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Plenty of people fantasize about retiring to a villa in Tuscany, a seaside village in Mexico, or even hopping from cruise ship to cruise ship without keeping a permanent address. For most of us, those thoughts remain daydreams. But for an increasing number of Americans, retiring abroad is becoming a reality.
If you want to retire abroad, there is a lot to think about before taking the leap. Done right, however, retiring abroad can offer a host of benefits.
Why Retire Abroad?
The reasons to retire abroad are as varied as the people who choose to do so, but there are some common themes; money is one. Many international retirement destinations offer a lower cost of living than the United States, meaning that a retirement nest egg stretches further. Don’t forget that the cost of healthcare, a major expense in retirement, may also be significantly lower in other countries.
International travel is a goal of many retirees, and it is often easier to achieve for people who retire to, say, Europe or Central America. Not only is there the opportunity to explore your new home, but you likely have greater proximity to a number of desirable destinations.
Then there are the less obvious advantages. Most of us spend our adult lives getting mental stimulation from work and social interaction. Every day offers new experiences and challenges. Retiring to a new country and culture can provide continued mental engagement that may prevent cognitive decline.
If you’re inspired and asking yourself, “Can I live abroad after retirement?” the answer is yes—with the proper preparation. Here are some tips to help you get started.
Decide Where in The World You Want to Live
Where are the best places to retire abroad? That depends on what is important to you. You may have long planned to retire to your country of ancestry or a favorite vacation destination. Or you may have decided to retire abroad without a specific destination in mind. If that’s the case, consider issues like:
- Whether you need to be in an English-speaking country
- Your climate preferences
- Cost of living in your prospective retirement destination
- Quality and cost of healthcare
- Whether you will want to work, and the ease of doing so
- How difficult it will be to secure a visa
If you’re sure that you want to retire to a foreign country, but not sure which one, consider which locations others have found desirable, especially if you’re looking for a community of other expatriates.
Take some time to evaluate your priorities for a retirement locale. Once you have an idea where you’d like to give, it’s time to dive deeper.
Consider a Trial Run
You may have fallen in love with a place while vacationing there—many retirees do. But that doesn’t necessarily mean it’s the right place for you to relocate to in retirement. If you have the chance, visit for a longer period, ideally at least a month, and preferably during a different season to get a fuller picture of your prospective home. The mountain town that was refreshing in August could feel isolating in January.
Spending a longer period in your intended location also gives you the chance to experience it more like a resident would. Is shopping convenient, and can you purchase most of the items that are important to you? Is public transportation adequate, or will you need (or want) a vehicle?
Explore Your Health Care Options
It’s just a fact of life: as we age, we are more likely to need health care, to become disabled, perhaps to need long-term care. You may be in great health at 65, but your needs could look very different in ten or fifteen years.
Take a look at how many doctors and dentists are available in your intended location, what specialized services local hospitals do (and don’t) offer, and how far you might have to travel to get the care you need. You might be pleasantly surprised to discover that the quality of care is even higher than what you were accustomed to in the States, and the cost is much lower. Or you might discover a gap in care that is a deal-breaker for you.
Don’t forget to consider your health insurance options. You may have been counting on Medicare to pay for your healthcare, but in most cases it does not cover healthcare outside of the U.S. You may need to look into international health insurance or health insurance designed for expatriates; ordinary travel health insurance is likely to be insufficient.
Although you probably cannot use Medicare coverage while living abroad, you may want to pay premiums anyway, especially if you plan to eventually return to the United States. Why? Because you could be hit with a financial penalty. Premiums for Medicare B, for example, are 10% higher for every 12 month period for which you were eligible, but failed to enroll.
Don’t Overlook Money Matters
Getting settled in your new home involves careful financial planning. It’s not as simple as withdrawing your money from your local bank account and depositing your funds in a foreign bank account. Chances are that, at least at first, you will want to retain your U.S. citizenship. Being a U.S. citizen makes it easier to travel not only back to the States, but to some other countries as well. In addition, keeping your citizenship allows you to receive Social Security benefits almost everywhere in the world, and entitles you to U.S. consular services and other protections. And, of course, if you change your mind about wanting to retire abroad, retaining your citizenship makes it much easier for you to resettle in the United States.
All of that said, being a U.S. citizen abroad means that you still have certain financial obligations. You still need to file a U.S. income tax return. And there are other financial obligations of which you may not be aware, such as the requirement to report certain bank accounts. If you are considering spending your golden years in another country, speak to an attorney or retirement professional first about how best to manage your money matters.
Retiring to a foreign country can be an enriching and exhilarating experience. To learn more about how to prepare for what could be the adventure of a lifetime, contact Estate Planning & Elder Law Services to schedule a consultation.
