Lifestyle design is all about changing the way we live so that we can fulfill our passions and experience life now. We should all be striving for early retirement from lousy jobs. One of the best ways to start on that path is to substantially reduce non-essential consumption to be able to effectively retire cheap. Back in 2009, my wife and made a one year plan, to quit our jobs and move to a new country. Over those years, we’ve changed countries many times, started different businesses and jobs and even had a baby. We didn’t retire from working. We just retired from work that no longer challenged or motivated us. I still want to continue working on interesting projects. I still want to write. I want to do more good in the world. However, we’ve sold our old business, house, and got rid of most of our possessions to focus on experiences over consumption.
How to Retire Cheap
Too many people still believe that retirement is for the 65 and older crowd who have worked and saved their whole lives and still have trouble making ends meet. How much money do you really need to retire? What if you could retire now, for as little as $500 per month? Of course, that means cutting back on most luxuries and living a relatively simple life but it does seem possible in lower income countries like The Philippines, Cambodia, Thailand, and Indonesia.
If you could live on $500 per month ($6,000 per year) and you made 6% annually from safe investments, you would only need to have $100,000 saved to retire. ($100,000 X 6 % = $6,000 per year) Alternatively, if you could make $500 per month from passive income like rental income from your house, or some internet business, then you could effectively retire now. With the internet, there are endless opportunities for online businesses and other fulfilling activities that most of us would love to continue long into the future. Why stop doing something you enjoy just because you reach an arbitrary retirement age.
Living on $500 per Month
Here are some articles from others that have managed to live very inexpensively around the world.
- Living on a Beach in India for under $500.
- Vietnam on $500 per month
- Chiang Mai on less than $500
- Living Luxuriously in Chiang Mai – $700 per person
- Why $500 per month is not enough in Chiang Mai.
Approximate expenses for apartment living on the cheap in Cambodia.
Miscellaneous – Visa Insurance etc. $75
Total monthly expenses – $310
Approximate expenses for apartment living on the cheap in the Philippines.
Miscellaneous Visa, Insurance etc. P2,500
Total monthly expenses P20,270 – $431
(Here is another post with a $500 budget for The Philippines.)
From my experiences in Bali and Thailand, I know that living within these means is quite possible. Guest houses and inexpensive, but nice accommodations can definitely be found for less than $10 per night, particularly in off seasons. Long term stays generally get a bit of a discount but expect prices to substantially increase in the peak season starting at about Christmas.
The sample living costs that Ken Baylis offers are missing some other considerable expenses. Airfare is the biggest cost. If you plan on traveling extensively like my wife and I plan to do, then travel costs will greatly inflate your budget. This can be offset by traveling to local countries by bus or other cheap transportation, but for most JetSetCitizens, expect to add another $3000 to $5000 per person per year for air travel. That will increase your monthly budget by $300 or $400 per month.
Another key concern, for the older of us anyway, is health care. We all need to have decent access to medical care should we need it. Many credit cards offer coverage for vacations but there may be some difficulties getting reimbursed if you are a perpetual traveler. It is probably advisable to have some sort of international health care which can cost anywhere from $20 to $100 or more per month depending on the type of coverage. Global Insurance offers rates of $169 per year while World Nomads comes in at the higher end of the scale at $961 per year. Do your research and find an insurance provider with the coverage you need and also make sure it is a company that will pay out if the time comes.
The good news is that many countries like Thailand, Costa Rica, Hungary, and India have great, inexpensive medical care with English speaking doctors and dentists. Even if you need major procedures, you are probably better off then trying to go through the cash strapped medical system in your own country. Just make sure you have a substantial chunk of money readily available in case something serious happens.
Traveling Costs for Real People
Another key factor is luxury. It is hard to always save and scrimp. Cheap locations off the beaten path are great for a month or two, but most of us need to go to a big city and indulge in a nice dinner, a bottle of wine, purchase a new camera or clothes, etc. Of course, most of us need decent computers with reliable internet access. It is likely that you will want to take lessons, go sight-seeing, learn a craft or study a language, etc. Everything costs money.
$500 is definitely possible, but unless you are a real hermit, your expenses will be more. Talking to people in Asia, Central America and South America some numbers I commonly hear are $1000 to get by, $2000 to live comfortably and $4000 to live like a king.
$100 per month accommodation is certainly possible in many countries around the world, but it might be at the lower end for the preferences of some travelers. A more comfortable range would be from $300 to $700. For $700 you can often find a beautiful house, sometimes with a swimming pool, in lower income countries. Here are a couple of examples;
(2013 Update) My wife and I stayed a central apartment in Chang Mai, Thailand for about $200 per month. It was small, but clean and in a great location. For long term stays, it’s possible to rent entire houses for $200 – $300 per month. I’ve also seen apartments for as low as $100 per month, but these are typically more suited as student accommodation.
Condos in Cebu, Philippines many in gated communities, sometimes with swimming pools for $300+
(2016 Update) Our favourite Chiang Mai apartment is only about US$150 per month. I share the name in my new post on Finding a Chiang Mai Apartment Rental.
Food can be found very cheaply in many countries, even if eating out. However, $5 per day as Ken Baylis suggests might be a little too low for my tastes. Even in an inexpensive tourist-oriented restaurant, eating out with some drinks can cost you more than $15 for one meal. Of course, it is not necessary to do this every day but many of the more expensive and trendier restaurants and bars are great places to connect with other foreigners.
Most of us will have a difficult time eating local food all the time. We all get cravings for various cheeses, bread, meats, or sauces. One trip to an international food store can often blow your budget for months. Based on my tastes and preferences I would say a more comfortable food budget would be closer to $500 to per month for eating out and groceries.
It is becoming increasingly common to find wi-fi Internet access even in more remote tourist enclaves. You may be able to scavenge free access if you are lucky, but for those of us building internet businesses, reliable and fast Internet connections are necessary. Don’t expect much in poorer countries. You will likely pay full western rates for a quarter of the speed if you are lucky. Expect to pay $50 to $80 for Internet access if you can get it. For those of us who will live more nomadic lives, buying your own long-term Internet connection is not an option. However, expect to pay similar amounts visiting internet cafes if your guest house or accommodations don’t have Internet included.
Real Costs of Retiring for Jet Set Citizens
Rent: $300 to $700
Eating / Drinking Out: $300
Airfare (on a monthly basis) $300
Health Insurance: $80
Visas, translators, legal: $50
Total monthly expenses – $1370 – $1770
If traveling with another person or family members some of these costs can be shared, like rent, utilities, and internet connections. Other expenses will be per person. My wife and I expect a budget of about $2000 per month. This might be as little as $1000 in countries like Thailand but will shoot up to $3000 when we go to Europe or return to Japan.
Costs of Retiring For Two
Rent: $300 to $700
Eating / Drinking Out: $400
Airfare (on a monthly basis) $600
Health Insurance: $160
Visas, translators, legal: $50
Total monthly expenses – $1950 – $2350
For $2000 per month you could have a very comfortable life in a tropical country with great food and a fantastic lifestyle. $1000 per month is very doable for those willing to sacrifice material comforts and give up western ideas of consumption. $500 is the low end of the scale. Possible for shorter term travel, but unless you are capable of living a very ascetic lifestyle, it is not practical for indefinite travel. Don’t get me wrong, I strongly encourage everyone to greatly reduce their environmental footprint on the world by living simpler lives. Living on $500 is still possible but it requires a disconnection from the rest of the world. It certainly would be hard to blog about it on $500 per month.
Live for Free
Another option is volunteer programs. There are a wide variety of volunteer opportunities around the world that cover all your living expenses so it is possible to live on next to nothing and do meaningful work to enrich the lives of disadvantaged people. Volunteer for a year or two and let your savings earn you a safe return on investment. You will then have more savings to begin your early retirement. Who knows, you may even find that volunteering brings you the spiritual satisfaction that you were looking for in life.
Here are a couple of links to get you started;
Do You Really Want to Retire?
Of course, the point is not to retire at all. Lifestyle design is about liberating yourself from work you hate so that you can focus on your passion and really contribute something of value to the world. Your passion may be expressed through art, volunteering or starting a business. Go ahead and retire from your soul-sucking, dead-end job but you will go crazy living in a tropical paradise for the rest of your life. Retire now so that you can begin your life’s work.