This Is How Much It Costs to Retire in the U.S. vs. Abroad

There are many different factors to consider when deciding where you'll spend your retirement years. Some people want to be as close to family as possible, some focus on travel, and others may prefer to stay where they've always been. 

But one thing that influences everyone's retirement, no matter where they end up living, is how much money they've saved. The insurance company New York Life estimates that Americans who retire at 65 can expect 20 years of retirement, on average, and will need $987,000 to cover their expenses. 

That's a hefty sum of money to squirrel away, and it may be out of reach for many American workers. Thankfully, there are several countries where the cost of living is much lower than in the U.S., which is likely why an estimated 15% of Americans say they plan to retire abroad.

If you're looking to stretch your retirement budget as far as possible, here are some of the cheapest places to consider. 

Where your retirement funds will go much further 

In the U.S., the average cost of living is $2,317 per month for one person, which is about 2.3 times more expensive than the world average, according to data from LivingCost. If you're looking to reduce your retirement expenses drastically, here are five places around the world that could be good places to settle down. 

1. Brazil 

Retirees will fork over just $736 per month on average by moving to Brazil. The cost of living here is 1.3 times lower than the world average.

2. Ecuador

Moving to Ecuador will cut your living expenses by more than half compared to the U.S., considering it costs an average of $779 per person to live there monthly. 

3. Mexico 

The cost of living just over the border is $911 per month, about 1.1 times lower than the world average. 

4. Costa Rica

Moving to Costa Rica could cut your cost of living by 53% compared to staying in the U.S., and will set you back just $1,073 per month. 

5. Portugal 

Living your retirement years in Portugal could save you nearly 50% off of living in the U.S., considering the average monthly expenses will set you back $1,180.

Of course, everyone's personal finances are different, so the amount you spend in each of these countries could be different based on your housing costs, food, and other expenses. But in general, these countries offer a far lower living cost for retirees than the U.S.

If you're planning to live abroad in retirement, you should consider that many countries have visas specifically for retirees. These visas may require you to prove your income and list assets you own to prove that you won't be a financial drain on the country. 

How to build up your nest egg no matter where you live in retirement 

Whether you're just getting started in the workforce or are nearing retirement, there are several steps you can take to put your retirement on track. Here are a few suggestions to help you get started: 

• Set up an individual retirement account (IRA): Open a brokerage account and regularly contribute to your IRA. You can contribute up to $6,500 into your IRA account -- or $7,500 if you're 50 or older -- in 2023. You can also choose between a traditional IRA and a Roth IRA, so be sure to compare the benefits of each beforehand. 
• Sign up for a 401(k) plan: If you have a 401(k) plan through your employer, make sure to sign up for it and contribute as much as possible. If your employer offers a matching contribution plan, it's a good idea to contribute enough in order to receive the maximum amount your employer offers. 
• Pay down debt: Besides investing, eliminating debt will help put you in a better position to retire. This may mean paying off credit card debt, downsizing to a smaller home, or consolidating your debt to make it more manageable.

While there's no one-size-fits-all approach to where you spend your retirement years, planning ahead now will give you more options on where and how you retire years down the road.