Cost of Living Abroad for Expat Retirees: What Five Years Did to the Global Rankings

In 2021, Japan was the 7th most expensive country in the world. Today it ranks 66th. The yen didn't get stronger — it collapsed against the dollar and the pound. And if you're drawing a pension in either of those currencies, that collapse just handed you a 46% discount on one of the most remarkable countries on earth to live in.

That's the most dramatic shift in the Numbeo 2026 cost of living rankings compared against the 2021 data. But it's not the only one. Mexico got 21% more expensive. Vietnam nearly halved in cost. Southeast Asia as a whole shifted. And the countries people have been pointing retirees towards for decades — Spain, Greece, Portugal — all moved, some in surprising directions.

This post works through the real numbers for the destinations expat retirees actually consider. No fluff about "vibrant local culture." Just indices, rank changes, and what they mean for a budget.

How to read these numbers

Numbeo's cost of living index sets New York City at 100. A country with an index of 50 costs roughly half as much as NYC for everyday goods — groceries, restaurants, transport, utilities. Rent is tracked separately. The two combine into a "cost of living plus rent" figure.

A few things this doesn't capture: healthcare costs, which vary enormously and matter a lot in retirement; visa fees and bureaucracy; and the fact that expat communities in popular retirement destinations often pay significantly more than locals do for the same things. Numbeo's data is crowd-sourced, which means popular expat hubs are reasonably well covered, but it's not a precision instrument.

Use it for direction, not decimal places. The Japan vs Mexico comparison below is stark enough to be meaningful even allowing for data imperfection.

The biggest story: Japan

Japan's cost of living index: 87.8 in 2021, 47.5 in 2026. Rank: 7th to 66th.

The mechanical cause is the yen. In 2021, one US dollar bought around 107 yen. By mid-2026, it buys around 153 yen. That's a 43% devaluation. When a currency loses that much ground, everything priced in it — rent, food, transport, healthcare — becomes dramatically cheaper for anyone earning or drawing savings in dollars or pounds.

Japan now costs less than Thailand did in 2021. Rent is lower than Mexico. A country that used to be firmly in the "expensive" category is now squarely in the mid-range, and for dollar/pound retirees it's cheaper still in practice.

The catch: Japan doesn't make it easy to retire there. The standard "Designated Activities" visa for retirees requires proof of income above a threshold that keeps shifting, and long-term settlement requires navigating a bureaucracy that is genuinely difficult if you don't speak Japanese. None of that changed. What changed is the reward for clearing those hurdles.

South Korea moved similarly — rank 14 in 2021 to rank 33 in 2026, with its cost index dropping from 81.2 to 61.6. The won also weakened against major currencies. Seoul is still not a cheap city, but it's no longer in the same bracket as Amsterdam or Dublin.

What got more expensive

Mexico. This one surprises people, partly because the "retire in Mexico for $1,500 a month" narrative is so embedded in expat content that it has taken on a life of its own.

The numbers: cost of living index 35.1 in 2021, 42.6 in 2026. Rank moved from 104 to 78. That's a 21% increase in the cost index over five years, and a jump of 26 places up the expensive rankings.

Why? Several reasons stacked up. The Mexican peso strengthened significantly against the dollar over this period, driven partly by nearshoring investment and remittance flows. Simultaneously, popular expat zones — Oaxaca, Mérida, the Riviera Maya, parts of CDMX — saw American retiree demand push local prices upward. It's a pattern that repeats: the places people move to precisely because they're cheap gradually stop being cheap once enough people move there.

Mexico remains cheaper than the US or Western Europe. But the 30% savings over Panama that existed in 2021 largely closed. If Mexico is on your list, factor in that the era of extreme affordability there has passed.

The other notable mover on the expensive side: Australia. It went from rank 11 to rank 27, COL index 84.1 to 67.9 — actually cheaper in absolute terms, but it lost ground relative to other countries and is still firmly in the expensive tier.

Southeast Asia: still the value case, but the numbers shifted

The region remains the most affordable for expat retirees drawing Western pensions. But within the region, the picture changed.

Vietnam moved the most. COL index 38.0 in 2021, now 26.4. Rank 95 to 143. It's now one of the cheapest countries in the dataset. Ho Chi Minh City and Hanoi still have a meaningful expat retirement presence, and monthly budgets of $1,200–$1,600 for a couple in a rented apartment, with restaurants and leisure, are realistic. The catch is that Vietnam has historically been reluctant to issue long-term retirement visas — most retirees are technically on repeated 90-day tourist visas, which is a legal grey area that has not been properly resolved.

Thailand dropped from rank 65 to rank 98, COL index 49.3 to 38.0. Thailand Retirement Visas (Non-Immigrant O-A) are well established, require proof of pension income or a 800,000 THB (~$22,000) bank deposit, and give access to the country's private hospital network — which is genuinely good quality in Bangkok and Chiang Mai. Costs in tourist areas like Phuket run higher than the national index suggests; costs in Chiang Mai are closer to the national figure.

Malaysia went from rank 90 to rank 112, COL index 39.5 to 34.0. Malaysia My Second Home (MM2H), the long-standing expat retirement scheme, was severely tightened in 2021 and then partially relaxed in subsequent years. As of 2026 it requires proof of monthly offshore income of at least RM 40,000 (~$8,500) for the standard tier — substantially higher than the old programme. That bars many retirees who would otherwise qualify easily on budget grounds. Penang and Kuala Lumpur remain attractive for those who can clear the income threshold.

If you're planning across Southeast Asia, the best expat retirement countries comparison has more detail on visa routes and healthcare access for each destination.

Europe on a budget: the quiet winners

The conventional wisdom has been that affordable European retirement means Portugal. That's still roughly true, but Spain and Greece both moved in ways that deserve attention.

Spain: COL index 59.1 in 2021, down to 51.6 in 2026. Rank 39 to 52. Goods and services are measurably cheaper. But the striking number is purchasing power: local purchasing power index went from 62.7 to 104.4. That's a near-doubling, driven by Spanish wage growth. For an expat bringing in external pension income, the practical takeaway is that Spain's service economy — restaurants, tradespeople, household services — has become more affordable in real terms even as headline costs fell.

Greece: COL index 61.0 in 2021, down to 54.0 in 2026. Rank 37 to 45. Greece introduced a flat 7% income tax rate for foreign retirees in 2019, still in force in 2026 for qualifying applicants who transfer tax residency and haven't been a Greek tax resident in the prior 5 years. The combination of low consumer prices and that flat rate makes Greece arguably the best-value retirement destination in the European Union for retirees who can qualify. Athens has changed dramatically — it's significantly more expensive than rural areas — but the islands and the Peloponnese remain very affordable.

Portugal: COL index 52.9 in 2021, down to 48.8 in 2026. Rank 50 to 60. A small improvement in everyday costs — but rent nudged upward (index 22.3 to 25.2), and the loss of the NHR tax regime for new applicants in 2024 removed the main tax advantage Portugal held. The new IFICI programme doesn't help most retirees. The D7 passive income visa still works as a route in, and Portugal remains genuinely affordable by northern European standards, but it's no longer the exceptional value play it was five years ago. The full Portugal retirement guide has the detailed tax math for UK and US pension income under the current rules.

Latin America: Panama and Colombia vs the new Mexico

Panama's cost index dropped from 54.1 to 45.5 (rank 48 to 72). It's cheaper than it was in 2021, and cheaper than Mexico is now. Panama also has the Pensionado visa, which is one of the most straightforward retirement visa programmes in the world: $1,000/month in pension income, confirmed in writing, gets you permanent residency with a suite of discounts on healthcare, entertainment, and transport. The dollar-denominated economy means no currency risk for USD earners. Drawbacks: heat, some crime in Panama City, and the fact that Boquete and other popular expat zones have their own local price inflation.

Colombia: COL index 31.0 in 2021, 31.7 in 2026. Essentially flat. Rank 118 both years. Medellín in particular has grown as an expat retirement destination — the climate in the Andes is excellent, healthcare is good and inexpensive by Western standards, and a couple can live comfortably for $2,000–$2,500 a month in a well-located apartment. Colombia's retirement visa (Visa de Pensionado) requires pension income of three times the Colombian minimum wage, currently around $750/month. That's a low bar. The caveat is that Colombia's safety picture is complex and varies sharply by location — doing proper research on specific neighbourhoods matters here more than in most other destinations.

The point on Mexico stands repeating: if you're still working from cost estimates you read in 2020 or 2021, they're wrong. The budget you'd have needed then gets you less now. Do fresh research.

The purchasing power trap

One number in the Numbeo data that's easy to misread is the Local Purchasing Power index. It measures the purchasing power of local wages relative to NYC. A high number — like Kuwait at 176.6, or Switzerland at 170.6 — doesn't mean those countries are affordable for retirees. It means local workers there earn good wages relative to local prices.

The trap: some very cheap countries have terrible local purchasing power because local wages are extremely low.

Angola is a good example. COL index of 42.3 — sounds affordable. Local purchasing power index: 200.8. Wait, that's high. But that's because Angola's oil economy generates enormous wealth concentrated in a small group, which skews the average. The healthcare infrastructure is poor, the visa situation for long-term retirees is complex, and daily life outside Luanda is very difficult. The number is technically correct and almost entirely misleading as a retirement planning signal.

Nigeria, similarly, has a COL index of 27.7 — very cheap on paper. Local purchasing power: 8.3. That low number tells you something the cost index doesn't: local services are cheap because wages are extremely low, not because of structural efficiency. Healthcare quality, infrastructure reliability, and daily logistics matter enormously for retirees, and the purchasing power index at least hints at those underlying conditions.

This is why the combined picture — COL index + purchasing power + what the country's infrastructure can actually deliver — matters more than any single number. For the destinations most expat retirees are realistically considering, the data is broadly reliable. But don't use a low COL index in isolation to draw conclusions about places with very different development conditions.

The big comparison table

Here's the data for the destinations most expat retirees actually consider, side by side. All figures from Numbeo. The index is relative to New York City = 100.

What this means for retirement income planning

If your pension is in US dollars or British pounds, the currency story is as important as the price story. Japan's 46% fall in cost index didn't happen because Japan got more efficient — it happened because the yen lost ground. If the yen recovers, Japan's cost ranking climbs back. Planning a retirement around currency-driven affordability requires thinking about how long that differential might last.

For the more structurally cheap destinations — Vietnam, Colombia, Panama — the affordability is more durable, though not immune to the same dynamics. Medellín now has enough US retirees to have created its own expat economy with expat-facing pricing. It's still cheap. But cheap in absolute terms, not cheap the way it was when nobody was talking about it.

The US Social Security and UK State Pension coordination guide covers something that's easily missed in cost-of-living comparisons: depending on where you retire, your pension income may be taxed differently. A country that looks slightly more expensive than another can end up better value if it has a more favourable tax treatment of foreign pension income. Greece's 7% flat rate is the sharpest current example — but it requires proper setup. Portugal used to be similar with NHR, and isn't any more.

The expat retirement planning guide has more on the full financial picture — not just cost of living, but tax residency, healthcare coverage, exchange rate risk, and how to think about the interaction between multiple pension systems.

Running the numbers for yourself

The indices above give you a country-level picture. But your actual budget depends on your specific income sources, where exactly in a country you'd live, whether you own or rent, and how you spend. Medellín is substantially cheaper than Bogotá. Chiang Mai is substantially cheaper than Bangkok. Rural Portugal is substantially cheaper than Lisbon.

The RetireFlexi calculator lets you build a specific plan for your circumstances: multiple pension sources in different currencies, different country tax treatments, live exchange rates, and the option to run 5,000 Monte Carlo scenarios against your projections to see how your plan holds under market stress. It's free and doesn't store your data anywhere — everything runs in your browser.

Start with the Numbeo numbers to pick your target countries. Then model the actual income picture with real pension figures to see if the budget works. Those are different questions, and both need answering before you book a flight.