For decades, many businesses offered pensions for their retirees. In some companies, the employee and the employer would contribute to the pension fund. When the employee reached retirement age, they could draw that pension in addition to their Social Security. It was generally hoped that by retirement age, most people had paid off most of their debts including their mortgages, allowing them to live off their pension and Social Security income.
Let me make this clear right now. Social Security was NEVER meant to the sole retirement income for senior citizens. It was designed to be a supplement to pensions. Additionally, at the time Social Security was established, it was estimated, based on life expectancy data, that most retirees would only live an average of 5 years after retiring. Thus, Social Security was purely a short-term supplement and nothing more.
As the baby boomer generation began to age, many companies discovered they could no longer afford to offer or pay pensions, so many of them dropped pensions. A person could work for a company for 20-30-40 years and retire with no pension to rely on. This turned the emphasis to the short-term supplement known as Social Security.
By this time, the average life span after retiring was being extended, so instead of only having to pay out for about 5 years, Social Security was then being taxed to pay out for 10 or more years.
With pensions disappearing like the dinosaurs, many older Americans found themselves in a situation that required them to continue to work into their late 60s and 70s and sometimes longer. They just can’t survive on Social Security alone.
I just turned 65 and have paid into Social Security my entire life. However, at 65, I would only get about $1787 a month. Then they automatically deduct the cost of Medicare Part B from that monthly figure leaving me with $1,665 a month. My wife started drawing Social Security several years ago, and after the Medicare Part B deduction, receives a whopping $720 am month. Combined, that would only give us a total of $2,385 a month, which isn’t enough to pay our mortgage and bills. I do have a pension I am drawing for a utility I used to work for, I was there only 12 years, so I draw $365 a month from the pension, giving us a total retirement of $2,750 a month. That still isn’t enough to meet our financial needs, which is why we are both still working in some capacity.
Many other senior Americans are in the same situation as we are, so what can they do to make their retirement go further?
Many are moving to other countries where the US dollar goes much farther. It’s estimated by the Social Security Administration that nearly 400,000 American retirees are living in other countries.
Some American retirees have moved to countries like Canada, England and Germany, but they find that the dollar doesn’t go as far. Many others are moving to Mexico and other Central and South American countries where the dollar goes a lot further. The current exchange rate in Mexico is 20.74 pesos per $1US. Our $2,750US a month converts to about 57,062 Mexican pesos.
Another popular place for American retirees is Costa Rica where a US dollar converts to about 552.30 colons. Imagine if we retired to Costa Rica on just our retirement income, we would be making about 1,518,825 colons a month. I’m certain we could live a lot more comfortable on a million and half colons a month in Costa Rica than we could here in the US for only $2,750 a month.
This is why a growing number of retired Americans are leaving the US to live in other countries. They can’t afford to retire here and will end up spending their senior lives working instead of relaxing and enjoying their remaining years.