Quick, what are the first words that come to mind when you think “Peru”? Bright colors, llamas, ancient ruins, Incas, ceviche, adventure. Perhaps you think beautiful beaches, or rugged Andean mountains, Lake Titicaca, or maybe even the Amazon rainforest.
The greatest part about Peru, is that all of these are accurate. Great Incan wealth and glory may also come to mind (all it takes is a quick search of “Machu Picchu” to be impressed by what that civilization achieved), and that too, would be correct. After the Spanish conquered the Incan Empire in 1533, they lived richly on gold and silver from the Andes, and Peru became the principal source of Spanish wealth in all of South America at that time. If you're thinking of retiring to Peru or just living there for longer than a vacation, you'll need to create a realistic budget for your Peruvian escape.
How much does it cost to live or retire in Peru? As you will see below, the cost of living in Peru is cheap by many Americans’ standards, though perhaps not as cheap as you thought.
When the Spanish conquistadores walked in on the Incan world in the 1530s, they found a wealth so resplendent that the capital at the time, Cuzco, boasted temples decorated with gold and precious jewels. This wealth came at a price to a majority of the Incan population, as the Incan culture followed a strict hierarchy with a descendent of the “sun God,” the Ultimate Inca, at the top, and farmers at the bottom (who certainly weren’t living in jewel-studded buildings). Up and down this hierarchy, payments were made in labor credits – that is, work was exchanged for goods or food.
How Much Is the Average Salary in Peru?
Today in Peru you would probably be laughed at if you offered to do the dishes for a plate of ceviche. The Peruvian currency is the nuevo sol, or, in plural, soles (sol meaning “sun,” so that the sun gods may not be as far away as 500 years). Coinmill.com reports that at the time of writing, one US dollar is equivalent to 2.65 Peruvian soles . Today’s economy in Peru may not be as flashy as it was for the Incans, but it is at least a little bit fairer. The U.S. Department of State reports a 7.9% unemployment rate in Lima, the capital, in 2010, and an average of 7.0% economic growth in the seven years before 2010.
Furthermore, in January of this year, 2012, the Peruvian Times printed that the average salary of workers in Lima increased 13.3% in the last quarter of 2011, to an average of 1,274.8 soles every month (473 US dollars).
How Does Peru's Cost of Living Compare to Other Cities?
When it comes down to it, when living in Peru you can choose to live like an Incan farmer or to live like a sun God; you get what you pay for.
In March of 2011, Mercer, a consultant, investing, and outsourcing firm, published data gathered with the purpose of educating multinational companies and governments on what they should pay their expatriate employees. The survey, which may be “the world’s most comprehensive cost of living survey,” covered 214 cities from five continents, and measured the comparative cost in each city of over 200 items, including entertainment, housing, food, and other factors.
Where did Lima, Peru’s capital, line up on Mercer’s list?
Lima is the 138th most expensive city for expatriats. Interesting and impressive, but what does that really mean?
First of all, the cost of living in Peru depends on where you stay in the country. Areas of Cuzco or Lima, for example, where the tourists and expatriates gather, may feel similar to the U.S. in terms of price and comfort, whereas smaller, less-touristy cities may be cheaper, but offer fewer comforts like dependable hot showers, heating systems, or a variety of restaurants. From personal, recent experience in Peru, it is possible to live in most parts of Peru on 20 US dollars a day; however, this will most likely mean shared accommodations, cheap and simple food (I hope you like rice), and abstinence from some of the touristy extras (clubs, discos, or that cute hat with the llama stitched on the sides). Then again, the streets of Peru are lined with delicious snacks for an average of one sol, and the best parts, the scenery, are…free (for the most part). Below is a more detailed breakdown of what you can expect to pay while living in Peru.