Ways to Retire Early While Living Abroad
While exploring exotic locations is certainly one aspect of traveling the world, the primary benefit for most location independent travelers is the savings. When you can cut your cost of living down from $25,000 per year (the median cost of living per working adult in the United States as of 2010, according to the U.S. Census Bureau), to a mere $8,000 to $10,000 while retaining access to all of the exact same amenities you are accustomed to, all that money goes straight back in your pocket rather than disappearing into thin air.
The pre-tax wage in 2010 was around $36,000, according to the U.S. Census Bureau, but when you deduct the average amount of taxes that most people in the United States pay, the take-home pay comes out to around $25,000. This means most Americans (the average) are barely breaking even in terms of pay versus cost of living. Meanwhile, the location independent workers of the world are enjoying the lowered cost of living in foreign countries while at the same time taking advantage of lower tax rates by choosing countries that have a lower tax rate and a tax treaty with the United States, which means you pay local taxes and then present that proof to the IRS to show that you are still paying taxes, just in your new home.
The appeal for many digital nomads is that they can go to a country like Colombia, where the upper middle class exists on a cost of living that is around $10,000 per year, or Bulgaria where it is around $8,000 per year, and while enjoying a lower tax rate and their same wages from back home, put a significant portion of their income back in their pockets. Being location independent means you can take a $30,000 a year salary and live like a rock star because you only need about $10,000 of that for your cost of living, and the other 20k can be spent however you see fit.
However, you don't have to be part of the active work force to be able to utilize the lowered cost of living in foreign countries as a digital nomad. Pensioners can apply just as easily, and while the concept of living abroad on your pension isn't a new ideal, many people still aren't educated as to how easy it is to actually do. When you can take your $1,000 a month pension and live somewhere like Sofia, Bulgaria on $600 to $800 per month, you are left with several hundred dollars that you can use as you see fit. Plus, since most of these countries (like Bulgaria, Colombia or Mexico) utilize universal healthcare systems, you don't have to pay thousands per year on the extra things.
Living abroad as a location independent digital nomad means you can reduce your working hours if you choose, because you need significantly less to pay for your cost of living. Or you can do as many other professionals are doing, which is working abroad for three to five years, working normal hours on your old salary and keeping that money so you can retire by the time you are 30 or 35, rather than waiting until you are 60 or 65. When you can buy three bedroom house in a place like Italy for $35,000, it's easy to save up in a few short years and retire comfortably at an early age.
The pre-tax wage in 2010 was around $36,000, according to the U.S. Census Bureau, but when you deduct the average amount of taxes that most people in the United States pay, the take-home pay comes out to around $25,000. This means most Americans (the average) are barely breaking even in terms of pay versus cost of living. Meanwhile, the location independent workers of the world are enjoying the lowered cost of living in foreign countries while at the same time taking advantage of lower tax rates by choosing countries that have a lower tax rate and a tax treaty with the United States, which means you pay local taxes and then present that proof to the IRS to show that you are still paying taxes, just in your new home.
The appeal for many digital nomads is that they can go to a country like Colombia, where the upper middle class exists on a cost of living that is around $10,000 per year, or Bulgaria where it is around $8,000 per year, and while enjoying a lower tax rate and their same wages from back home, put a significant portion of their income back in their pockets. Being location independent means you can take a $30,000 a year salary and live like a rock star because you only need about $10,000 of that for your cost of living, and the other 20k can be spent however you see fit.
However, you don't have to be part of the active work force to be able to utilize the lowered cost of living in foreign countries as a digital nomad. Pensioners can apply just as easily, and while the concept of living abroad on your pension isn't a new ideal, many people still aren't educated as to how easy it is to actually do. When you can take your $1,000 a month pension and live somewhere like Sofia, Bulgaria on $600 to $800 per month, you are left with several hundred dollars that you can use as you see fit. Plus, since most of these countries (like Bulgaria, Colombia or Mexico) utilize universal healthcare systems, you don't have to pay thousands per year on the extra things.
Living abroad as a location independent digital nomad means you can reduce your working hours if you choose, because you need significantly less to pay for your cost of living. Or you can do as many other professionals are doing, which is working abroad for three to five years, working normal hours on your old salary and keeping that money so you can retire by the time you are 30 or 35, rather than waiting until you are 60 or 65. When you can buy three bedroom house in a place like Italy for $35,000, it's easy to save up in a few short years and retire comfortably at an early age.
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Before moving abroad, research living as a digital nomad at places like Marginal Boundaries, where you can find more information on the location independent lifestyle and how to take advantage of the drastically reduced cost of living in other countries.
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