How to Live the Retirement We Were Promised

Sooner or later? 

It’s a question I think about from time to time in the quiet moments of my life when I’m contemplating retirement and the cost of living and the quality of life I am accustomed to. 

My most recent quiet moment came while I was sitting in an Aussie burger joint in Chaweng, the central town on the Thai island of Samui.  

I liked Samui. A lot. I could live there. It’s tropical…it’s beachy…Western-style apartments and houses are gorgeous and within a price range I expect I’ll be able to afford. Here’s an example of what I mean: 

That’s a three-bedroom, three-bath villa, 2,600-square-foot, literally on the beach, for less than $2,000 per month. I challenge anyone to find me an equivalent rental property anywhere in America. 

Which got me thinking about the cost of living in retirement…which got me thinking about sources of income…which naturally led to thinking about Social Security and the never-ending debate about whether one should claim their government goodies as early as possible, or as late as possible. 

Frankly, there is no one right answer for everyone. I realize that. Each of us has our own facts and circumstances that define when we should claim.  

I lean heavily toward claiming them as late as possible. 

Mathematically, the rationale is irrefutable. Late-claiming also makes a lot of sense if you pair it with living overseas in retirement, at least for several years. 

Let’s start with the irrefutable math: For every year you wait to claim your benefits, Social Security increases your payout by 8%. That’s arguably the greatest, risk-free rate of return you’ll find anywhere in the investment universe. 

In my case, if I retire at 62 (oh my god, less than six years from now!) Uncle Sam will pay me $2,066 per month. If I wait until 70, my paycheck ramps up to $3,639. 

Which gets me to my point about pairing a late-claiming strategy with living overseas, even for a while. 

First, living abroad can be magnitudes cheaper than living in America in retirement. That means income from your existing nest egg can very likely cover your costs (that villa above at $2,000 is certainly not cheap, but you can find stylish and comfy two-bedroom apartments for $500 to $600).  

That means you don’t have to claim Social Security to live a life that is richer and more luxurious than you can afford at home. Which, then, means your Social Security check can grow beefier behind the scenes while you’re living an active life overseas.  

Then, one day, you might decide you do want to return Stateside. When you do, you’re going home to a much larger paycheck at a time in your life when your costs are naturally receding because you’re not necessarily going to be as active. 

And if you decide you want to remain overseas because you love the lifestyle—and my bet is that you will love it—well, then you have even more income to cover your costs or to strengthen your financial peace-of-mind. 

To my way of thinking, this is a solid strategy when plotting your retirement.  

You live a richer and more adventurous lifestyle, you’re technically saving more, and you gain financial flexibility. 

That is what retirement should offer: flexibility and options. 

By claiming Social Security late, and by pairing that with a more affordable cost of living overseas, you get the best of all worlds.  

And of course, it doesn’t have to be Thailand. That’s just top-of-mind because of the week I recently spent there. You can find similar opportunities in various parts of Europe, and all over Asia and Latin America. 

Certainly, this won’t be right for everyone, since not everyone wants to live abroad in retirement.  

But if you’re the type who wants that retirement we were all promised when we jumped into the workforce all those decades ago…well, welcome to your opportunity to live that life.