Why We’re Retiring and Moving to Spain
On September 12, 2018 we will board a one-way flight to Valencia, a city we have never visited and where we don’t know a soul. Why would we do such a thing? Here’s the FAQ.
Where did you get the idea to retire early and move to a foreign country?
Before the fateful day of July 21, 2015 we had given little thought to retirement and no thought at all to retiring in another country. But on that day an article on CNN’s website caught my eye. It was about an American couple that took a vacation to Panama and realized that due to the low cost of living, they could retire there much earlier than expected. The article detailed their monthly budget for housing, groceries, health insurance, etc. Before I had even finished reading, I was pretty sure that we would enjoy doing the same. After a couple days of research into the financial issues and a few countries that we might choose, I was convinced. It took a few more days to convince my wife. In early August we informed our families that we planned to retire in 2018 or 2019 and move to some low-cost foreign country whose identity was still to be determined.
There are a lot of countries in the world – according to Wikipedia, more than a dozen! So which to choose? We immediately narrowed the list to those where English or Spanish is spoken. Liliana’s native language is Spanish – she was born and raised in Lima, Peru – and after college I spent a year backpacking around Central and South America before living for four years in Bolivia, so I’m fluent, too. Because “low-cost” is a key requirement, we quickly ruled out almost all English-speaking countries. (Your loss, New Zealand and Australia!) And while Belize is inexpensive and looks like a nice place to visit, it didn’t make the short list.
The first country we seriously considered was Costa Rica, where we’ve taken two family vacations and where I backpacked for a month back in 1990. Many Google Maps clicks later, we had identified several interesting towns that might make the grade. From there we moved on to Panama, Ecuador, Peru, Colombia, Chile, Uruguay and Mexico. For good measure, I also glanced at Guatemala and Nicaragua, but they were never serious contenders.
At this point alert readers will notice that I have yet to mention Spain. That’s because we assumed that Spain would be too pricey – I mean, it’s practically in Europe! — and we all know Europe is expensive. Now hold that thought.
In October 2015, we took a long-planned trip to Italy. After visiting the island of Procida to look for Liliana’s grandmother’s house and long-lost cousins, we headed to the Amalfi Coast and then to the beautiful small town of Maratea. Our hotel was on a hill overlooking the town, and while I stood on our room’s tiny balcony, it occurred to me that this was the kind of town we could be happy living in. But, alas, we don’t speak Italian. And then it hit me – Spain must have towns like this! And since small towns that are rarely mentioned in tourism guides tend to be moderately priced, maybe we had been too hasty in ruling out Spain. I Googled “where to retire in Spain”, and the rest is history.
In 2016 we took a two-week scouting trip and vacation to Spain, visiting the cities of Barcelona and Malaga, and a small town called Torrox. By the end of the trip, we were pretty much convinced that we would be happy in Spain and that life there would not be too expensive after all. A year later we went back again, this time to the cities of Bilbao and San Sebastian, and the small town of Begur. Everything we saw, heard, ate and drank confirmed that Spain was a good choice for us.
At this point alert readers – probably the same ones that I recognized above – will notice that we’ve never been to Valencia, the city where we now plan to move. In fact, we don’t even know anyone there. So why Valencia? Well, at some point between our two trips to Spain we realized what our criteria were for selecting our destination: we wanted to be in or near a mid-size or large city (but not a huge one), on or very near the ocean, with great weather (sunny most days with no real winter, thank you), not too expensive and not too touristy. Valencia, if the internet is to be believed, is all of these things. With a population of 800,000 it’s not huge like Barcelona or Madrid. The city center is about two miles from the Mediterranean. It rarely rains and never snows. And compared to Barcelona, apartment rentals are cheaper and there are fewer tourists.
If it turns out that you can’t believe everything you read about Valencia on the internet, then we’ll try a different city. Since we won’t be buying a house or apartment anytime soon, moving won’t be a problem.
What are you taking with you?
Not much! In the last year we have sold our house, our two cars, our furniture, Liliana’s boutique and practically all other possessions. Family photo albums, other things of sentimental value and practical things that our kids might want some day are now in storage. So we’ll be taking with us clothing, laptops, phones and not much else. A trial packing exercise proved that I can fit my stuff in a 40-liter backpack (close to the maximum carry-on size) and one medium-size suitcase. I expect Liliana will manage with the same plus one more medium size suitcase. So I will no longer have a daily choice of 25 shirts, but that’s probably a good thing.
Why not just retire to Florida like normal people?
The cost of health insurance, for starters. In a future post I’ll talk about our Spanish health insurance, but for now I’ll summarize as follows: private health insurance in Spain is reasonably priced while in the U.S. it is prohibitively expensive. The costs of housing, food and transportation are also lower in Spain. Of course our move is not all about money. Miami is on the ocean and the weather might be great, but moving there isn’t exactly what I would call an adventure.
Are you sure you can afford to stop working?
When we first got the idea that early retirement might be possible, we needed to find a way to estimate when we could afford to do it. A quick Google search for “retirement calculators” will turn up any number of quick, free, easy-to-use tools that are all but useless. The problem is that determining when you can afford to retire and how much you can spend in retirement is a question that you can’t answer just by plugging into a formula your age, salary, current savings, savings rate and an estimate of your retirement spending. A lot more factors are involved, and there is no simple formula that will give you the answers you are looking for. So I started to develop an Excel-based model of our finances that takes into account all relevant variables that are known or can be reasonably estimated. These include assets of all kinds, salaries, 401k/IRA contribution rates, expected future raises, social security distribution options, 401k and IRA distributions, inflation, expected cost of living in retirement, anticipated increases in health care premiums and more.
The initial results indicated that we could probably retire in 2018 or 2019. Over the following two years I made many improvements to the model and updated our numbers once a month. By early 2017 it appeared very likely that we could afford to stop working at the end of 2018. A year later the outlook hadn’t changed, and that’s when we started the process of applying for our visas to live in Spain.
How did you get a Spanish residency visa?
Although the process is not overwhelming, it’s not simple or quick. I plan to detail our experience in a future post.
Will you ever live in the U.S. again?
We have no idea. We say we are moving permanently to Spain, but “permanently” really just means that we currently have no plans to live anywhere else. Maybe someday we will have grandchildren, and we will want to live closer to them. Maybe the United States will finally figure out how to provide reasonably priced healthcare. Maybe the creator of Breaking Bad will find a plausible way to continue the story for another season. Ok, I guess that last one’s off-topic, but it’s still something I wonder about. The point is that we can’t predict the future, we’re happy with the plans we’ve made, and we know things could change at any time.
Are you going to write more about this experience?
The purpose of this blog is to help others figure out why, when, where and how to move overseas – whether to retire, work remotely or work locally – and not just in Spain, but anywhere really, since most of the challenges involved in this undertaking apply to any country. As long as this blog serves that purpose, we will continue to update it with our discoveries.