Whenever I visit Antigua Guatemala, an enchanting colonial town in the south, I’m always struck by the number of retirees who have chosen to spend their golden years there. After coming across a question on Mr. Money Mustache about the ideal place to retire early, I decided to examine the costs.
Typical Costs of Retiring in Guatemala
Rent: You can rent a charming small place for $500 or a luxurious house for $1,000, both fully furnished and including all bills except electricity. Yes, even Wi-Fi is included.
Food: We eat well, enjoy meat daily, and indulge in a fair amount of alcohol for about $200 a month. Lunch at a local eatery costs around $2, whereas a nice restaurant dinner can be $20 or more per person and still compete with international cuisine.
Healthcare: Most retirees don’t have health insurance, but healthcare is affordable. A visit to a US-trained doctor costs between $20 and $50, while local doctors charge even less.
Transportation: Owning a car isn’t essential if you live in Antigua Guatemala or around Lake Atitlan. Tuk-tuks and taxi boats can take you anywhere for about $2. If you want to explore more, renting a car costs $20 a day.
Staff: A full-time maid costs roughly $200 a month, or $12 a day for one visit per week.
Taxes: Operating as an LLC, we face a 6% tax on our gross income. Property taxes are 0.9% annually based on the property’s undervalued price. VAT stands at 12%. We could claim company expenses to recover the VAT, but this would lead to a 31% tax on our profits, so the 6% rate works better for us due to low expenses.
A couple can live comfortably on $1,000 per month in a small home. With $2,000, you can have a larger place, more leisure money for travel and outings, and fully enjoy what Guatemala offers. With no mortgage, we live on about $1,000 per month, which covers full-time staff, two cars, a motorboat, and a few trips abroad each year.
Extreme Early Retirement Cost of Living in Guatemala
For those looking to retire on a more extreme budget, it’s possible to live on $400 a month or less. Recently, a small house in my village sold for $6,000 on a 900 sqm plot. It’s a basic thatched hut, a rarity at such a price in the US. These homes rent for under $100 a month, with $50 for utilities, $50 for a primarily rice and bean diet, and occasional $2 meals at local fried chicken spots. You can buy clothes at thrift stores for around $0.50 per shirt and take bus rides for $1 an hour. Living lean on $300 a month is tough but doable, dropping to $200 if you own your home.
Considerations When Living Abroad
For people like me, living abroad isn’t a hardship; it’s a joy. I relish the mild weather, own a lakefront house, and can visit France whenever I want. I recently spent a month there enjoying time with family and friends. However, if you plan to travel often, remember to factor in flight costs, being away from loved ones, potential language barriers, and differences in available products and their costs. Also, consider visa costs. In Guatemala, a two-year residency through a lawyer costs $1,000. Alternatively, you can queue in humid offices or make a visa run to Mexico every three months. Renewal is possible before applying for permanent residency.
Cost of Retiring in the US
Housing: This will be your primary expense and varies greatly depending on location. Early retirees on average salaries likely can’t afford housing in high-cost areas. You might rent a small place in the Midwest for $400, keep food costs at $200 by couponing, opt for high deductible health insurance like MMM for $250, cycle around, grow a garden, and wear extra layers to reduce heating bills. A $2,000 monthly budget, comparable to a comfortable Guatemalan retirement, can be achieved with effort, leaving some fun money for holidays or hobbies.
If you’ve paid off your house, consider the equity as idle money since it could get you a cheaper place abroad without bringing in any interest. Extreme early retirement in the US is attainable on less, with Tight Fisted Miser showing a $1,000 monthly budget.
In the US, you trade comfort for cost-effectiveness. Living in a small studio or one-bedroom apartment without staff contrasts with having a larger home and help in Guatemala. You may lack a garden or live in a remote area with limited social opportunities, requiring a car. If you need $2,000 a month to live, you’ll have to save until your nest egg reaches $600,000, compared to $300,000 for a $1,000 monthly budget abroad. If you’re eager for early retirement, consider the $300 monthly lifestyle in Guatemala once you’ve saved $100K.
Is Retiring Abroad Worth It?
Yes: If you seek a higher standard of living for the same cost, the luxury of staff, or want to experience a new culture for a few weeks or years. Having someone to help with chores in your 60s is especially beneficial.
No: If you can’t live away from family, get homesick, or need to return to your home country frequently. Relying on relatives for accommodation can strain relationships. If you move abroad solely for the cost savings but never engage in local activities due to expense, life can become monotonous.
A popular option is to spend winter months in Guatemala and summer in a paid-for US home, enjoying grandkids and longer days. With flight tickets and rentals, this can be managed for the cost of staying home. Some retirees rent out their US homes to live well abroad even more cheaply. Other popular destinations include Mexico, Belize, Costa Rica, Panama, Ecuador, Argentina, and Chile. These places feature similar time zones, minimizing jetlag for holidays. Eastern Europe and Southeast Asia are attractive too, though flights are pricier and less frequent.
Before deciding to relocate purely for cost reasons, review considerations like those discussed by Jason Hull on the topic.