Retiring in Ecuador - Pros and Cons

A lot of Americans are retiring in Ecuador and other countries in Central and South America - stretching their retirement dollars and enhancing their quality of life. Why? How hard is this? Is this something anyone can do? What’s the down side? Where’s the catch?

Here’s the problem:

A lot of Americans who weren’t able to save a handsome nest egg or worked for a company that didn’t supply a pension, or didn’t sock away enough of their pay checks into a 401k are finding they can’t afford to quit work and pursue that retirement dream of life and leisure. They’ll have to keep working till they’re 70 to get full social security benefits or work as long as they possibly can, take whatever social security benefits they have and keep working part time supplementing that S.S. check.

And when they can work no longer? Move into their kid’s basement? Living solely on social security requires serious budgeting, down-sizing, belt-tightening and many find they can’t resign themselves to living on noodles and rice and beans as the government suggests.

There are also a lot of retirees who have more than a couple nickels to rub together and feel ready to retire early - in their 50’s - while they can still enjoy - as the Italians say - being a free citizen. But how?

So here’s the deal:
Cash out and move to a third world country where your money increases in value by 300-400%. No joke, no catch, just simple currency exchange.

And there are a lot of countries in Central and South America courting American retirees to come on down, put your feet up and stay a while: Nicaragua, Costa Rica, Panama and Ecuador are the most popular.

They offer residency programs for foreign resident retirees, who can show they have a $1,000 a month in income. These residency permits are the equivalent of a green card in the U.S. . In addition they’ll throw in government health insurance for around $60- $80 a month, attractive foreign ownership laws, 10%-20% discounts on restaurants, hotels and domestic flights.

On top of these discounts everything else is already so inexpensive in Ecuador: good hotel rooms for $10 - $25 a night, simple meals everywhere for $2 - $10-$15 in their best restaurants, taxi rides for $1 across town, beer $.50 a bottle, coffee $.25 a cup and furnished apartments for rent for $400 - $600 a month.

Why would they do this?
While America is turning away and expelling Latinos these countries are inviting North Americans in. It’s all about the money. These nations want those retirement dollars in their economy.

Foreign retirees don’t work, they don’t have kids in school, they build houses, spend on recreation, they might get bored, open small businesses, bring in more investment dollars all the while providing more local jobs. It’s a win/win for them.

City councils in the States - rural towns in need of more revenue and taxes  - are asleep at the wheel. Launching a program to court retirees to resettle - bringing in more tax dollars and disposable income - makes total fiscal sense. America is losing its baby boomer retirees to these warm, attractive, third world countries who are capitalizing on an opportunity.

How does it work?
There are numerous possibilities. Some people sell their house in the burbs and move down to a land of eternal spring - full time. Some rent for a while, then buy a house or build one for a third of the price it would cost back home. Some buy a house as an investment, winter there and rent it out during the months they’re gone via Airbnb. Some just winter it out, snowbird style, moving from hotel to hotel or renting apartments for days or weeks at a time.

Expats have access to fresh meat and seafood, tropical fruits and fresh vegetables for pennies on the dollar. They even have enough left over to hire a gardener and a maid to come in once a week to do the yard work around the house, clean, do the wash and cook a couple meals. There’s Wi-Fi internet all over, cable television with English channels and all the comforts of home.

Nothing backwater about these places anymore. All medical and aesthetic procedures cost a third of what they cost back home. All this on a social security check? Yes, and if a couple have two S.S. checks they’re living really well, banking the rest or paying the bills on the condo back home.

How hard is it?
International Living is a magazine specializing in helping people retire abroad. It started as a back packer, expat magazine back in the 80s and was edited by a couple college professors. I wrote for it back then as an expat living in Tuscany. Later the magazine was bought out and redefined as a tool to help people retire abroad.

Today, the magazine sells subscribers seats at conferences in the host countries and organizes tours to specific countries south of the border.

This offers retirees, or soon to be retirees, the opportunity to consult with government officials on the bureaucracy of moving to their country while exploring the different communities and environments the country is trying to develop. They stay at the best hotels, are shown the sunny side of the street and meet with builders and other providers of services they may soon be needing.

Sometimes the magazine makes it look way too easy. But it’s not all that hard to do on one's own. One might have to hire a local English speaking lawyer to help with the paper work, but these countries have made it simple.

Before making the plunge one should do some research before selecting a country and make a few extended, exploratory visits before ultimately deciding on a city or village to settle in.

What is life like after moving?
In Ecuador towns like Cotacachi, Banos and Cuenca* host sizable American expat populations: they have expat clubs where they meet to play bridge, enjoy some cold beverages together, have pot luck dinners, do volunteer work – community service for the village, consult, work on opening local businesses, study Spanish together and just help the next guy settle in.

Then again a lot of American expats don’t want to live in the midst of other Americans. As one American expat told me: “When I see gringos it’s like the game 'you’re getting warmer getting colder'. I go other way. It’s the old Woody Allen joke: I wouldn’t belong to a club that would have me as a member. I didn’t leave America to be in the middle of a bunch of Americans. I’d rather go native and live with the locals.” And there are thousands of towns in these countries that rarely see a foreigner.

Yes, down south all foreigners are called gringos sometimes affectionately sometimes not so much. There are a lot of Europeans who don’t like the term and think it should be reserved for ugly Americans. But down here they are all inclusive. If one never lived abroad before it’s challenging and takes some getting used to - constantly being the foreigner, constantly the outsider. But it can be done. It’s not always easy living in a country as a visitor. But it's always going to be much easier than working in that country as a foreigner.

In these Ecuadorian villages, Americans are building a lot of houses. Bricks are going up all over these towns and local builders are busy - they import plumbing fixtures, drywall from North America and Italian marble and tile for those aesthetics American’s just can’t live without. They have craftsmen and custom cabinet makers. Currently, the gringos are building bigger and better houses than what the locals have.

One criticism coming from the Ecuadorians is that a lot of these expat Americans have an exaggerated sense of insecurity. Many are worried about being robbed, raped, kidnapped and/or having their organs harvested.

So they’ll live in American-only gated communities, put up a ten foot cinder block walls around their houses, run a few strands of electric wire on top of wall with remote controlled opening steel gates with intercoms, alarm systems and snarling German Shepard guard dogs roaming the yard. Makes one half expect to see moats and gun turrets around the next corner.  For some there are always more walls to be built.

But for most it’s a quiet, peaceful, relaxing existence that gets easier with passing time. Ecuadorians are peaceful, friendly, congenial people. It’s their turf - their lifestyle; so when in Rome. It’s up to the expats to make it work. And they seem to be doing just that.

*Cotacachi is a small village 20 minutes north of Ortovalo with a sizeable American expat population.There's a nice food court in Palazzo di Ponco. But the town rolls up its sidewalks at 8 p.m.
Banos is a mid-size mountain village known for its thermal baths, waterfalls, raging rivers and extreme sports.
Cuenca is a big, little city, the third biggest city in Ecuador after Quito and Guayaquil and it's famous for the Panama hat. It’s a Spanish colonial town, considered the most beautiful in Ecuador with numerous universities and an estimated 7,500 foreign residents retiring here – half of them are Americans.

All of these towns are in the Andes Mountains, are bug free, cool – in the 60s and boast a climate of eternal spring

For more on Ecuador see the following articles:

Travel Banos - Thermal Baths

Travel Tena - Gateway to the Amazon

Travel Ecuador's Pacific Coast and Beaches

Travel - the market of Otavalo

Why is the Panama hat made in Ecuador?

For retirement in Panama see:

Retiring in Panama - Pros and Cons

see also -

Retire in Colombia - Pros and Cons

Snowbird Tourism in Colombia

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