What's Driving Americans to Retire Abroad?

In the small town of Cotacachi, Ecuador, Dan Prescher is living out his retirement dream. Prescher, a native of Omaha, Neb., lives with his wife in a condo in a gated community overlooking the Andes Mountains. They eat fresh fruits and vegetables year round. They spend their free time hiking to hot springs and frequenting local restaurants. They keep up with their families and friends back in the U.S. via Skype and Facebook. Their costs are modest: They bought their condo three years ago for $50,000. Food is inexpensive. They don't own a car, so for a night out they take a 25-cent bus ride into town. Although Prescher is not officially retired -- he and his wife are both writers -- he has no plans to return to the U.S. "Every now and then, [my wife and I] think it would be nice to have a place in the states, so we run the numbers," says Prescher, who is in his late 50s. "But because of the high taxes, medical costs and insurance, we just can't figure out a way to live as affordably as we do here. The cost of living is half of what it would be in the U.S." In the aftermath of the global financial meltdown that ravaged 401(k) accounts and decimated home values, a growing number of Americans -- like Prescher -- are stretching their retirement savings by spending their golden years overseas. Beckoned by foreign countries with mild climates and a lower cost of living, many retirees view living abroad as the fulfillment of a life-long dream. Some are former snowbirds who opt for a Caribbean island or Latin American country; some seek out charming villages in Portugal or Spain, and others have landed in more exotic locales, such as Malaysia. "Large numbers of people live where they live because of their jobs," says David Reibstein, professor of marketing at Wharton. "When they're not working anymore, they make the decision to move to a more comfortable climate and some place to make their dollars last longer.... One of the things that used to happen is that families stayed together in a general area. But in today's economy, your children are no longer tying you to a certain [location]. It allows you to think more broadly about where in the world you might want to live."