Retire in Colombia With $200,000 of Savings?

Say “Colombia” to just about any American a decade or two ago, and they would probably think: drug lords, kidnappings, violence. The idea of retiring to Colombia would have been laughable. 

What a difference some time makes. Colombia ranked No. 2 on The New York Times “52 Places to Go in 2018,” and the U.S. Department of State notes that the country "has transformed itself over the past 20 years from a fragile state to a vibrant democracy with a growing, market-oriented economy."

In Jan. 2018, the State Department upgraded Colombia from a Level 3 country, one traveler are urged to reconsider visiting, to a Level 2 country, one in which exercising increased caution is recommended. While that may still sound a bit ominous, consider that many popular European tourist destinations, including France, Italy and Spain, are Level 2 countries.

Three Colombian cities – Cúcuta, Palmira and Cali – were on the 2017 list of the world's 50 most violent cities with a population over 300,000, released by Mexico's Citizens' Council for Public Security. But the U.S. cities of Detroit, New Orleans and St. Louis also made the list.

Let's take a look at how Colombia has evolved as a retirement destination and how far a retiree living there might be able to stretch $200,000 in savings.

After a half-century of internal conflict that left 200,000 dead, the government of Colombia and the Revolutionary Armed Forces of Colombia (FARC) reached a historic peace accord in Nov. 2016. However, the situation remains tenuous, with the State Department saying "some dissident groups refuse to demobilize" and that the National Liberation Army (ELN) rebel group continues to plot possible attacks in Colombia.

In the Global Peace Ratings for 2018, released by the Institute for Economics & Peace, Colombia ranked 145th out of 163 countries. To put that in perspective, the United States is at 121 and Mexico is at 140. Yet, the Institute for Economics & Peace noted that among South American countries, Colombia showed the most significant improvement between 2013 to 2016.

Colombia landed the No. 6 spot on International Living’s list of The World’s Best Places to Retire in 2018. The ranking takes into account things such as ease of buying or renting a home, cost of living, ease of “fitting in,” availability and cost of healthcare, governance and climate. Commenting on Medellín, the city that gave its name to Pablo Escobar’s drug cartel, an International Living contributor Nancy Kiernan writes that retirees "can live a First-World quality of life in a country that’s only now showing up on fellow retirees’ radar."

Now, let’s look at how well and how long you will be able to live in Colombia on $200,000 in savings.

One of the reasons Colombia ranks so highly on International Living’s retirement-destination index is its low cost of living. The expat publication says there are many parts of Colombia in which a couple can live off $2,000 per month or less. International Living’s sample budget for a couple renting a furnished three-bedroom, two bathroom apartment in Medellín looks like this:

• Rent: $1,250
• Utilities (electric, water, natural gas): $105
• Internet, phone, cable TV: $75
• Groceries: $175
• Maid (twice a week): $120
• Cinema (once a week): $56
• Dinner out (twice a week): $320
• Public transportation: $90

That adds up to a monthly budget of $1,291. But if you're willing to forgo the maid service and cut back on a few meals out or trips to the movies, you could easily get your budget down to $2,000 a month.

On that budget, you would be able to live on your $200,000 savings for approximately eight years and four months. Of course, this is simply back-of-the-envelope math that assumes your monthly expenses stay the same over the years. It also does not factor in additional sources of retirement income, such as Social Security. The estimated average monthly Social Security benefit for 2019 is $1,461, which is more than enough to qualify for a pensionado, or pension, visa in Colombia. 

The best advice to save money in Colombia is to live like the Colombians. Shop where they shop, eat where they eat and travel the way they travel. AARP’s Travel Center website lists discounts up to 25% in Colombia for seniors, including on hotels and car rentals.

Once you decide on Colombia as a retirement destination, you need to figure out where you’d like to live. What kind of climate do you like best? If it’s tropical, try out the coast and eastern plains. You’d like it cooler? Head for the highlands like Medellín. Big city? Think Medellín or Colombia capital Bogotá. Something quainter? Try Popoyán, a university town in the Andes, Manizales, the hub of the coffee-growing industry, or Cartagena, a popular tourist destination on the Caribbean that combines beach living with a walled Old Town of 16th-century plazas and colorful colonial-era buildings.  

It’s Medellín that seems to be a favorite with expats. Live and Invest Overseas' Kathleen Peddicord calls Medellín, "a miniature version of Buenos Aires, from its annual Tango Festival to its Botero Museum." But with a population of around 2.5 million people, she says that Medellín is "more manageable," noting that it is cleaner and easier to navigate than Argentina’s cosmopolitan capital.

Dan Prescher, the senior editor of International Living, says that although Medellín only recently got onto the radar of North Americans looking for a retirement home, Europeans have been retiring there for years. He adds that Colombia is a thriving economy and a place where things work. For example, roads are wide and well-paved, and wireless internet is everywhere and free in many places, including in Colombia’s equivalent of Starbucks, Juan Valdez Cafés.

Robert Rose, a travel TV host who has lived in Colombia, reports that Antioquia state, where Medellín is located, is his favorite part of Colombia because of “its incredible natural beauty, temperate climate (it felt like spring every day of the year to me) and some of the friendliest people I’ve ever run across in all my travels. It also helps that it was cheap. I lived for a fraction of the cost of living in the United States and quite well (doorman building, eating out every day).”  

Medellín also boasts an upbeat gay culture. “Parque Lleras is famous for hosting one of the most entertaining and energetic gay scenes in South America,” writes Live and Invest Overseas' Peddicord. 

Retirees understandably want to know about the quality of healthcare in their chosen destination. There's good news in that category. The World Health Organization ranks Colombia No. 22 on a list of 191 countries based on the overall performance of their health care systems. International Living reports that retired expats say they pay around $70 to $85 a month per couple for their health insurance premiums with the country's public insurance plan. Private health insurance plans are also available. And the cost for doctors' visits, medical and dental procedures, and prescriptions are often much lower than in the United States.

Colombia is drawing more and more retirees from the United States, and Medellín is the locus of a fledgling American expat community. Although the country’s negative image discouraged many from even visiting Colombia not that long ago, the country’s high score on International Living’s index of the best places to retire means that it will most likely continue to grow as a retirement haven. The cost of living, climate and culture are all powerful draws.

Since the North American expat community is not a long-established one, you should know some workable Spanish before you make the move. Visit any and all of the places you are considering retiring to and, since tax implications of retiring abroad may be complicated, work with a qualified attorney and/or tax specialist as you do your planning.

You may also be interested in reading Plan Your Retirement Abroad.