How Living Abroad Let Me Escape The Rat Race At 29

What if you could retire years, or even decades earlier, by moving to a place where each dollar you save goes 2 or 3 times as far?

The math behind financial independence is simple: you need 25 times your annual expenses to never have to work for money, ever again.

This calculation comes from the thorough Trinity Study, which defines the safe withdrawal rate based on historical returns, that will allow your portfolio to never dry out. That safe withdrawal rate is 4% per year.

What Does This Mean For You?

If you are a 25 year old recent graduate making $50,000 a year, and are willing to live lean for some years, saving half of your income, you can achieve early retirement at age 42. The assumptions behind the math are that your savings generate a 7% annual rate of return, and you can withdraw 4% of your nest egg to live in retirement.

how to retire early networthify

You can use Networthify to determine your retirement date, based on your income and savings rate. For a more detailed analysis of your retirement goals, you can also try Personal Capital’s Free Retirement Planner

The truth is that saving half of your income is hard. Let’s say you are only able to save 20%, or $10,000 per year. Financial independence is now 37 years away. That is a long time to wait.

But here is the thing: what if you could retire years earlier, by moving to a place where your dollar stretches even further?

How To Retire Early Via Geo-Arbitrage

Our retirement calculations here are based on annual living expenses of $40,000 in retirement. If you are willing to use geo-arbitrage and relocate to a cheaper state, or even country, you could quit your job much earlier – without sacrificing lifestyle.

Financial independence has always been a goal of mine, and I was working in the UK, saving aggressively, with a retirement target at age 40. I was miserable at my job, and counting the days that seemed too far away.

Then it hit me.

What if I went back to Guatemala, a country I had lived in previously, that I loved, and live a simple life over there? I needed around $1,000 a month to cover my basic living expensive, and the cost of a flight back home every year.

how to retire early by moving to guatemala

The hammock view from the author’s home in Guatemala

Based on the safe withdrawal rate of 4%, I could retire on a $300,000 nest egg instead of the $1,000,000 or so I would need if I remained in Europe. Six month later, I sent my resignation letter. I was 29.

And I am not alone. A lot of US retirees have chosen Guatemala for its mild climate, low cost of living, and natural beauty. The cost of living in Guatemala is about 50% less than in the US.

Here is a sample monthly budget:

  • Rent: $500 that will get you a nice furnished little house, sometimes with all bills included. Most include at least water and condo fees for gardening and garbage collection.
  • Utilities: $100 electricity should be around $30-40, a gas tank for cooking costs $10, internet is around $30 (more if you live in remote areas), phone around $10-20, and you don’t need heating but you can buy wood if you have a fireplace.
  • Food: $100 that’s for one person. You can buy street food for $2 a meal, local fruits, vegetable and meat are delicious. Expect to pay more for imported products.
  • Travel: $300 You can fly to most US cities for under $500. I am accounting for two flights back home ($1,000/year), and around $200 a month to explore the country. You can travel well on $50 a day per person.
  • Staff: $300 A housekeeper charges around $10 a day. If you are older, you can find a nurse for under $40 a day. This is a top reason people choose to move down here in retirement.
  • Transportation $50 I have already accounted for travel costs around the country, and in town you can get tuktuk rides for $2-5. You don’t need a car.
  • Entertainment $50 again, some of the restaurant costs will go under travel and food. A nice dinner costs $25pp and up.

That monthly budget comes to $1,400 for one person. $1,100 if you split the rent and bills with a significant other. And as you noticed, I included a full-time staff and quite a bit of international travel. You can comfortably live for under $1,000 a month in Guatemala.

Where Can You Move To Enjoy Financial Independence Sooner?

Check out Expatistan for detailed cost of living in several countries, and to compare these with the cost of living at home. Mexico and Central America are popular destinations for their geographical proximity to the US, quality of life, and because learning Spanish is much easier than Asian languages.

If developing countries are not your thing, you may consider Portugal, Spain or Italy. Your budget should be about the same, for a simple life without the luxuries mentioned above.

According to Numbeo, the cost of living including rent in Guatemala is 51.84% cheaper than in the UK where I was previously living, and 50.96% cheaper than in the US. That means if you are living in the US on $2,000, you can make it work in Guatemala on $1,000.

Shave Years Off Your Target Retirement Date

Let’s get back to our financial independence savings. If you are saving $10,000 per year on your $50,000 salary, instead of retiring 37 years from today on $1,000,000, you can achieve a $317,312.46 net worth at the end of year 19, and live on $12,000 a year in a cheaper country (calculator used). That is 18 years of your life you won’t have to work to finance your retirement.

Is Geo-Arbitrage Right For You?

On the other end, geo-arbitrage for earlier financial independence can come at a cost.

Most retirees I meet in Guatemala have left their kids back in the US so they can pursue higher education. Communication is made much easier these days thanks to Skype and Whatsapp, but still, seeing your kids won’t be as easy as dropping by for Saturday burgers.

If you move to a foreign country, there may be a language and cultural barrier. While I feel at home in Guatemala, and speak Spanish fluently, I sometimes get a reminder that I am not 100% integrated.

Look Before You Leap

While geo-arbitrage can be a great way to achieve financial independence sooner, I always recommend you take an extended trip to your dream destination. Rent a place for a couple of months (AirBnB has affordable properties in over 191 countries available for short-term lease), explore around, meet other expats, and see how you like it. Inquire about taxes, immigration laws, the price of real estate.

Some early retirees even make it a lifestyle, changing countries with the seasons. It doesn’t make their life much more expensive, as the price of a ticket from say Guatemala to Panama is pretty much the same as a flight to the US.

In the end, it all boils down to personal preferences. To me, escaping the rat race a decade earlier was well worth it.


  1. Hank

    March 30, 2016 at 10:59 pm

    This is actually a useful article, most on the subject are painted with such broad strokes, filled with generalizations and no real facts. You gave some concrete details so kudos to you.

    We am on a similar path, albeit a few years later than you. In 5 years time, I and my wife will both be 45, and we will be comfortably settled in Asia (I prefer not to give out the country). We achieved our goals in a slightly different way.

    #1 I am married, and my wife also makes a good living. The combined income, 401K, investments, and shared household costs really help versus being single. If I were single my timeline would be pushed back and my budget could run into more unexpected expenses because I would still want to date/marry/etc.

    #2 My wife is educated in, and 20+ year resident of America, but still holds a passport in the country we will retire in. This makes the visa process easier and even made the home buying process cheaper/easier/possible.

    #3 We purchased the house we will live in with cash ($50k total) so we have no rent. We also rent the place out while we are not there.

    #4 We consciously chose not to have children to help us achieve our goals. This is a tough one for many people.

    #5 We are both Masters degree holders and also took advantage of our company’s tuition and certification reimbursement programs so we can consult/teach/tutor/etc to fill in financial gaps in any unforeseen emergency.

    #6 We sold our huge house and too numerous possessions 10 years ago so as to work towards this goal. We have been living with less physical things since then.

    #7 Lots of research. This includes visiting our new home country multiple times, often using all our vacation and staying more than a month living like a local not a tourist. Reading every article on retirement in the country. Finding out mundane things like internet/phone/water/electricity/car costs from my in-laws and friends that still live there. Networking on expat sites and blogs.

    We could have moved faster but we had certain things we wanted to accomplish before moving to Asia. We spend more money on rent than needed. We live in a 1 bedroom condo, but its by the beach in Los Angeles, living in a major city is a must for us and the one major irresponsible thing we have in our budget. We do share just one 14 year old car, this makes insurance and licensing MUCH cheaper. We also choose to get around by bike much of the time which reduces gas and maintenance and also has become a free-ish/cheap and healthy hobby. We hit up every free concert and festival we can go to to save on entertainment. We eat home cooked meals on all weekdays and often on weekends. We coupon and use savings apps to save on everything.

    • Pauline

      March 31, 2016 at 1:07 pm

      Great story Hank. Looks like you and your wife are on your way! Good point about being a couple vs single. I am single, and have lived with partners but always kept my finances separate. I was enjoying the “one rent split in two” part, but not the double boost of two people saving. So my partner wanted to go out? We went out. You are lucky to have found a like minded wife. And her being a national in your new country will definitely be very helpful.

  2. Nate Tsang

    March 31, 2016 at 12:57 pm

    Awesome stuff Hank. Thanks for sharing all those helpful tips – could have made a great article in itself!

  3. Terence

    April 29, 2016 at 9:11 am

    Great article, Pauline. Question for you, if I may. I’m American, 68, consulting in China until November 2016. At that time, my wife and I plan to move to Lake Atitlan. My social security and other income will easily qualify for a pensionado visa for me and my wife (I’m told it’s $1,200/couple).

    My wife holds a Kenyan passport. Do you envision her passport could in any way stifle our plans or put up a roadblock for her entry into Guatemala?

    • Pauline

      April 29, 2016 at 12:06 pm

      Hi Terence,
      I don’t think so but worst case if you are struggling for residency, you can do what many people do, visa runs every 6 months. You get 3 months as a tourist that you can renew once and extend to 6 months. That means you only need to fly home or visit Mexico/Belize twice a year.

  4. Sam

    May 11, 2016 at 1:13 pm


    I loved this article. This is something that I am interested in doing (retiring abroad) but I am scared at taking the plunge. Based on the expenses you’ve listed, I am capable of doing so right now but am loving my job. I plan on working for up to another 8 years and then planning on living abroad.

    My biggest concern with early retirement is filling the time and not getting bored. If you don’t mind me asking, how do you spend the days and do you find yourself engaged and not bored? I have left my email address, feel free to send me an email if you have time, would love to pick your brain.

    • pauline

      May 11, 2016 at 1:42 pm

      Hi Sam,
      Please note my expenses are as of right now, as a single woman with no kids, health problems, etc. These are also my expenses when I am in Guatemala. I spend a lot on travel and when I am abroad I spend more. I am producing way more than that and saving the rest to afford a family and other costs of growing older. Say I own a car and a house, but will need to repair/replace them eventually. A roof replacement can be a year worth of Guatemalan expenses.You need to account for all that if you want to retire completely.
      People get bored in normal retirement because they don’t know what else to do. Early retirement could mean 40 years of boredom. Mostly, I see work as an excuse for people. “oh, I can’t stop working, I need to pay for XYZ… I don’t have the time to XYZ because I work…”. When you’re in ER, you have no more excuses and that’s scary. I never find myself bored.
      I wake up around 530am, go for a run, a swim, have breakfast. My house is a guest house so sometimes I have guests and staff to manage. I was building another house for myself until recently. I have a piece of land I am developing. Part of my income goes to a charity project that I run. I offer free computer and English classes to the kids in my village. I run three personal finance blogs.
      I guess ER is just a shift from having to work to working on what you like. I couldn’t be in the hammock all day. But I enjoy being able to eat when I am hungry, sleep when I am tired (sometimes I nap at 10am or 2pm), and take a month off if I want.

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