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6 Affordable Places to Retire Abroad in 2012

Kathleen Peddicord

There are many benefits and advantages of retiring overseas. Launching a new life in a new country at this stage of your life can mean better weather, new adventures and opportunities, and new friends. You can realize the beach life you've dreamed of for decades and sometimes even realize some significant tax savings by relocating overseas.

However, the primary advantage of retiring to another country can be a reduced cost of living. In some places overseas the cost of everything, including rent, groceries, a retirement home, medical care, health insurance, and dinners out, can cost a fraction what they cost in the United States.

[See The 10 Best Places to Retire in 2012.]

If living within a budget is a priority for your retirement planning, don't despair. Even on a very limited retirement budget, or perhaps even Social Security alone, you can afford a comfortable, interesting, fulfilling, and adventure-filled retirement lifestyle if you know where to look to find it. Here are six affordable places to retire overseas in 2012:

Chiang Mai, Thailand

--Monthly budget: $1,100

--Monthly rent: $400

Consider settling down in Chiang Mai, perhaps the world's most affordable place to retire comfortably. A retired couple can live here for as little as $1,100 per month, including rent and other basic expenses.

A frugal person could live here on much less. I know a single American man living in Chiang Mai on only $200 a month, with half of that going for rent. He makes a sport out of spending as little as possible. Another Thai American woman who bought an apartment in a small town outside Chiang Mai manages on her Social Security income alone, which is $600 a month. These are special cases, but you can live very cheaply in this part of Thailand.

House and apartment rentals can vary a great deal. You can rent a small home outside Chiang Mai for $100 to $150 a month. For a house or apartment that most American retirees would be happy living in, figure about $400 a month.

Las Tablas, Panama

--Monthly budget: $1,200

--Monthly rent: $400

My second pick for the most affordable place to retire in 2012 is Las Tablas, Panama, on the Pacific coast of this country's Azuero Peninsula. Other beach towns are certainly easier to access from Panama City. But these city beaches have gotten expensive. It'll take you four hours to reach Las Tablas from downtown Panama City. That's the bad news. The good news is that, having made the drive on the well-maintained PanAmerican highway, you are greeted by a charming and lively town center, a welcoming local population, and a long-established community of Panamanians and expats who savor their super-affordable seaside lifestyle.

A couple can live comfortably in Las Tablas on as little as $1,200 per month. You could spend more, of course, especially if you travel often to Panama City to enjoy the distractions of the big city. But if you'd be happy with a modest life, sticking close to home, passing your days fishing and swimming, Las Tablas could have your name written all over it.

One reason Las Tablas is such an affordable retirement choice is that the cost of rent in this part of Panama is dramatically lower than in Panama City or other coastal regions. You can rent a cozy, charming two-bedroom house within a few minutes' walk of the Pacific Ocean for as little as $400 per month.

Kuala Lumpur, Malaysia

--Monthly budget: $1,250

--Monthly rent: $500

This developed Southeast Asian city is one of the world's most exotic and, at the same time, comfortable places to retire anywhere in the world. Kuala Lumpur qualifies as one of the best places in the world to live what can qualify as a luxury lifestyle on even a very modest budget of as little as $1,250 per month.

Life is different in the heart of the Malaysian peninsula than in the West. When you go to your neighborhood shop, you take your time and converse with the owner, ask about his family, and he asks you about yours. By your second or third visit, you'll be recognized and waved to when you enter. You may even be invited to dinner, or at least to share a cup of kopi (coffee).

Unlike many places in Asia, foreigners are genuinely welcomed in Kuala Lumpur, and Malaysia is the only country in this part of the world that makes full-time residency a straightforward option for foreign retirees. Language isn't a problem, as almost everyone speaks adequate English. Medical care is among the best in the world, and Malaysia has developed an important and growing medical tourism industry.

[See The 10 Sunniest Places to Retire.]

Cuenca, Ecuador

--Monthly budget: $1,300

--Monthly rent: $500

In Ecuador, I believe Cuenca to be the best place for an expat to retire. It's not the cheapest retirement choice in this country (or the world), but it offers a comfortable and appealing quality of life for the money.

At just over 400,000 people, Cuenca is the perfect size. It's small enough so that you see people you know when walking around town. What's more, people know and remember you, making you feel at home and part of the community.

At the same time, Cuenca is not so small that it doesn't have all the services you need. It's the provincial capital of Azuay, so you have the state and municipal offices, making the administrative tasks of living in a foreign country easier to manage. Plus, Cuenca is a city of culture, with good restaurants, theater, orchestra, and festivals.

Public transportation is great, both within the city and between cities. City buses are plentiful and inexpensive, and a taxi ride is about $1.50. Owning a car is an unnecessary expense and often a burden. Rental cars are easily available when you're ready to explore the country beyond Cuenca.

Another advantage to Cuenca is the expat community that has developed here. It's big enough that it's not hard to find someone who speaks English, but small enough that the general population hasn't formed a stereotype about what American expats are like.

Leon, Nicaragua

--Monthly budget: $1,300

--Monthly rent: $500

Leon is not the best-known retirement option in Nicaragua, but it is the most affordable and also the most authentic. Sister colonial city Granada, with its central square, markets, restaurants, and thriving expat community, is a good choice too. But, because it's more discovered, Granada is more expensive.

Leon is Nicaragua in its natural state. If you want to experience this country without the expats or the false economy that follows them around, then Leon is worth a look.

Founded in 1524, Leon is home to 110,000 people and sits about an hour north of the capital of Managua. The climate is hot, but humidity is generally low and evenings are usually comfortable.

Always a center for Nicaragua's liberal and progressive thinkers, Leon boasts bookstores, coffee shops, museums, universities, and the younger population that typically accompanies those things. This is a city of colonial architecture, an impressive cathedral, markets, and most of all, a relaxed, non-hurried ambiance and friendly people.

Leon is an inland city that is close to the Pacific Ocean. The coast at Las Peñitas is less than 15 miles to the west when you're in the mood for swimming, seaside sunbathing, or fresh seafood in an open-air restaurant. Frequent bus service runs between Leon and Las Peñitas, making the trip easy and inexpensive.

[See The 6 Best Places to Be a Snowbird.]

Medellin, Colombia

--Monthly budget: $1,700

--Monthly rent: $500

Medellin is more expensive than the other places on this list, but you get what you pay for. Medellin is still a highly affordable option, but it offers a superior quality of life in many regards, not only to the other budget choices, but to other much more costly retirement options as well. In Medellin, you get an enormous bang for your retirement lifestyle dollar.

Colombia's city of springtime and flowers makes a good impression immediately and on many levels. Architecturally, this city is lovely. Built almost entirely of red brick, with almost every structure topped by a red clay tile roof, the place is pleasing in its consistency, especially when viewed from some height.

The city is also impressively green, with trees, plants, and small gardens everywhere, and remarkably clean. In the central neighborhoods, you see no litter. The metro, a point of pride for the local population, is spotless and like new. At every station and in every train we boarded, I looked for but was unable to find even a cigarette butt or piece of gum on the ground.

Medellin's primary cost advantage is its real estate market, which is a screaming bargain. El Poblado, in the heart of the city, is the top end, for both renting and buying. Here you're looking at $1,000 monthly for a one-bedroom and approximately $3,000 per month to rent a furnished luxury-level penthouse.

In less recognized neighborhoods those prices can fall in half and more. Right now you could rent a one-bedroom apartment in the safe and pleasant Laureles neighborhood for as little as $450 or $500 per month.

Another notable cost savings living in Medellin is utility expenses. Thanks to the spring-like climate year-round, you could live here with neither heating nor air conditioning, meaning your utility costs could be almost negligible. This could reduce your overall monthly budget by as much as $200 or more compared with other options.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas--Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

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