Not just Florida: Consider the world when planning retirement

Not just Florida: Consider the world when planning retirement

Living in North America offers access to an unprecedented standard of living, stable employment, safety, and entertainment.

But it comes at a high cost. What if you could retire in style at a fraction of the cost? Enter geo-arbitrage which means taking advantage of the cost of living in different locations.

To make retiring early feasible for the average individual, Business Insider points out that American dollars can buy a lot more in other countries than they can at home. As an example, most retirement calculators are based on about $40,000 per year in annual retirement income to compute their savings goals. This assumes that the person is using the standard 4 percent withdrawal rate from their retirement savings. To manage that number, a person would need $1 million in the bank to retire. This amount of money will require diligent saving and strong market performance to achieve.

Conversely, an individual might only need about $12,000 per year to live comfortably in a place like Guatemala. This means that they could retire with the same standard of living while only having $300,000. This could literally shave more than a decade off of a person’s working life. Sure, the standard might not be an exact apple-to-apple comparison, but many resources are available online that help to provide direction and information for would-be expatriates. Many from these groups are already living abroad and have helped pave the way for this trend to flourish.

Now, this type of lifestyle change might not be feasible for everyone, especially families with children still in school, but options exist outside of the traditional method of working until the age of 65. It would pay to take notes anytime someone is traveling abroad on how they might like to spend the rest of their lives in that location. For someone up for adventure and yearning for financial freedom, geo-arbitrage might just be their golden ticket.