Retire on $200,000 (200k): Is this possible?

 

Cedar St. Park, Emerald Isle, North Carolina 

My wife and I are recent early retirees at ages 51 and 48.  We’ve been slow traveling with our traveling companion Toby, a 13 pound Pomeranian dog since our early retirement in August 2020.  We’ve visited several destinations on the eastern parts of the United States including Ocean City (Maryland), Atlantic Beach (North Carolina), Claysburg (Pennsylvania), the Poconos, and others.  We’re planning on living this way in the near foreseeable future.

Previously in my blog, I had written a post on how to retire on $100,000 ($100k).  If you missed that post, please click here.  

In this post, I’d like to share my thoughts on retiring on $200,000.

When I was researching financial independence and retiring early during my late thirties, one of my favorite search topics was exactly this one:  How to retire on $200k.  

I knew looking for answers on how to retire on $100k was not going to be easy.  I was bit more sure, that I could find the answer to living on $200k though.  

This led to learning a new word ‘geoarbitrage’.  This is when you move to an area that has a lower cost of living.  Examples of geoarbitrage are as follows:

  • You currently live in a high cost of living cities like New York, San Francisco, Honolulu, Los Angeles.  To save expenses, you move to a city that has lower cost of living, like Las Vegas, Portland, Santa Rosa, and Salem.

  • You currently live in these same high cost of living cities but decide to live abroad in other      countries.  Popular countries for expats include Mexico, Panama, Vietnam, the Philippines, and Thailand.
Moving to other countries is a big jump for many of us.  If you can pull it off, then savings may be worth while...

Now let’s look at both of these scenarios in depth:

If relocation to another city/another state within the US
  • The ideal location is one of many states in either the Midwest or the Deep South.  Midwest states like Ohio, Michigan, Minnesota would fit the bill.  Deep South or Southern states like South Carolina, Texas, Georgia, Florida, Mississippi, and Alabama would also fit the bill.  
If you had $200k, that means you’ll have $666 per month to spend.  ($200,000 times 4% = $8,000.  Divide $8,000 by 12 months equals $666 and change.)

***4% withdrawal rate is what most experts would recommend.  

There’s no easy way to make this work even in places like Texas where cost of living may be about 45% less than an average US city.  Rent alone would cost around $400-$500 per month even in the lowest cost of living cities...

I just don’t see how you can eat and pay for transportation on remaining $166...*Not to mention things like health insurance, entertainment, emergencies, etc...

You’ll most likely will have to supplement your income with either a part time job and/or social security (or pension).

Other options like house sitting, bunking with family, living in cars/vans, may exist, but it won’t be easy...

If relocating to another country

Moving to another country is well, complicated.  There are visa issues you’ll need to deal with.  There may be language barriers, and there may be culture differences.  

Visa was one of the things I looked at.  While most European countries make it easy for Americans to visit  90 days at a time without a visa, others may not.  Some will offer a one month visa to be extended while you’re living there, while others may allow you to get a temporary/ permanent residency visa.

If you plan on settling down permanently, some countries are easier than others.  For example, Malaysia has been known as a good destination for exactly that.  Thailand used to be that, but no longer.  Countries like Vietnam charges monthly (or longer) visa fees that will add up as they do not have a retirement visa program...

Tip:  Every country since the pandemic has changed their laws on immigration and visitation.  I recommend checking each country for the latest information...

In terms of language, the Philippines is a popular expat destination as most people speak American English.  Malaysia is another country that speaks English well.  

Outside of these countries, you may have to get help from friends/locals if you don’t speak that language...

Culturally, European countries will be very similar to the US.  Southeast Asian countries will require some adjustments to assimilate, even besides the language, as diet (main staple is rice), for example, is different than the US diet.  

A general recommendation if you’re considering moving to a foreign country is to eat like the locals do and not insist on US style food.  If you try to eat Italian food in Vietnam, you’ll pay possibly 5-10 times the price of a local food.

There may be other factors that play a role as well.  Weather/climate is another factor and so is quality of health care.

From my research, Malaysia and Thailand have top notch hospitals while the Philippines and Vietnam lag these countries.  Weather / climate can’t be underestimated either.  Countries like Malaysia and Vietnam are constantly hot, think Alabama or Florida type weather with hurricanes...

Always do research to figure things out...

I won’t say it’s easy to live on $666 per month, but I will say you’ll have a slightly easier time doing that in these countries.

In places like the Philippines, Vietnam, or Malaysia, you can probably find a small apartment for around $300 US.  If you stick to local food, then it’s possible.  

Most expats on budget tend to use public transportation and/or walk/bike.  Cost of transportation may be prohibitively expensive in some of these countries if you’re considering buying a car...

If considering moving abroad, most expats would recommend having some cash available (something like $10,000) to have for the initial move to the country.  You’ll need to take care of visas, plane tickets, hotels/AirBNB until you find a permanent place, etc...

I can’t say what quality of life you’ll have, but I saw someone living on $500 in Mexico per month, while someone living in the Philippines did it on about $600 per month.  Google ‘living under $500 per month in Mexico’ for example.  

In conclusion:

The answer to the question ‘retiring on $200k’ is that it’s definitely possible.  It may require finding a cheaper place to live, whether that’s in the US (with some creative budgeting), or abroad.   My research has shown you may have to live internationally to make this scenario to work though.  

My wife and I seriously considered van life to cut housing costs, but we realized each time, that we couldn’t live without a flushing toilet!  You’ll also need to figure out what your deal breaker is for you.  It may be that you can’t live without American food.  This habit can be quite pricey abroad...

On the other hand, you may find that learning a new language is a cinch.  Or you may find that you want to live abroad to immerse yourself in new cultures and ideas.  If so, you may be a good candidate for living abroad...

Happy researching, and happy discovering yourself!  Knowing yourself is always half the battle!


Jake

Wandering Money Pig 


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