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Retire Early by Living Abroad

Knowing how much money you will need to retire (the magic number) depends on how much money you plan to spend. It goes without saying that a couple who can live on $30,000 per year will have a much lower magic number than one living on $60,000. When I started closely tracking how much money we spent, I knew it would take a big chunk of change to amass enough savings to retire early. Our only options were to reduce our expenses or keep working. We live in the Midwest, where the cost of living is low compared to other parts of the U.S, so relocating to another part of the United States wouldn’t really help to cut costs. Living overseas, however, was another story. I knew that the cost of living in some parts of the world was a lot lower than here. We started looking abroad to countries like Thailand, Mexico, Argentina, and Ecuador for a low cost retirement destination. After reading everything we could get our hands on, we decided to check out Ecuador. A small town in the Andes Mountains called Cotacachi was described as having perfect spring-like temperatures, year round, friendly people, and a low cost of living. After a 5-day visit to Cotacachi in 2008, we were sold. We realized, after checking out the cost of food, transportation, real estate, and health care, that we could keep our expenses low enough to live without working. We found that it really was possible to live overseas on less than $1,000 per month if you owned your own home, and that made it possible to have a much lower “magic number.”

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