Retirement is an important new life phase, a time of new freedom and possibilities. Your time is yours and you’re not tied to one place. You’re free to take up hobbies, explore your surroundings, and enjoy the privilege of setting your own schedule.
Many retirees take the opportunity to travel. Increasing numbers are taking it further and making their home in another country. This move can offer a world of possibilities and create a whole new retirement experience.
In this post, we’ll look at why so many retirees choose to move overseas. The benefits include experiencing new cultures and lowering your living costs in retirement. But you do have to make some adjustments, and we’ll look at some of the things you need to plan for if you want to make another country your home.
In 2021, nearly 450,000 people were receiving Social Security benefits in a country other than the U.S. This increased from 307,000 people in 2008. Some popular moving destinations for retirees are Panama, Costa Rica, and Portugal. At least 12% of Americans have considered living in a foreign country after retirement.
Why Move Abroad After Retirement?
There are multiple reasons why people choose to move abroad to another country for their home after retirement. Some want to broaden their horizons and learn first-hand about another culture. Others want to pursue an interest or hobby and take advantage of the opportunities in other lands. For example, Norway, Sweden, and Switzerland offer the world’s best cross-country skiing, while Thailand, Chile, and New Zealand have breathtaking scenery for landscape photography.
Another popular reason for moving overseas is to stretch your retirement dollars. Many foreign countries offer lower costs of living than the U.S., especially for those on fixed incomes. With expenses rapidly rising in the U.S., many are eyeing attractive living costs in foreign countries.
Still another reason many retirees pull up stakes and leave the U.S. is healthcare. Some countries, such as Malta, Spain, and Costa Rica, offer residents quality healthcare at low or no cost. Retirees can combine international private healthcare insurance policies with Medicare to meet their needs.
Safety is another draw for many American retirees. The U.S. has violent crime rates five times higher than Europe. Other countries like Iceland and New Zealand have even lower rates.
Where to Move?
If you’ve decided to move to another country in retirement, the obvious question is where? Many people choose a living destination based on where they typically went on vacation. But living somewhere is very different from just staying there for a week or two as a tourist.
Instead, you can decide what qualities of a region are important to you, then consult online resources for countries with those qualities. Do you want to be close to the beach? Be able to buy a property? Enjoy a low crime rate and political stability? Be able to come back to the U.S. easily when you want or need to? Many retirees choose Canada and Mexico because of their proximity to the U.S. and familiarity to many Americans. You can also look at websites and online forums for the experiences of expats currently living in a country you’re considering.
The cost of living is a big consideration for most people. The exchange rates with U.S. dollars significantly impact how far your income and savings will go. In Columbia, Vietnam, and Thailand, you can live comfortably on $1,000 per month, even in the city.
When you’re researching destinations, an essential consideration is residency requirements. Some countries require a certain amount of income or savings to become a resident. The amount of income, savings, and time needed to establish residency varies by country and can change yearly. In Nicaragua, the income needed is $600 per month, while Ireland requires an income of $48,500 per year.
If you plan to establish residency in a country, that doesn’t mean you can become a citizen. In Costa Rica, residents can get a job and use healthcare, but can’t vote or get a passport without citizenship. A passport in European countries allows you access to free healthcare and to send your kids to college for free. Many countries, such as Brazil and Hungary, offer ancestral citizenship to foreigners who can prove their ancestors came from those countries.
Taxes are a crucial consideration for expat retirees. If you retain your U.S. citizenship, you’re required to file federal taxes each year, even if you’re living overseas. Your income, including Social Security benefits, remains subject to U.S. taxes. But the U.S. has tax treaties with a few countries like France and New Zealand that allow residents of those countries to be exempt from U.S. taxes on certain income they receive.
Finally, consider a country that already has a large expat community. Such a community can be a valuable source of information before and after you move. You can search for expat networks online and on Facebook and other social media platforms.
We hope you found this post, Is Living Abroad After Retirement Right for You? useful. Be sure to check out our post, Tips to Overcome the Hurdles of International Moving for more great information.
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