I'm going to post an email I received from Iris, who is concerned about here retirement to Cuenca, Ecuador. My advice to Iris is likely to answer a lot of questions other people considering retirement in Ecuador or other South American nations have. I will most probably post any reply Iris makes too, if it is of a generic nature.
Iris' email to me:
My name is Iris and I would like to retire to Cuenca this coming Jan. when I'm 66. I will be by myself and feeling a bit nervous. I've read in several places that there is a price for gringos and a price for locals. Gringo prices are usually double local prices. If this is the case, I may not be able to afford it. I will only be living on $1200.00 per month. I was wondering, is this true? I live in Middletown PA and when I'm 66 will not be able to retire (here).
Thank you so much.
My reply to Iris: (please note that editing was necessary to remove reference of a personal nature reguarding Iris' retirement plans)
Nice to make your acquaintance Iris. I will help you out with your question as best I can...
Q: I've read in several places that there is a price for gringos and a price for locals?
This is true in most affordable economies in the Americas, Central and Eastern Europe, the Middle East and the African continent. The reason for this is that merchants can not get much from the locals, but assume expats and tourists can and will pay more. All you need to do is say "No" or shake your head and the price begins to tumble. What I do is haggle when I first arrive in a new country. After a week or so I then deal only with those merchants I feel I got a fair deal from, which is usually 40% less than what was asked at first. I like to leave a little on the table so my slightly overpaying patronage is appreciated and often the best fruits, vegetables, and cuts of meat are put aside for me and other generous regular customers. Remember, no matter where in the world you are, honest merchants know that a customer only remains a customer for as long as he or she feels treated fairly and receives good service. Unfortunately there are merchants that have no concept of repeat business and will overcharge and outright cheat anyone they think they can mislead. Once you have weeded out those that are only interested in a quick buck you will have no problems.
Q: I will only be living on $1200.00 per month?
I recently spoke with a member of the consular staff at the Ecuador Consulate in Vancouver, BC. I'm retiring at 60, a full five years before my Service Canada pension will kick in, so the automatically issued retiree visa isn't an option for me. I had a recent health scare, and although all is good now, the experience firmly entrenched my choice to forego the pursuit of wealth for the sake of enjoying my good health.
I have been to Ecuador previously as a tourist. Now I will be returning under a 6 month visa that permits me to set up banking, find accommodations, and basically organize myself to relocate. Of course in my conversation with with the staffer at the Ecuador Consulate, cost of living was a major concern I wanted to discuss. I was assured that CAN$800 was all that was needed to live comfortably in Cuenca, or even Quito, which is why this amount was the minimum pension a Canadian needed to automatically be granted a retiree resident visa. So your US$1200 pension should be more than enough to live comfortably Iris.
During this same conversation, I was told that in all likelihood Ecuador will soon forego having their currency linked to the US Dollar for reasons I won't bother mentioning, but that made perfect sense from an Ecuadorian perspective. When this happens there will be an initial devaluation of the Ecuadorian currency, which will benefit anyone with income in other currencies. However, Ecuador's independent currency will eventually stabilize after the departure from it's attachment to the US Dollar. Being as Ecuador has a much more fiscally responsible government than the USA, the exchange rate will then become somewhat disadvantageous to anyone with US Dollar income. However, unless the Fed keeps printing bank notes to drive the dollar down in value as has been the case of late, you'll not suffer much of a cost of living decline living in Ecuador. Those who will suffer a drastic drop in living standard I fear are going to be the Americans who remain in the USA and have to survive on a fixed, but devaluating income.
As for why I chose Ecuador and am confident it is the right choice for any retiree...
I have always had two retirement plans because I've spent more time traveling the globe than working. Plus, when I wasn't traveling some of my business ventures were risky because I enjoy living on the edge.
Plan A was if I was well enough off when it was time to retire I'd move back to Europe, probably Austria. I actually started to organize my affairs to follow that path prior to the global economic meltdown cause by the US sub-prime mortgage fiasco. Well, mixed with a bad investment that was no one's fault but my own, and perhaps shared by the person in whom I placed unwarranted trust, Plan A died a sudden death.
Plan B was my backup plan. This would be the course I'd take if my personal fortunes were not what I'd need to live in very costly Europe without having the employment income I'd previously enjoyed while living there. This plan entailed retiring in either Ecuador or Morocco. With the dashing of any hope that Plan A was even a remote possibility, I'm retiring to Ecuador. To tell you the truth, at this point in my life the slower pace is the better choice. After all, no one in Europe takes afternoon siestas in a hammock stretched between two trees... and that's incredibly appealing to me at this point in my life.
There are literally dozens of people I know personally, school chums and acquaintances I've made over the years, who are already retired in Central and South America, or will be over the next few months or years. So the number of Americans, Canadians and Brits in Cuenca is likely to grow steadily. So you, me, and anyone our age is likely to be surrounded by other English speaking people of like mind; retirees that relocated to an affordable, relatively crime free country, with excellent weather, that has a affordable and very good health care system, and an adequate social infrastructure.
Keep in touch Iris... and who knows, maybe we can meet once we're both in Cuenca.
As always, if you have any questions I may be able to help you with using my lifetime of traveling experience, or if you want to share your experiences, email firstname.lastname@example.org