Retire for Less -- Outside the U.S.

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You probably know the usual tidbits of advice offered to those preparing for retirement:

• Save as much as you can, perhaps even considerably more than 10% of your income -- especially if you're a little behind.
• Invest as effectively as possible, perhaps parking a large chunk of your money in a stock index fund, versus more conservative options that will grow more slowly. The stock market has grown by an annual average of 10% over long periods, and an index fund will match its returns. Other companies, such as Gap (NYSE: GPS), Mattel (NYSE: MAT), and J.C. Penney (NYSE: JCP), have done even better over time.
• Make tax-smart decisions, making the most of IRAs and other vehicles. (Our IRA Center and Tax Center can help).

Here's one you may not have thought much about, though: Reduce your cost of living in retirement by moving out of the country. There are lots of countries where your dollar will buy you more than it does here. More and more retirees are doing this, and some popular new homes include Mexico, Panama, and Costa Rica. Here are some interesting facts:

• Some countries, such as Panama, Ecuador, and El Salvador, even use American dollars as their currency, making the financial transition easier for retirees.
• A Fortune article briefly profiled folks who retired in places as far-flung as Croatia, Argentina, and Thailand. A couple in Mexico bought an 8,000-square-foot home for $155,000. Other possibilities include Malta, Italy, Malaysia, and New Zealand.
• Per a recent MarketWatch article, "In Panama, the number of visas issued to U.S. retirees tripled between 2003 and 2005, according to a study published in 2006 by the [Migration Policy Institute]. In the previous decade in some regions of Mexico the number of U.S. retirees jumped nearly 200%."

If this strategy appeals to you, consider doing some research first. You may want to take a long vacation to check out some contending locations and see where you feel most comfortable.

We'd love to help you with your planning -- whether you plan to retire here or abroad. Our Rule Your Retirement newsletter service distills what you really need to know into a manageable volume each month. A free trial will give you full access to all past issues, allowing you to gather valuable tips and even read how some folks have retired early and well. It regularly offers recommendations of promising stocks and mutual funds, too.