Retiring Early While Living Abroad
Thursday, February 9, 2012
By Benjamin Harper
Everyone wants to know the secret to retiring early, but what many people don't know is that it can be done on a relatively small salary simply by changing your location. One of the many benefits of traveling the world and exploring exotic destinations is the fact that you can reduce your cost of living by upwards of 80% simply by following the location independent lifestyle. For example, the United States Census Bureau states in 2010 that the median cost of living per person was around $25,000 per year. However, you can have the exact same amenities and benefits in a different country, yet enjoy a cost of living that is between $8,000 and $10,000 per year.
Using the same numbers presented by the U.S. Census Bureau, you can see that as of 2010 the average take-home salary for a working adults was around $25,000 per year, after taxes. This means most people are just barely breaking even when it comes to the take-home pay versus the cost of living. But what most people don't realize is that your pre-tax median wage of around $36,000 can actually be utilized to a greater extent when choosing to pursue the location independent lifestyle, because you can enjoy lower tax rates in countries like Mexico where there is a tax treaty in place. What this means for the digital nomad is that you can pay the tax rate of the country you are living in and then submit your proof of payment to the IRS, thereby enjoying a lower rate.
Most countries outside of the industrialized West still have all of the same amenities and luxuries that people in the "first world" countries have, but the cost of living is significantly lower. As a general rule, places like Colombia, Bulgaria, Mexico, Italy, Greece and beyond hover between the $8,000 and $10,000 range, which means you can head there as a digital nomad with your pre-tax salary of $36,000 per year and live accordingly. What this means for the location independent traveler is that you can put a significant portion of your income back in your pocket rather than merely breaking even year after year as you would back home.
The beautiful thing about the digital nomad lifestyle is that you don't have to be part of the current work force to take advantage of the lowered cost of living in other countries. Pensioners have been choosing to retire overseas for years, and this is one of the primary reasons. You can take your $1,000 a month pension (or rough equivalent) and use it in a place like Cancun, Mexico where you can live on $600 per month, leaving you with $400 per month to spend as you see fit. And because the healthcare is free you don't have to spend hundreds of thousands on medical fees, plus you have access to the beach and a lush, tropical environment to enjoy every day of the week.
Another benefit of living abroad as a location independent digital nomad is reducing your working hours due to the fact that the cost of living is so much less. However, there is another alternative, which is what many working professionals are already doing. Namely, working their normal working shifts of 8 hours a day for the next three to five years, but instead of needing to spend all that money on the median cost of living as described earlier, the vast majority of that money is going straight into your savings. When coupled with the fact that you can find three to four bedroom houses in places like Italy, Mexico, Guatemala or Colombia for a mere $35,000 on average, you can very easily set yourself up to live a debt free, retired lifestyle by the time you are 30 to 35 rather than waiting to turn 60.
Using the same numbers presented by the U.S. Census Bureau, you can see that as of 2010 the average take-home salary for a working adults was around $25,000 per year, after taxes. This means most people are just barely breaking even when it comes to the take-home pay versus the cost of living. But what most people don't realize is that your pre-tax median wage of around $36,000 can actually be utilized to a greater extent when choosing to pursue the location independent lifestyle, because you can enjoy lower tax rates in countries like Mexico where there is a tax treaty in place. What this means for the digital nomad is that you can pay the tax rate of the country you are living in and then submit your proof of payment to the IRS, thereby enjoying a lower rate.
Most countries outside of the industrialized West still have all of the same amenities and luxuries that people in the "first world" countries have, but the cost of living is significantly lower. As a general rule, places like Colombia, Bulgaria, Mexico, Italy, Greece and beyond hover between the $8,000 and $10,000 range, which means you can head there as a digital nomad with your pre-tax salary of $36,000 per year and live accordingly. What this means for the location independent traveler is that you can put a significant portion of your income back in your pocket rather than merely breaking even year after year as you would back home.
The beautiful thing about the digital nomad lifestyle is that you don't have to be part of the current work force to take advantage of the lowered cost of living in other countries. Pensioners have been choosing to retire overseas for years, and this is one of the primary reasons. You can take your $1,000 a month pension (or rough equivalent) and use it in a place like Cancun, Mexico where you can live on $600 per month, leaving you with $400 per month to spend as you see fit. And because the healthcare is free you don't have to spend hundreds of thousands on medical fees, plus you have access to the beach and a lush, tropical environment to enjoy every day of the week.
Another benefit of living abroad as a location independent digital nomad is reducing your working hours due to the fact that the cost of living is so much less. However, there is another alternative, which is what many working professionals are already doing. Namely, working their normal working shifts of 8 hours a day for the next three to five years, but instead of needing to spend all that money on the median cost of living as described earlier, the vast majority of that money is going straight into your savings. When coupled with the fact that you can find three to four bedroom houses in places like Italy, Mexico, Guatemala or Colombia for a mere $35,000 on average, you can very easily set yourself up to live a debt free, retired lifestyle by the time you are 30 to 35 rather than waiting to turn 60.
About the Author:
Before moving abroad, research living as a digital nomad at places like Marginal Boundaries, where you can find more information on the location independent lifestyle and how to take advantage of the drastically reduced cost of living in other countries.
Posted byBertie at 2:48 AM
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