Seeking more affordable living, North American retirees head to Latin America; Ecuador remains a top destination
When Connie and Mark Pombo decided in 2010 to retire abroad, they searched for locations online. Ecuador seemed to have everything they wanted, so Mark, who had recently retired from the United Parcel Service, flew south to visit.
He was impressed. Three months later, the couple sold their Lancaster, Pennsylvania, home and packed their suitcases. Two years later, the Pombos live on a $600 monthly budget, which includes their $200 two-bedroom rental overlooking the Tomebamba River in Cuenca, a city in the sierra of the Andes Mountains.
They love their scenic and affordable lifestyle. "I could never go back to the U.S.," says Connie, 56, a semi-retired freelance writer. "The prices just rattle my brain."
In the last five years, the South American country, sometimes known for its shamanic healing, has become the top hot spot for bargain-seeking retirees like the Pombos, according to International Living magazine's 2012 Global Retirement Index.
The warm weather, cheap housing, and inexpensive healthcare are a draw, especially for baby boomers with eroded nest eggs and a sense of adventure.
The State Department estimates that some 6.3 million Americans are living abroad, and expat sites have put the number of retirees doing that as high as 1.5 million. Those numbers could swell as baby boomers hit their retirement years ready for new adventures. Some sources estimate that overseas retirees could number 5 million within six or seven years.
For retirees, leaving the United States often means a more affordable way of life, including low-cost healthcare, real estate and even gasoline prices. Cherry-picking a warm weather spot can offer another perk. Some expatriate retirees also point to the social benefits that accrue when they become part of a tight knit community. That is especially important for those who feel isolated back home, says Mary Beckman, 55, who plans to retire to Ecuador with her husband, Steve, 60 this year.
She visited the country for the first time last month and plans to permanently move to Cuenca this year. "Everybody seems to be in the same stage in life," says Beckman, who blogs about her experiences at SouthofZero.com. "People are just open arms and very friendly."
Moving abroad — even to an affordable tropical paradise — has its headaches.
"Ecuador is still in the infancy stage in terms of attracting … the infrastructure is still not as strong as other places like Costa Rica," says Nicholas Crowder, author of "Culture Shock! Ecuador: A Guide to Customs & Etiquette." He estimates 5,000 to 10,000 expats live in the country, while over estimates range as high as 20,000. "Many Americans are not prepared for the language and the culture."
Real estate scams are common and can include hidden fees, says realtor Amy Prisco, 40, a former New Yorker who sells coastal properties in Salinas. "It's unregulated and nobody is enforcing the laws," she says. This may change soon, however, as legislation has been introduced in the National Assembly to tighten regulation of real estate agents.
Ecuador has recently seen an increase in long-term home rentals, which can be a good alternative to buying, Prisco adds. Negotiating a two or three-year lease can halve monthly payments. For example, a three-bedroom, waterfront condo can rent for $700 with a multiyear lease.
Unexpected living expenses also add up. When travel industry veteran Gary Sisk, 63, retired to Cuenca last December he was surprised at the cost of furniture, appliances and electronics, which can sell for up to three times what he once paid in the United States. Western-sized clothing can be especially difficult to find, Sisk says, "Americans tend to be a lot bigger."
Like other retired expats, Sisk is required by the U.S. government to pay taxes, even if residing abroad.
Despite the unforeseen set-up costs, prices are still low. Sisk's monthly budget is $800 per month, which includes renting a $280 per month two-bedroom two-bath apartment in a popular expat area.
Logistics like health insurance and banking have been surprisingly easy, says Connie Pombo. The Pombos pay $85 per month for comprehensive health insurance with Nova Ecuador, a national insurer.
Pombo says most retirees prefer to simply pay out of pocket for doctor visits, which are less than $20 per appointment.
The family gets Mark's $1,300 monthly retirement check in their U.S. bank account and uses an ATM for monthly cash withdrawals for all expenses including rent. Getting around by bus is only 12 cents for seniors; taxis cost anywhere from $1 to $3, Pombo adds. Gasoline is subsidized by the government and is under $2 per gallon.
The quality and efficiency of places like hospitals, banks, stores and restaurants throughout Ecuador may not be what immigrants are used to. "A lot of people think it's just like the U.S. but cheaper — it's not, it's a developing country," says Leigh Frost, 55, a retiree who owns a small rental business in coastal town of Olon, Ecuador.
Crowder also cautions Americans thinking of retiring abroad to not be overly trusting. White-collar crime is becoming a concern for some retirees in Ecuador. "Gated communities have these big austere looking fronts, but a lot of crime is committed by insider jobs," says Crowder who owns a home in Ecuador. He warns against an increasing number of expat criminals who establish trust with retirees by speaking fluent English. Expect to be bombarded with ways to part with your money from locals too.
Before you take the leap, get acquainted with the locale, suggest folks who have been there. "I always tell people to take one trip in high season and then come in off season when it's chilly and overcast," says Prisco, who lives on the coast. A local attorney can help start the year-long residency process and specify which notarized documents are necessary before leaving the United States. Brushing up on Spanish and learning about the Ecuadorian language and culture is a must.
But nothing can prepare new expats for the country's different way of doing things. Embracing the laid-back culture is a must, says Gary Phillips, 65, who moved to Cotacachi, Ecuador, in 2006 and runs the expat site Pro-Ecuador.com. He always shares one piece of advice with the country's retirees: "Things happen much slower here than they do in the States. Ecuadorians say mañana but mañana doesn't mean 'tomorrow' it just means 'not today.'"
Credit: By Alina Dikik, www.reuters.com; photo caption: Cuenca is the top draw for retired expats in Ecuador with almost 1,500 permanent foreign residents, according to immigration officials.