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Gringo Retirement: Living Abroad in Economic Refuge

NEW YORK (MainStreet)--A couple from Hendersonville, N.C. always dreamed of settling down in paradise and moved to Belize last year to retire along the scenic barrier reefs.

"Our primary financial motivation for retiring abroad was to achieve a lower cost of living in a tropical setting," said David Wright, 65, who moved with his wife, Elizabeth, 52, to Ranchito Village, an expatriate enclave near Corozal, Belize.

For Americans retiring overseas, places in Latin America and the Caribbean are an economic haven for stretching a dollar and paying less in healthcare costs.

"The strategy is to move somewhere that counts, and the cost of living in Latin America is a fraction of the cost of the U.S," said Dan Prescher, special projects editor at International Living, a publication that focuses on international retirement.

The rising cost of healthcare coverage and limited savings other than home equity are pressuring many baby boomers to consider retirement abroad to lower their living expenses.

Half of Americans have less than $25,000 in total savings, excluding the value of their primary home and pension plans, according to a March 2013 survey conducted by the Employee Benefit Retirement Institute.

"Most Americans are not saving enough for a secure retirement, and an alarming number of Americans do not participate in any retirement savings program," said Ronald, O'Hanley, president of asset management and corporate services at Fidelity Investments.

Only 45% of American workers have a pension or 401(k) plan, according to Center for Retirement Research at Boston College. Around one-third of U.S. retirees receive at least 90% of their retirement income from Social Security benefits.

The average annual Social Security benefits for a recent U.S. retiree provides around a modest $15,000 a year.

For stretching a fixed income, a rising number of those Social Security checks are going abroad to expatriates settled in retirement enclaves in Latin America and the Caribbean.

"You can live almost anywhere in Latin America on $2,000 a month, but we see some people do it for a lot less on $600 or $700," Prescher said. "But, they're living a different type of lifestyle amongst the locals."