Whenever I visit Antigua Guatemala, a charming colonial town in the South, I am astonished by the number of retirees who have chosen to spend their golden years in Guatemala. Recently, I saw a question on Mr. Money Mustache about the best place to retire early, so let’s break down the costs.
### Typical Costs of Retiring in Guatemala
**Rent:** You can find a cozy small place for $500 or a luxury house for $1,000, both fully furnished including all bills except electricity. Yes, that even includes wifi.
**Food:** We eat well, having meat daily and also buy quite a bit of alcohol for about $200 a month. Lunch at a small local eatery costs around $2, while a dinner at a nicer restaurant goes for $20 or more per person but can match international cuisine.
**Healthcare:** Most retirees skip health insurance because healthcare is affordable. A visit to a U.S.-trained doctor costs between $20 to $50, and even less for a local doctor.
**Transportation:** Owning a car isn’t necessary if you live in Antigua Guatemala or around Lake Atitlan. Tuk-tuks and taxi boats are very affordable, costing about $2 per ride. Renting a car costs around $20 daily for country trips.
**Staff:** A full-time maid costs approximately $200 per month, or $12 a day if you want her services once a week.
**Taxes:** We are taxed 6% of gross income as an LLC, and property tax is 0.9% a year on the undervalued price of properties. VAT is 12%. We could claim company expenses to get the VAT back but then pay 31% of benefits in taxes, so 6% works better due to our low expenses.
A couple can live comfortably on $1,000 per month in a small home. With $2,000 a month, you can have a larger place, extra money for travel and outings, and can truly enjoy what Guatemala has to offer. Since we own our home outright, we live modestly on about $1,000 per month, which includes full-time staff, two cars, a motorboat, and a couple of trips abroad each year.
### Extreme Early Retirement Costs in Guatemala
For the extremely frugal, living on $400 a month or less is possible. A basic thatched hut in my village sold for $6,000 recently. Such houses rent for under $100 a month, add $50 for utilities, $50 for food (mainly rice and beans), and occasional $2 meals at a local fried chicken place. Shopping at thrift stores costs about $0.50 per shirt, and bus rides are $1 an hour. Without Baygon, finding a malaria-free zone is wise, and keeping a ticket home saved up is essential for health emergencies.
A $300 monthly budget is very lean but attainable; $200 if you own your house.
### Considerations When Living Abroad
For people like me, living abroad isn’t a sacrifice—it’s quite the opposite. I love the mild weather, my lakefront home, and being able to visit France whenever I want. However, you should account for travel costs, being away from family and friends, language barriers if you’re not fluent, dietary changes, and the added expense of some imported goods. Also, consider the visa costs; a two-year residency in Guatemala costs about $1,000 through a lawyer. You can renew it for another two years before applying for permanent residency.
### Cost of Retiring in the U.S.
**Housing:** This will be your main expense and varies greatly depending on the location. If you aim for early retirement on an average salary, affording housing in high-cost areas will be challenging. Renting a small place in the Midwest can be around $400, and you can limit food costs to $200 by using coupons. High-deductible health insurance like MMM costs about $250. Cycling, gardening, and wearing extra layers to reduce heating costs can help. A $2,000 budget, similar to a comfortable retirement in Guatemala, is feasible with some extra money for holidays.
If you already own your house, consider the equity as inactive money since a cheaper house abroad means that money isn’t earning interest. Extreme early retirement in the U.S. is possible on even less; for example, Tight Fisted Miser shows how you can live on $12,000 a year.
In the U.S., you’ll either have a more frugal lifestyle for the same cost or spend twice as much to maintain a similar lifestyle. This necessitates having twice the savings before retiring. At a 4% withdrawal rate, you can retire with $300,000 on $1,000 a month. But if you need $2,000 monthly, you’d have to save $600,000. If you’re eager to retire early, consider the $300/month lifestyle in Guatemala once you’ve saved $100K, as living on that in the U.S. would be difficult. While extreme frugality isn’t for everyone, some manage it successfully in Guatemala.
### So, is Retiring Abroad Worth It?
**Yes,** if you want a better standard of living for the same cost. In your 30s, having staff feels like a luxury, but in your 60s, having someone to help with groceries and housework becomes invaluable. Also, if you’re curious about other cultures, living abroad offers unique experiences.
**No,** if you can’t bear being away from family, get homesick, and need to return frequently, which can burden others. If you’re only there for the low cost of living but never leave the house due to expense, it’s a bad idea too. Fulfilling activities and social interactions are still important for a good quality of life.
Many retirees in Guatemala spend the winter months in the sun and return to the U.S. for summer to enjoy family and friends. They often rent homes here while their U.S. homes are rented out, balancing the cost of living. Popular retirement spots include Mexico, Belize, Costa Rica, Panama, Ecuador, Argentina, and Chile. They offer convenient time zones for calling home without the hassle of jetlag. Eastern Europe and Southeast Asia are also popular but have pricier flights, so most retirees fly back once a year or less frequently.
Before you decide to relocate somewhere purely for its affordability, read Jason Hull’s post on the subject for more insights.