Americans Find More Affordable Paradise for Retirement

May 15, 2013— -- Nestled in the Andes Mountains is a kind of paradise that has lured thousands of Americans away from home.

Cuenca, Ecuador, may be a place many people have never heard of. But it's become a city teaming with retirees from all over the United States, drawn there by quality health care, a booming social scene and a low cost of living that makes their nest eggs suddenly seem golden.

Jan and Paul Cottage moved to Cuenca from Houston, Texas about a year ago. But it was not a future they were counting on when they began discussing retirement several years ago.

"I think we are the least likely people to end up in Ecuador," Jan Cottage said. "We owned a time share in New Mexico. That's where I thought we would always retire."

But when Jan Cottage, 61, lost her job and the company Paul Cottage, 67, owned was downsized, they realized they were looking at an early retirement with less money than they had planned on. So he got on the computer and started researching.

"So when he comes home and says, 'What do you think about Ecuador?' I just burst into tears," Jan Cottage said, smiling now at the memory. "You could see him go, 'Oh, this is not good.' And so he kind of went away and didn't mention it again for several months."

She said she could have looked for a new job, but knew at her age the chance of finding something at her same salary was slim.

"It's real hard when you're in your mid-50s to find another job. You're competing with very well-qualified people that may be 30, 35 years old," she said.

Despite her initial hesitation, the couple kept researching the possibility of retiring overseas, knowing that if they stayed in the United States, even moving to a less expensive city, they would be strapped by high health care costs, property taxes and other fixed costs like utilities and gas.

"We all know people who have retired and they spend a great majority of their time watching television," Jan Cottage said. "We wanted to make sure that wasn't us."

They went to Costa Rica on vacation but decided it wasn't a place they wanted to live. They also visited Panama and Mexico.

Then they flew to Ecuador and found it had just what they were looking for: a moderate climate where temperatures didn't typically climb out of the 70s, an active art and music scene, and plenty of places to hike and exercise.

They went back for a second trip, this one for five weeks, where they tested what it would be like to live in Cuenca. They took Spanish lessons and learned to navigate the cobblestone streets. Then they moved there for good.

The Cottages, who don't have any children, said they don't miss much about their life in the U.S. aside from their friends. Their property taxes were slashed from about $10,000 per year in Houston to just $72 per year in Cuenca.

Jan Cottage's health insurance dropped from $640 per month in COBRA payments in the U.S. to just $100 a month for private insurance in Ecuador.

Even a year later, they marveled as they moved around their kitchen pointing out fruits, vegetables and a loaf of bread they bought for just a dollar, even less in some cases.

There have been some hiccups. While Cuenca offers most of the amenities they were used too -- such as widespread Internet service and DirectTV -- there is a more relaxed vibe that took some getting used to.

"I don't think I would do people thinking about this justice without saying that this isn't probably for everyone," Jan Cottage said. "You have to be flexible here. If someone says they're going to do something like show up to hang a chandelier tomorrow, tomorrow may be Wednesday of next week. So you have to be patient with all that."

The Cottages are just two of what some have coined "recession refugees" -- Americans who left the country in search of a more affordable, yet still rewarding life.

It's a crunch many Americans have felt. The Social Security Administration sends monthly benefits to more than 346,000 Americans living overseas, an increase of nearly 47 percent from 10 years ago.

In Cuenca, the Americans first came in a slow trickle. Then, in the last couple of years, a deluge of retirees began settling there. The mayor of Cuenca estimated 4,000 Americans were now living in his city of about half a million.

"There has been a growth and, of course, it is complicated for us because, evidently, it makes it less accessible [for] Ecuadorians," Cuenca Mayor Paul Granda told ABC News in an interview conducted in Spanish.

Granda said prices in Cuenca have soared by as much as 40 or 50 percent, in some cases. He pointed not just to the Americans for the prices rising, but also the large number of Ecuadorians that had moved to the United States decades ago and were now bringing their families back.

"The basic services are very cheap and of quality. Obviously we are also obligated to keep being more efficient," Granda said. "But I think that the goal is how to make politics active so that that immigration fits in with our society and would be a contribution to our society."

The locals have been welcoming to the Americans. In Cuenca, the word "gringo" is a term of endearment, with many establishments even hosting "Gringo Nights" once a week.

International Living magazine has named Ecuador a top retirement destination for five years in a row.

Some of the Americans who are now living in Cuenca worry that the city will become too popular with expats.

Edd and Cynthia Staton moved to Cuenca from Las Vegas about three years ago. They had always talked about retiring overseas, but their search began focusing on the more affordable South American countries after the recession forced both of them into early retirement.

"We had an idea of the kind of retirement life we wanted," said Cynthia Staton, 59. "And Cuenca seemed to check all those boxes."

"We had the choices of accepting a lousy retirement, which wasn't a choice, continuing to keep on keeping on like we'd always done before," said Edd Staton, 64. "But there was no guarantee that was actually going to work. And if it didn't work we would have given up perhaps the best 10 years of our life we had left."

"Plan C," he said, "was think of something else."

"This is our something else," she said. "And we couldn't be happier. This was a great decision for us. "

Their news raised some eyebrows among their family members, including their two children. But they pointed out that if they had chosen to stay in the U.S., they would have kept working to pay the bills. So they would be on a tight budget and get very little vacation time to visit their family, which is scattered across the country.

Now they can visit the States for two to three weeks at a time. Living in Cuenca, Edd Staton pointed out, has meant that they've been able to see their children and, now, grandchildren more than they ever did living in Las Vegas.

And they Skype daily.

"With technology what it is, I think that you can move abroad and still feel connected to your family, whereas years ago that wasn't possible," Cynthia Staton said.

Neither couple has any plans to move back to the U.S. Instead, they are just enjoying what they call the best years of their lives.

"We certainly wanted to have this fling before we possibly physically can't do that," Jan Cottage said.

It's what Ecuadorians call "la tercera edad" -- the third and, quite possibly, best chapter of their lives.