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Think about where to retire

Cuando se trata de la jubilación, pensar detenidamente dónde quieres jubilarte puede ser una decisión muy importante.

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Humans are creatures of habit. This is what is known as the status quo bias, meaning we like things the way they are. That is why it is so hard to change our jobs, habits and homes.

However, when it comes to retirement, thinking carefully about where you want to spend your golden years can be a very important decision. This is because the cost of living changes in each country, city and even in different neighborhoods within the same city.

Choosing the right place to retire to is a tool for getting the most out of your state pension and your retirement savings. There are some places in the world where you can live like a king on 1,000 euros a month, and others where that amount will barely get you a roof over your head.

The key factor is housing

Food, transport, clothing and footwear, telecommunications… These are all classic budget items and they all change depending on where you live, within the same country or even in the same city.

For example, according to a study by the Organization of Consumers and Users, supermarket spending for a person living in the northern area of Madrid can reach 8,600 euros a year, but by choosing the right store you can save up to 3,530 euros annually.

The same thing happens if we change cities. According to the same study, Jerez de la Frontera is the cheapest city for shopping, with an index of 100 compared to 111 in places like Las Palmas de Gran Canaria or Getxo, partly because they are generally more expensive and partly because of the lack of available options.

However, if you have a budget (and even if you don’t) it is clear what the biggest expense of all is: your home.

The cost of housing is a key factor when choosing a place where you can get the most out of your pension, if you don’t mind moving. At the end of the day, paying 500 euros in rent is not the same as paying 1,300 euros, or being able to purchase a home for 75,000 euros instead of having to spend 150,000 euros.

What if you have already paid for your home? In that case you have one more tool to help you plan your retirement and maximize your resources. In this article we explain how to take advantage of your home when you retire.

The best countries to retire to

The option that will allow you to get the most out of your state pension and your income in general is a change of country. The clearest and most extreme example would be to move to a country in Southeast Asia, where, with the average state pension, you could have a much higher standard of living than in Spain.

However, choosing where to retire to is not only about finances and cost of living. There are other important factors to consider, such as the climate, how easy it is to find a place to live and the quality of the healthcare system (and its cost).

Using these factors, International Living compiles its Global Retirement Index, which you can consult here. It lists the best retirement destinations according to the criteria we have mentioned.

These are the best options:

  • Portugal
  • Mexico
  • Panama
  • Ecuador
  • Costa Rica
  • Greece
  • France
  • Italy
  • Thailand
  • Colombia

And Spain? This year it does not appear among the top 10 destinations, although it has done so in all previous years. And it should be noted that this ranking is biased towards US citizens, which is why countries like Mexico are at the top of the list, due to their proximity.

This is something that you should also consider when making your decision.

If you are particularly concerned about the economic aspect, on the Expatistan page you can compare the cost of living in different cities around the world, including several in Spain.

The best cities in Spain for retirees

Changing countries can be a bit extreme for many people, but even a change within Spain could be worthwhile.

According to a study by the comparison website Kelisto, Palencia is the cheapest city to retire to, with a cost of living 30% lower than the average.

The International Living study points to Burgos and Logroño as the best cities to retire to due to the mix of climate, culture and cost of living.

For those looking for a retirement full of leisure options, Madrid and Barcelona are the best alternatives, although they are certainly far from being the cheapest.

Las Palmas de Gran Canaria is one of the quietest and safest places in terms of crime, as well as having assured good weather. Similarly, Alicante is a very popular area among retirees because of its coastline.

For those whose priority is healthcare, the Basque Country and Navarre have some of the best medical services. In addition, Bilbao is one of the best cities for retirees according to Forbes magazine.

Beyond these specific recommendations, when you make your choice it is important that you take into account the economic, communications and healthcare aspects. In other words, a small town on the coast may be a cheap place to retire to and a good option at 65, but not so much at 75 or 80, because you may not have a supermarket nearby, there may not be a healthcare center, or the hospital may be in a city several miles away.

What if you don’t want to change cities? There are also differences according to neighborhood

If you like your city, a change of scenery within it could also help. Normally the most economic option will be to change your city to a nearby town.

However, even within the same city you can make significant savings. Madrid is a good example of this. According to data from Idealista, the difference in rental prices between the Salamanca neighborhood (the most expensive, at 20.7 euros per square meter) and in the Retiro area is 3 euros per square meter.

And that is in a big city like Madrid. In smaller towns, that difference may be simply a matter of being 15 or 20 minutes from the city center.