How much money do you need to move to and retire in a new country? That question might seem like an obvious starting point for planning a retirement adventure overseas, but I suggest another tactic.
Rather than figuring out how much money you need to retire, I suggest asking yourself how much money you have for retirement. Regardless of where you dream of enjoying your retirement years, you need to take stock of how much retirement income you can generate. The easiest way to approach this is to calculate what your retirement nest egg amounts to on a monthly basis.
The minimum amount you’re going to need to be able to retire overseas and live a reasonable, comfortable life is about $700 per month. If this is your budget, your choices are limited, but you have some good ones. But if your Social Security income is less than $700 a month and you have no other pension to count on, you still have another option for retirement overseas:
Calculate how much you would have if you sold everything.
Don’t be shocked. Stick with me. This is only an exercise. But I think that, once you’ve walked through it, you’ll see the beauty of this straightforward approach. Think about it this way: If you were to liquidate every asset you own, what lump sum of capital would you net? And if you invested that money, what level of yields and dividends might that capital generate on a monthly basis? That’s how much money you have to retire.Begin by detailing the value of every asset you hold, including cash deposits, retirement and investment accounts, real estate, vehicles, collectibles, coins, precious metals, antiques, jewelry, and insurance policies. Next, itemize your liabilities. Then balance the two figures to determine your current bottom line. This is your starting point.
To calculate your total potential retirement income, first you want to eliminate all debt. Then you want to convert as many of your fixed assets to current assets as possible. You do this by selling them off. This is the total amount of capital you could have to put toward funding your retirement adventures overseas.
Step two is converting that lump sum into a monthly overseas retirement budget. You accomplish this by determining the level of yields and dividends your total retirement nest egg, once invested, might generate on a monthly basis. You can then add in whatever Social Security or other pension income you’re expecting. Armed with this figure, you can begin to consider where best you should plan to launch your new life overseas.
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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