Not saving enough or starting soon enough leaves many Americans facing meager retirement prospects. For some, retirement living in Spain can be a solution.
Even the best-laid plans can go wrong when it comes to financing a comfortable retirement. A past study by the Center for Retirement Research at Boston College concluded that nearly a third of baby boomers aged from 56 to 64 years are at risk of not having adequate savings to finance a comfortable retirement.
For many, hopes for retirement rest on Social Security alone. According to the Social Security Administration, 10.6 million people, or 20 percent of the 48 million who will receive benefits this year, live on that check alone. Social security was never meant to be a retirement pension but merely a supplement to retirement income. Living in the United States dependant on social security alone warrants a bare subsistence level standard of living, barely adequate to provide for little more than basic needs.
For many Americans, solving the underfunded retirement dilemma means moving abroad to countries like Spain, where the cost of living is less, and retirement dollars go further. Every year thousands of Americans and other foreign nationals move to Spain to enjoy a higher standard of living than they could afford in their home countries. Properties in resort towns like Salou, Sitges, and Javea are particularly in demand.
Advantages of moving to Spain in retirement
Financial considerations are perhaps the top advantage of retirement living in Spain. Basics like rent, utilities, and groceries are all less expensive than in the States. Restaurant dining and entertainment expenses are also lower. Saving on the basics can free up more retirement income for luxuries that many American retirees can only dream about.
As an example, Barry Golson, co-author of the book, Retirement Without Borders, reports these typical monthly costs for retirees living in many areas inside Spain:
- Rent: $588.22 (€500) and up to rent a two-bedroom home, condo, or apartment
- Groceries: $411.75 (€350) for two
- Utilities: $294.10 (€250), where air conditioning is not needed
- Television: $35.29-$76.47 (€30 – €65) for satellite or cable
- Internet: $47.06 (€40)
Overall, he estimates that the cost of retirement living in Spain is at least 25 percent to 35 percent less than that in the UK, France, the United States, and Canada.
Affordable and good quality healthcare is another advantage of retirement living in Spain. Office visits to a doctor, hospital costs, dental services, and prescription drugs are substantially less. Large numbers of Spanish doctors and dentists received their medical training in the U.S., so comparable healthcare is available. While Medicare and many U.S. health insurers will not pay for care received in Spain, many retirees report that they receive a better standard of care, paying a relatively low-cost private medical insurance, than they would experience in the U.S. with Medicare or another insurer.
Climate and weather conditions are another big draw when it comes to retirement in Spain. Many areas have temperate climates eliminating the need for both air-conditioning and heating.
Disadvantages of retirement living in Spain
Retiring to Spain should not be considered synonymous with a move to the mythical Shangri La. There are real disadvantages that must be carefully weighed against the advantages:
- A great distance separates retirees living in Spain from friends and family.
- The language barrier can also be problematic for those who do not speak Spanish unless settling in one of the large U.K. or American expatriate retirement communities.
- Many of the luxuries taken for granted in the United States are unattainable.
- The red tape associated with living in a foreign county.
- While it is slowly changing, there is still some government corruption in Spain, the effects of which may be experienced by American retirees.
- Property crime rates may be higher in some areas than in the U.S.
Considerations for retirement abroad in Spain
First and foremost, someone considering retiring to Spain should ask themselves if they could be happy living in a foreign country. It is not for everyone and relocating to Spain purely for financial reasons is not wise. A sense of adventure and a desire to travel and experiencing different cultures are characteristics of successful American expatriates living in Spain. Lower costs of living should be looked at as a bonus to the whole experience.
Before deciding to retire in Spain, several visits should be made to the country to different locales to assess living conditions, housing availability, and the desired services. Experts recommend that housing be rented for at least a year before a decision is made to buy for those who opt to go ahead with the relocation. Should someone change their mind, it is much easier to end a lease than sell property, extricate, and return to the States.
Americans can live in Spain on non-immigrant visas that must be renewed periodically. A qualified legal estate agent in Spain can advise as to current legislation. For those desiring a more permanent arrangement, retiree visas are available for people age 50 and older. Still, minimum fixed income requirements exist to discourage the possibility that foreigners will request state aid or take jobs from citizens. There is currently no statutory requirement, and Spanish immigration officials consider applications on a case-by-case basis, but a rule of thumb is that Americans looking to retire in Spain on a retiree visa should be able to prove monthly fixed incomes of $1764.57 (€1,500) plus an additional $588.19 (€500) for a spouse or other dependent.
Retirement abroad in Spain can be a good alternative for some Americans who face unfavorable prospects for a comfortable retirement at home. Indeed, it can make sense from a purely financial perspective, but all factors, including the advantages and disadvantages, should be considered. Also, no one should up and move to a foreign country without doing the necessary homework. Visit first, preferably several times, and experience several different areas before launching retirement relocation to Spain.
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