Ever consider retiring outside of the United States? From weather, to scenery, to cost of living, there are many reasons some look outside of the USA for retirement. Sure, it’s not all hammocks and coconut drinks, but with the right plan, you’ll be sipping those drinks under a foreign sun in no time. Here are some tips to plan your happily ever after.
- Research Your Destination: Start by diving into the Google rabbit hole of potential retirement spots. But remember, retirement isn’t just about the scenery; it’s about finding a place that fits your lifestyle.
Make sure you include a visit. After all, you wouldn’t buy a house without checking out the neighborhood first, right? Make sure to step outside of the hotel or resort you visit to get among the people, culture, and commerce. - Understand Visa and Residency Requirements: What does your new country require for travel and relocation? Some countries are eager for retirees and even provide incentives, while some are less welcoming. The US State Department has much of the information you need at travel.state.gov. Here you can find not only visa and residency requirements, but also travel advisories and embassy information.
- Assess Healthcare Options: Medicare does not pay for medical expenses overseas. Your host country may have national health insurance. Research eligibility, availability, and quality beforehand. In some locations you can purchase local insurance, but often these policies are limited to specific hospitals and providers. You may also purchase international insurance that will provide broader coverage, but it will be more expensive. Local US Embassies can provide a list of hospitals and doctors.
If you do ever return to the United States and seek to enroll in Medicare, you may be subject to a permanent penalty for the time you were eligible for Medicare but were not enrolled. If you will return to the United States occasionally for medical procedures, you may wish to retain enrollment in Medicare. - Financial Planning: Crunching numbers may not be your idea of a good time, but when it comes to retiring abroad, it’s essential. Build a retirement budget using the cost of living at your intended destination. Make sure to consider the impact of the currency exchange rate. Your dollar may purchase more or less goods where you intend to live. You may also need to plan for travel expenses related to returning to the U.S. for family events.
You may still receive Social Security while living abroad, and some countries will even allow direct deposit. Just so you know, Social Security payments cannot be sent to Cuba, North Korea, and a few other countries. Check https://www.usa.gov/social-security-abroad to see the rules for your intended destination.
You will want to set up a local bank account in order to manage your daily cash flow in country. Keep in mind that these accounts may not enjoy some of the protections your U.S. accounts enjoy like FDIC and SIPC coverage. Research what accessing your money will require – there may not be an ATM on every corner.
Many advisors suggest retaining your U.S. bank and investment accounts. This makes reporting and compliance with U.S. Tax laws easier. Check to see if your account provider will work with you if you have a non-U.S. address. - Speaking of Taxes: Yes, you will still have to pay them, both in the U.S. and in your home country. The United States does have some tax treaties with some countries which allow retirees abroad to be taxed at a reduced rate or entirely exempt from foreign taxes. A conversation with a tax advisor who specializes in expatriate tax issues is a must.
Retiring abroad has appeal but can also be challenging. However, with a little planning, you’ll be ready to enjoy the retirement you have always wanted. So, pack your bags, grab your sense of adventure, and get ready for the retirement journey of a lifetime!
