The Great Recession has left many older adults’ retirement portfolios in a state of eroded disarray, prompting thousands—perhaps millions—to look abroad for a more affordable cost of living in their later years, says The Wharton School of the University of Pennsylvania.
In the aftermath of the global financial meltdown that ravaged 401(k) accounts and decimated home values, a growing number of Americans—like Prescher—are stretching their retirement savings by spending their golden years overseas.
Beckoned by foreign countries with mild climates and a lower cost of living, many retirees view living abroad as the fulfillment of a life-long dream. Some are former snowbirds who opt for a Caribbean island or Latin American country; some seek out charming villages in Portugal or Spain, and others have landed in more exotic locales, such as Malaysia.
The precise number of people retired overseas is hard to come by. About 350,000 American retirees receive Social Security benefits in countries other than the U.S., according to the Social Security Administration’s annual statistical supplement. The majority of those people live in Europe, Canada and Mexico. Anecdotal evidence suggests that this number will rise: As many as 3.3 million American baby boomers are planning to retire abroad, according to figures from Travel Market Report, the industry publication. Three years ago, the paid subscription base of International Living, a magazine for retirees who live overseas or plan to, was 39,000; today, it’s 80,000.
What’s driving them abroad? Money—or lack of it. Americans’ confidence in their ability to afford a comfortable retirement is at historically low levels, according to this year’s Retirement Confidence Survey, conducted by the Employee Benefit Research Institute. Only 14% of workers said they were “very confident” they would have enough money to live comfortably in retirement, according to the survey.
Historically, families have stuck around in the same general location, and people often remain in one area due to their jobs. These days, families are more likely to be dispersed—and once someone leaves the workforce, their job no longer serves as an anchor.
“Large numbers of people live where they live because of their jobs,” says David Reibstein, professor of marketing at Wharton. “When they’re not working anymore, they make the decision to move to a more comfortable climate and some place to make their dollars last longer…. One of the things that used to happen is that families stayed together in a general area. But in today’s economy, your children are no longer tying you to a certain [location]. It allows you to think more broadly about where in the world you might want to live.”
Read more from The Wharton School.
Written by Alyssa Gerace