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In 1991 Billy and Akaisha Kaderli retired at the age of 38. Now, into their 3rd decade of this financially independent lifestyle, they invite you to take advantage of their wisdom and experience.

Expat Living and Dollar Fluctuations

How to deal with Dollar Fluctuations when you live outside the US

Billy and Akaisha Kaderli

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Currency Conversion Chart

Akaisha and Billy On the Beach Saint Some Where

On the Beach Saint Some Where

Let's say you're living outside the US and your fixed pension or Social Security is based in U.S. Dollars. If the Dollar takes a dive and loses value against the currency you are using, what might that decline of the Dollar mean for you?

Practical day-to-day effect

Most people, at least the ones that follow our advice, use ATM's to extract cash in the local currency. Most likely you are limited to a daily withdrawal amount from your US based bank or from the local ATM machine you are using. In Mexico that could be 6,000 Pesos, in Guatemala 2,000 Quetzals, and in Thailand 18,000 Baht. It just depends on the daily fluctuation of the currencies themselves and the country in which you are living.

When the Dollar loses value against one of these currencies, we still receive money from the ATM but it costs us more than the last time we withdrew funds, thus increasing our cost of living.

When we first started coming to Guatemala our 2,000Q ATM withdrawal cost us $262.00 USD. Today it's $274.00 USD. Figuring we take multiple withdrawals a month to live on, this $12.00 increase per withdrawal can add up. This could be as much as a $100.00 a month or $1200.00 per year in increased expenses. Add local inflation to that and this can make a difference in your lifestyle.

How do you protect yourself against this slippage?


Those on a fixed income

If your monthly budget is solely derived from fixed income investments such as bonds, annuities, pensions, or Social Security, you could feel a financial squeeze as prices rise for you and your lifestyle is costing you more. Add in some inflation to your costs of groceries, dining, utilities and so on, and you have the perfect storm. It's called loss of purchasing power.

This is why it is important to have equities like an Index fund in one's portfolio no matter what your age, to counter the effects of inflation, and in an Expat's case, a falling Dollar.

A pile of Quetzales, Guatemalan money

2,000 Q = $274 USD... Today!

The good news is that when the Dollar declines and you are invested in the stock market, the multi-national companies that make up the S&P 500 Index usually increase in value as their exports become cheaper in the global markets and their profits rise. Your portfolio total would rise as well, reflecting these profits. The bad news is that costs in groceries, rent, and travel go up as you receive fewer Pesos, Baht, or Quetzals to the Dollar.

This is why we say being invested in the equity markets helps counteract any drop of the Dollar.

Personal illustrations


For example in Panajachel, Guatemala in one of our biggest splurges of the week, we now pay $13.01 for a complete bar-b-que baby back pork ribs dinner for two which includes vegetables, salad and garlic bread as compared to $11.84 a year or so ago. Even though thatís a 10% increase, it does not effect our lifestyle in general because we are invested in equities.

A local meal of tacos in Mexico runs less than $2USD per person in Chapala, and a local meal of chicken, guacamole, rice, beans and tortillas can be purchased for under $4USD. Meals of the same type and quality are similarly priced in Guatemala.

A point worth noting is that the more integrated retirees are into the local culture the less expensive their lifestyle will become. Eating in local restaurants as compared to western hangouts will significantly affect oneís food costs for the better.

As the Dollar weakens, your portfolio gains should outpace the small increase in your local expenses. The increase in our Net Worth reflects those gains, and if dinner, hotel rates or transportation costs go up a bit, it doesn't affect our daily lifestyle.

Final note

To sum it up, to offset your limited income based in Dollars, it's prudent to have investments in the stock market to keep up with a possible Dollar decline, and to offset inflation.

The other manner of supporting your lifestyle is to blend into the local culture to keep your expenses down.

With these two practical tools, you should be able to withstand any reasonable Dollar downturn.

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About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurerís Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on

Retire Early Lifestyle appeals to a different kind of person Ė the person who prizes their independence, values their time, and who doesnít want to mindlessly follow the crowd.

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