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How to retire early, with less than you might think

By Andrew Hallam - July 28, 2022

Do you need £3 million to retire?

How about £5 million?

You’ve probably read several stories that recommend a “number.” And while those financial journalists probably meant well, they know more about Ryan Peniston than they know about you.

Ryan who? Yeah, that’s my point.

Your financial plan is about you. It’s as unique as your fingerprint.

Here’s just one example.

Assume you and your work colleague earn the same amount of money. She began investing at a younger age, so her investment portfolio is twice the size of yours.

And perhaps, because she’s Paris Hilton’s third cousin, she finds not-so-subtle ways to rub her wealth in your face.

But here’s what she doesn’t know.

Despite having a portfolio that’s half the size of hers, you could retire several years before she does. What’s more, while retired you could enjoy fancier dinners, better spa treatments, snazzier holidays and finer clothes.

This isn’t a competition. Instead, it’s about fingerprints…and location.

Numbeo.com compares the cost of living in different cities.

For example, a retiree living on £10,400 (€12,310) a month in London, England could enjoy the same standard of living as someone spending £5,400 (€6,390) a month in the gorgeous seaside city of Malaga, Spain.

How much do you need to spend for the same lifestyle?


City/Country  Monthly Spending Equivalents
London, England £10,400 (€12,310)
Malaga, Spain £5,400 (€6,390)
Lisbon, Portugal   £5,500 (€6,510)
Panama City, Panama £5,500 (€6,510)
Penang, Malaysia £3,400 (€4,025)
Tbilisi, Georgia £3,800 (€4,497)

Source: numbeo.com

Malaga, Lisbon, Panama City, Penang, and Tbilisi aren’t hardship posts. They’re among dozens of other low-cost cities…each rich with culture and modern amenities. They also get far more sunshine than the UK and the rest of Northern Europe.

Sixty-year old Jane Dunbar and her 68-year old husband, Ian, retired to Martos, Jaen, Spain, in 2015.

“I suffered from SAD [Seasonal Affective Disorder] when living in the UK,” says Jane.

“But we get a lot more sunlight living in Spain.”

If you’re currently working overseas, you might also find it easier to bond with retired expats than you would with people living in your home country. If, when you visit your former home, few people relate to where you’ve been and what you’ve seen, you’ll know what I’m talking about.

Assume you’ve done a rigorous assessment of your future financial needs.

You’re retiring next year.

You think you’ll need £5 million to live well in London, England.

After looking at the table above, Panama City might inspire you.

But retiring in the Dubai of Central America (as it’s sometimes known) would require even less than you might think. Benjamin Franklin once said,

“In this world, nothing is certain except death and taxes.”

But in Panama, residents are required to pay paltry capital gains taxes compared to residents in the UK, the U.S., Canada, Australia, and most of Europe. Most residents in countries such as Georgia and Malaysia (to name two of many) don’t even have to pay capital gains taxes on their investment portfolio gains.

Coupling a lower cost of living with lower taxes (or no taxes) can supercharge the buying power of the money you saved.

Not everyone will want to retire in a different country. Some might miss family and friends.

But in an age when adult children often scatter to different cities (even different countries) plenty of retirees in beautiful destinations report seeing their family more because they live abroad.

Lee Steele moved to Mexico from the U.S. about ten years ago.

“All of my family and friends in the U.S. love coming here to visit,” he says.

“My favourite cousin has visited five times. Even my old college roommate, who I hadn’t seen in 40+ years came to visit me in Mexico.”

Cheryle Lee-Salazar says much the same thing.

“My grandson, who’s turning 16 told me, ‘It [coming to Mexico] is our family tradition.’ He has spent his vacations with me since he was 18 months old.”

Mandy Harrison, originally from Middlesex, England, began visiting her parents several times a year after her parents retired to Spain.

She and her husband flew from the UK “for peanuts” on low-cost airlines. And the journey to Spain equaled the driving time it used to take them when her parents lived in Norwich. Following her parents, Mandy now lives in the seaside Spanish village of Campoamor, Orihuela Costa.

My apologies for the shameless plug, but if you want to learn more about retiring abroad, the final four chapters of Millionaire Expat (3rd edition) describe popular low-cost cities in Europe, Latin America and Asia.

More than a million retired expats live reasonably well on less than £22,000 (€26,040) a year.

Yes, you read that right.

Even if such people didn’t earn a penny from other pensions, they could retire on investment portfolios worth less than £600,000 (€710,040). That’s based on inflation-adjusted withdrawals of 4 percent.

The 2014 publication of International Living’s Guide To Retiring Overseas on a Budget, although a bit dated, describes comparative costs and benefits with an even broader view.

So when a co-worker, someone in the pub or an online “expert” says how much you need to retire, just smile to yourself and remember your fingerprint.

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Andrew Hallam is the best-selling author of Millionaire Expat (3rd edition), Balance, and Millionaire Teacher.