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Retire abroad on $600 a month. Really?

Oct 14, 2011, 8:39 a.m.

Each year Yahoo, Forbes, AARP and others publish lists of the best places to retire. In 2011 some of the top U.S. cities included Cape Coral, FL, Boise, ID, and Danville, KY. As for international locations, Panama, Costa Rica, Nicaragua, France and Argentina show up on many lists.

However the repeat winner of the "Number One Best Place in the World to Retire" seems to be Cuenca, Ecuador. It's a small town of one-half million in Southern Ecuador nestled in a valley between the Eastern and Western slopes of the Andes Mountains, not quite three degrees South of the Equator. As one long-time expat living in Cuenca exclaimed of the decade-long influx of Americans, "I see gringos everywhere." Today the U.S. Consulate estimates there are 20,000 U.S. citizens living in Ecuador, with perhaps a few thousand in Cuenca.

Websites that champion international travel and retirement have promoted Cuenca as a romantic, best-in-class city that offers a comfortable lifestyle for just $600 per month. It is a UNESCO World Heritage city, fraught with Spanish architecture from the 17th century, very well preserved and wonderfully photogenic. Narrow streets are filled with vendors cooking tasty, exotic foods over charcoal grills. Warm and friendly people are willing to help even if your Spanish is barely enough to get by. Apartments with two or three bedrooms rent for $200 to $350 per month, unfurnished. A friendly, Facebook-connected expat community is eager to help every newcomer. A 25-cent bus ride takes you anywhere in town, while a taxi ride is rarely more than two dollars. Perhaps best of all, the U.S. dollar is the country's official currency, so there is no exchange rate to negotiate.

Can one live on $600 per month in Cuenca, Ecuador? Just barely, and you have to be willing to cut back on your expenses. International Living's 2011 survey finds a typical monthly cost for a couple living in Cuenca is around $1,400. That pays for a luxury two-bedroom apartment ($500); a maid twice each week ($60); groceries ($275); utilities ($150); gasoline plus auto maintenance ($140); clothing ($70), entertainment--two people enjoying fine meals twice each weekend ($200); and health care ($20).

An AARP study finds that almost one in four retirees rely on Social Security for 90 percent of their living expenses, with the average retiree receiving $1,177 per month in 2011. So for an "average couple," Social Security would pay about $2,350 per month. That's more than enough to enjoy a comfortable, even lavish lifestyle in Cuenca or anywhere else in Ecuador. What to do with your 401(k) savings? Hold on to it. You won't need it in Ecuador.

Take some time to learn about Ecuador before you visit. Of the many excellent websites and blogs that discuss expat life in Ecuador, Cuenca High Life is a good starting place. It offers a newsletter and provides links to other information-rich sites. As you begin studying the prospect of retiring in Ecuador, do not let the rock-bottom cost of living be your only motive. Be sure to learn about the legal system and the socialist political environment. Perhaps most important, leave your biases at home. Life is very different in South America; embrace those differences, because complaining about them only leads to disappointment.

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