’s a big issue and it must be included in a budget. I try to go to the states to visit my elderly mother at least once every two months and the cost of an airline ticket keeps rising..rising…rising.

  7. These are all valid points. The best (and only!) good thing about reading the magazine International Living is that the articles written about “real life” in different countries showed me that there might be some alternatives to working until the age of 65. We’ve been to many of the areas that are listed as expat “havens” where the cost of living is lower but, as you pointed out, you have to decide what you need and what you can live without. And I had to laugh when I read your “Gringo Gourmet” comment! Our cooking has gotten to be VERY creative because we’re never quite sure what’s available at the market. On the other hand, it’s always an adventure! Anita

    • Anita, well said. I have been asked to write a couple of articles for International Living and I have friends who have been invited to speak at their seminars. I have nothing against the people who attend these seminars and are exploring their options, only the CEOs of this company who are in it to make big bucks.
      I’ll never be a gringa gourmet…sorry to say. But, it is fun experimenting with all the local ingredients. lol

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