Where in the world would you want to retire?

An American couple enjoying retirement in Costa Rica.

While the world may seem to be a pretty unsettled place thanks to the constant stream of negative news we hear from afar, in reality it’s never been easier to work and live overseas.

For one thing, digital communications have taken once-major barriers and turned them into nothing more than minor speed bumps.

Today, while Americans who have lived overseas for their careers may choose to return to the United States to retire, many others are moving in the opposite direction.

What countries are the best places for Americans to consider retiring to, all things considered?  It would seem that having a nice climate along with a vibrant culture and an interesting social scene are important factors. Personal safety ranks up there, too. Having an attractive cost of living would be another factor to consider – at least for most of us for whom budgets are important to follow.

International Living magazine has just published its newest listing of the “Top 10” countries for retiring abroad.  It’s the 26th annual list published by this magazine, which calculates a “global retirement index” by country and selects the best-scoring ones that are, as the magazine puts it, “outstanding destinations where you can live a healthier and happier life, spend a lot less money, and get a whole lot more.”

Which countries have made the 2018 list? Here are the Top 10, along with a quick wrap-up statement for each as to why:

#1. Costa Rica – “the world’s best retirement haven”

#2. Mexico – “convenient, exotic first-world living”

#3. Panama – “friendly, welcoming – and great benefits”

#4. Ecuador – “diverse, unhurried, and metropolitan”

#5. Malaysia – “easy, English-speaking, and first-world”

#6. Colombia – “sophisticated and affordable”

#7. Portugal – “Europe’s best retirement haven”

#8. Nicaragua – “the best bang for your buck in Latin America”

#9. Spain – “romance, history, and charming villages”

#10. Peru – “low-cost living, vibrant and diverse”

It’s interesting to note that of the countries on the Top 10 list, all but one of them are Latin American or part of the Iberian Peninsula.

I haven’t gone back and researched it, but I suspect that the countries on these lists were quite different going back 10 or 20 years prior.

For more information about the 2018 list and the 12 factors that went into creating the global retirement index for each country, click or tap here.

How about you? Which of these countries, if any, would you consider making your home in retirement?  Or is the notion of retiring abroad completely “foreign” to you?

Getting the Message on Retirement Savings

401(k) plan balances are actually increasing.
401(k) plan contributions -- and balances -- are back on the increase.
Have Americans finally gotten the message about saving for retirement? Judging from the most recent published stats on 401(k) savings, it would seem so.

Last month, it was reported that 401(k) retirement savings have hit a 12-year high, with an increase of ~3.5% in contributions being charted during the first quarter of 2011.

What about average account balances? Today, those stand at about $75,000. That’s still woefully inadequate considering what (little) people can expect to receive from Social Security as they reach retirement age. But it’s a darn sight better than the ~$41,000 average 401(k) plan balance that existed in 2002.

Of course, averages can be misleading, since the figures can be skewed by some very hefty balances held by a very few highly compensated workers at the top of the heap. In fact, more than 55% of workers have less than $25,000 in their 401(k) plans.

On top of that, nearly one in four plan participants has outstanding loans against their plans.

Clearly, the recession has had a big impact on contribution behavior – even as workers have become more sensitized than ever about the inability of Social Security to cover their retirement needs.

Making 401(k) contributions are not an option for the unemployed, of course, but there are many other workers who were forced to reduce their contributions to cover for losses of family income because of a spouse losing his or her employment.

And some have had to borrow against their plan assets in the more serious circumstances. Those loans are actually up by double digits.

Still, it’s heartening to see the latest numbers … as it appears that “awareness” is now being translated into “action.” Would that we could rely on our local and national politicians to do the same thing …

Your declining retirement savings: It’s all relative.

EBRI's Annual Retirement Confidence Survey
The EBRI's 2010 Retirement Confidence Survey reveals severe challenges faced by many American workers.
As difficult as the last two years have been on your finances, you’ve probably saved a lot more for retirement than your fellow workers.

How is that possible? Because it’s all relative. The Employee Benefit Research Institute’s most recent annual survey of U.S. workers and their retirement savings reveals that the percentage of workers having fewer than $10,000 in savings stands at 43%. That’s up from 39% in 2009.

Even more ominous, the percentage of workers who reported they have less than $1,000 in savings is 27% — significantly more than the 20% reported in 2009.

The EBRI’s definition of retirement savings excludes the value of primary homes and defined-benefit pension plans. Still, these are startling figures, showing that large numbers of Americans have little if anything in the way of a savings safety net.

It’s true that some people have plowed their savings into the purchase of a home. But these “house poor” individuals are often among the first who face mortgage foreclosures upon the loss of a job, because they have so few cash resources upon which to fall back.

If there is a glimmer of good news in these dreary statistics, it’s that more people are awakening to the reality of their finances. Gone is the notion that Social Security will pay enough for a decent retirement lifestyle. Indeed, less than 20% of respondents expressed confidence in their ability to save enough for a comfortable retirement. That’s the second lowest reading ever recorded in the 20-year history of the EBRI’s annual survey.

Only ~45% of workers with some form of savings have more than $25,000 stashed away … and people know that $25,000 is not nearly enough for retirement, Social Security payments being what they are. Consequently, in the 2010 EBRI survey, one in four workers report that they’ve decided to postpone their retirements (that’s up from ~15% saying so in the 2009 EBRI research).

For its survey, the Employee Benefit Research Institute queried ~1,150 U.S. workers (age 25 and older) plus retirees, making it one of the most comprehensive field studies on the topic of U.S. retirement savings. There’s a wealth of additional statistics and insights available here.