How to Fund a Relaxing Retirement Without Huge Savings

This Simple Idea Will Afford You a Better Life in Retirement

With apologies to The Who, the kids are decidedly not alright.

In fact, they’re in deep dookey… Up to their neck in dookey.

Maybe even sunk.

I’ve been hanging on to some research that arrived over the summer and which I forgot about until I was scrolling through emails this past weekend looking for something.

The research in question was mentioned in a Forbes article carrying this headline:

Generation X On The Brink: The Stark Reality Of Their Grim Retirement Outlook

The story below that headline pointed out that Gen X—my generational brothers and sisters—have about $40,000 saved for retirement per typical household.

Now, that’s not really the entire picture, because the average Xer has about $130,000 squirrelled away.

But that’s the average of everyone born between 1965 and 1984. All those one-percenters who work in C-suite jobs, or as high-priced lawyers, investment bankers, doctors, etc.—well, they skew the results. By that, I mean they really—really!—throw off the central tendency.

Because, see, the median amount saved among Xers is right at $10,000.

Meaning half the X population has more than $10,000… and the other half has less.

Going through retirement on less than $10,000 and whatever Social Security coughs up is not going to be a pretty retirement.

Even if $40,000 is the best number to use, that’s simply not a good sign for what’s to come.

Assuming one were to live in retirement according to the 4% Rule (take no more than 4% of your nest egg annually to live on), that quail-egg-sized nest egg would generate about $133 per month. The average retiree household spends just under $400 a month on groceries, assuming the Bureau of Labor Statistics is on the ball with its research.

Clearly, $133 isn’t going very far.

Like I said, the kids are not alright.

The dark-side wildcard here is that Boomers have a goodly amount of wealth, and one could assume that as parents pass on, they will pass along some wealth to their kids. Of course, Boomers didn’t really give two shakes of a rat’s rump about raising us Xers… so who knows what’s passed along? My impression is that Boomers want to croak holding onto the last penny in their bank account.

Whatever the case, it’s stats like those that always have me immediately thinking about trying to convince my compadres to consider retiring abroad.

True, $40,000 isn’t going to go very far anywhere in the world for the duration of retirement.

However, the average Social Security check for workers who retire in 2023 at full retirement age would be close to $2,000 a month. The oldest Xers will hit full retirement age in about nine years. Obviously, Social Security’s average distribution will increase between now and then. But I’m gonna use $2,000 as the benchmark today to compare that sum to living expenses around the world.

Because what I’m getting at here is that a better life awaits my Xer comrades by pursuing a retired life abroad.

I’m going to assume the only income collected in retirement every month is Uncle Sam’s monthly stipend. And I know $2,000 sounds like very little, but it will stretch a helluva lot farther in Thailand, Mexico, Colombia, Ecuador, Vietnam, Malaysia, and elsewhere than it will in Des Moine, Poughkeepsie, and Sioux Falls.

One example: Ecuador.

My colleagues over at International Living have a correspondent in Ecuador who does a great job of tracking cost-of-living. Turns out, you can live there for about $1,900 per month. That includes a maid, by the way.

And it’s not like Ecuador is slumming it.

The country on South America’s Pacific coast regularly ranks among the 10 best places to retire. Gorgeous country. Mountain communities in the Andres… down to surf towns on the coast. Culture. History. Food! The city of Cuenca, hugely popular with expats, dishes up spring-like weather year-round.

But my point here isn’t to convince you to go off to Ecuador and push you toward a Latin lifestyle. I just got a bit carried away with my description…

The point is that we all have options.

I know the idea of abandoning America just as you hit retirement is a big idea. A tough idea to swallow, maybe. How will you adapt to life overseas, where everything is so foreign?

Frankly, you just do. You adapt. It comes quickly.

You live the same life. Grocery store. Movies. Cooking. Wasting time sending cat videos to your friends.

You’re just doing it with a different view outside your window.

You’d be surprised how many people speak English all over the world. You really never run into problems. I lived in Prague for five years. Now I’m in Portugal. In neither place did I ever really have any challenges operating in English (except with supermarket check-out ladies; they universally do not speak English!).

Amongst the 77 countries I’ve traveled now, I’ve rarely struggled with a communication gap. People love to speak English, particularly if you try to speak to them first in some very bad version of their local lingo. They smile at your effort, then gladly switch, if only to practice their English skills on you.

I’ve gone and lost the plot again, so I’ll get back to it.

Looking down the barrel of a financially anemic retirement is a stressful situation. I know that feeling.

But I also know that a potential answer lies beyond American shores. There’s a better life awaiting. A less expensive life. A life you can afford, and a life you’ll love living because it’s a great adventure as the next stage of life begins.

If you’re a Gen Xer—like me—don’t toss off this idea as unrealistic.

Plant the idea in your mind. Let it germinate and percolate over the next few years. Then, as retirement nears, take stock of your finances. And if you realize that you’re likely to keep breathing long after the nest egg is empty, well, just remember what you read here today.

The kids are not alright.

But they can be.