Our goal is to give you a realistic, preliminary estimate of how financially attainable each retirement destination is based on the information you provide. Here’s a step-by-step breakdown of how our calculation engine works:

Step 1: Determine Your Annual Retirement Costs

First, we look at the estimated monthly cost of living for a couple in a specific country and multiply this by 12 to get the total Annual Cost of Living for that destination.

Step 2: Calculate Your Annual Income Shortfall

We then subtract your Expected Annual Income in Retirement (from pensions, Social Security, etc.) from the destination's Annual Cost of Living. The result is your Annual Shortfall—the amount of money your savings will need to cover each year.

Example: $30,000 (Annual Cost) - $24,000 (Your Pension) = $6,000 (Annual Shortfall)

Step 3: Establish Your "Financial Independence" Number

A common financial planning guideline is the "4% Rule," which suggests you can safely withdraw 4% of your savings each year. To support your Annual Shortfall, you would therefore need a total nest egg that is 25 times that amount. This is your Target Nest Egg.

Example: $6,000 (Annual Shortfall) x 25 = $150,000 (Target Nest Egg)

Step 4: Project Your Savings Growth

We calculate the difference between your Target Nest Egg and your Total Current Retirement Savings to see how much more you need to save. We then project how many years it will take to reach that target by adding your Current Amount Saved Annually each year and applying a modest, conservative 3% annual growth rate to your total nest egg.

Step 5: Combine Financials with Your Priorities

Finally, we calculate an "Overall Fit Score" for each country by weighting your financial viability (60%) and how well the destination matches your chosen priorities (40%). Countries are then ranked by this combined score to give you your personalized list.