Geographic Arbitrage Calculator — Methodology

How This Calculator Works

The calculator compares your current US spending with what the same lifestyle might cost in up to three other countries. For each country it scales your spending by a cost-of-living multiplier, adds a private health insurance estimate, and shows the annual difference. Tax is not included on either side. If you enter savings details, it also estimates how many years earlier you could reach financial independence (FIRE).

Inputs and Assumptions

• Annual spending: What you spend in the US today. This is the US baseline.
• Countries: Up to three, each supplying a cost-of-living multiplier and a monthly health insurance estimate from our country dataset.
• FIRE inputs (optional): Current savings, annual savings, expected return and safe withdrawal rate (SWR).

Formula

// Per country
adjustedSpending = usSpending × colMultiplier
totalCost        = adjustedSpending + healthcare × 12
annualSaving     = usSpending − totalCost
// No tax on either side: usSpending is your spending, not your income.

// Years to FIRE (B = savings now, S = savings per year,
// r = expected return, F = expenses / SWR)
B(1+r)^n + S((1+r)^n − 1)/r = F
n = ceil( ln((F·r + S) / (B·r + S)) / ln(1 + r) )

// Abroad, lifestyle expenses = adjustedSpending + healthcare × 12
// and annual savings rise by (usSpending − lifestyle expenses).
fireYearsShift = nUS − nCountry

Data Sources

• Numbeo Cost of Living Plus Rent Index (2024) — each country's multiplier is its index divided by the United States index (59.5; Numbeo indexes New York City at 100), because the multiplier is applied to your whole monthly budget, rent included.
• International Citizens Insurance and Cigna Global (2024) — indicative expat private health insurance premiums.
• Years to FIRE use the standard future-value identity for a balance plus end-of-year contributions.

Limitations

• Tax is not included. Tax abroad depends on where you become tax resident, the country's rules, any treaty and the type of income, and US citizens remain subject to US federal tax wherever they live. Estimate it separately; IRS Publication 54 explains the foreign earned income exclusion and the foreign tax credit.
• Health cover can be counted twice. Each destination adds a health insurance premium, while your US spending is scaled as a whole. If that spending already includes US health insurance, part of it is carried into the destination figure as well, which overstates the destination cost slightly.
• Cost-of-living indices are national averages from crowd-sourced data and vary widely between cities. They do not reflect your personal spending pattern.
• Exchange-rate movements, visa costs, relocation costs and inflation differences between countries are not modelled.
• Years to FIRE use a single constant return, so they show one path, not a range.

Last Updated

October 2026 — Tax removed from the comparison. The calculator had added the destination's top income tax rate on your whole income while adding no tax to the US side, so almost every destination showed a loss: the default example ($60,000 spending, $100,000 income, Portugal) showed $27,600 a year more instead of $20,400 a year less. The annual saving now compares living costs and health insurance on both sides, and the income and filing-status inputs, which fed only that tax line, are gone.

October 2026 — Methodology page published. Years-to-FIRE corrected: the formula had used the safe withdrawal rate where the expected return belongs, which understated years to FIRE whenever the SWR was below the return (for example 14 years instead of 18 for $100,000 saved, $20,000 a year, a $1,000,000 target and a 7% return).