Retire like royalty in a low-cost paradise

By Liz Pulliam Weston

With the stock market recently approaching new milestones, you may have revived your dream of retiring early. The only question is how.

The answer for a growing number of Americans making the leap into early retirement is moving to a country with a lower cost of living. The U.S. State Department estimates some 4 million Americans live abroad, not counting military and embassy folks. About a quarter of those are estimated to be retirees.

Poke around on the Web, and you'll find a whole industry devoted to retirees looking to live like a despot on $15 a day -- usually under tropical skies with daily maid service and umbrella-bedecked drinks thrown in for good measure.

From a financial perspective, spending your golden years overseas is certainly tantalizing. Consider how far your Social Security checks might go:

• In Ajijic, Mexico, a community near Guadalajara that's home to more than 3,000 expatriate Americans, where you can rent a sprawling three-bedroom, two-bath hacienda for about $700 a month.

• In English-speaking Belize, where retirees don't have to pay taxes on the first $75,000 of income and where property taxes on a $500,000 home run about $90 a year.

• In Spain, where the weather is good, health care is affordable and the rest of Europe is at your doorstep.

The cost of living may even be low enough for you to retire years earlier than you might otherwise.

Louisiana banker Tom Vidrine, for example, fell in love with Belize on his first trip to the Central American country in 1990. He bought a vacation home and spent the next seven years saving money so that he could retire in 1997 at the ripe old age of 45. He says an American can live a comfortable life on one of Belize's many tropical islands for $2,000 a month, or half of that on the mainland.

"My only regret," said Vidrine, "is that I did not come sooner."

If you're the kind of person who considers only the financial aspects, however, then retiring abroad could be an absolute disaster. Ruth Halcomb, who runs the LiveAbroad.com Web site from Santa Fe, N.M., has seen it many times.

"Some people sell their stuff, move and try to settle," Halcomb said, only to "change their minds and come back."

At a minimum, people who consider retirement abroad should be adventuresome, flexible, tolerant and patient, the expats I interviewed agreed.

Here are some other traits that come in handy:

You're willing to make new friends

"The people who do well are couples who depend on each other a great deal," Halcomb said, "and who don't have a great sense of community or good friends they're going to miss terribly."

That's not to say you won't make new friends, particularly in areas that attract a lot of other foreign retirees.

"There are enough retired people here who are looking for friends and new acquaintances," said Chuck Svoboda, a former diplomat who retired to Spain's northern coast, "that there's no difficulty in building a fairly large circle of them in a short time."

Improved cell phone networks and Internet access also have made it easier for expats to stay in touch -- so much so, Svoboda grouses, that it sometimes "keeps people from enjoying what this country has to offer."

But you'll still be hundreds if not thousands of miles away from family and friends, who probably won't visit nearly as often as they would if you were still in the States. You may not mind watching a grandchild grow up in photos, but if you want to be there in person, overseas retirement probably isn't for you.

You're open to experiencing a new culture

It seems obvious, but the rest of the world really isn't like the United States. Some people never adapt to the strangeness or to the notion that they'll always be foreigners, no matter how many other expats live in their chosen community.

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