Retiring abroad has become a growing trend for millions of U.S. retirees who are looking to stretch their retirement savings. Here are some tips and resources for you to consider and to help you prepare.
For starters, you can find information and articles on the countries and cities you are interested in at websites like InternationalLiving.com and EscapeArtist.com.
Another good idea is to talk with retirees who have already made the move that you are considering. They can give you tips and suggestions, explain the advantages and disadvantages and provide you with the day-to-day reality of living in a particular country. Visit ExpatExchange.com and ExpatForum.com for additional information and resources.
Before committing to a particular location, most experts recommend that you visit the location multiple times during different seasons to see whether you can envision yourself living there, rather than simply exploring the location as a tourist.
It is also important to consider these financial factors:
Cost of living: Retiring abroad was once seen as a surefire way to live beyond your means and, for some countries, it still is. However, the U.S. dollar is not what it used to be, so your money may not stretch as far as you think. See Numbeo.com for a country-by-country cost of living comparison.
Taxes: No matter what foreign country you decide to retire to, as long as you are a U.S. citizen, you must file an annual tax return and report all income above certain minimums. This is true regardless of where the income is earned. For details see the IRS Publication 54, "Tax Guide for U.S. Citizens and Resident Aliens Abroad" at IRS.gov/pub/irs-pdf/p54.pdf.
Health care: Medicare and most U.S. health insurance companies do not provide coverage outside the U.S. Check with the U.S. embassy (see USembassy.state.gov) in your destination country to see how to receive coverage as a foreign resident. Many countries provide government-sponsored health care that is inexpensive, accessible and just as good as what you would receive in the States. Another option is to buy a policy through Medibroker (Medibroker.com) or Bupa Global (BupaGlobal.com).
Be aware that most people who retire abroad eventually return to the U.S. As such, you should consider paying your Medicare Part B premiums. If you drop and resume Part B, or delay initial enrollment, you will pay a 10% premium penalty for every 12-month period in which you could have been enrolled.
Banking: Opening or maintaining a bank account abroad has become more difficult because of the Foreign Account Tax Compliance Act, a U.S. law designed to prevent Americans from hiding assets abroad. So, you may have to establish a savings and checking account with an institution that has international reach, like Citibank. Another option is to consider maintaining your bank account so that you can access your account online and get U.S. credit and debit cards that do not charge foreign transaction fees.
Housing: Buying a home in a foreign country can be complicated. Therefore, it is usually less expensive and simpler to rent, unless you know you are going to live there for a long time.
Social Security: You can receive your monthly Social Security benefits almost anywhere around the world (see SSA.gov/international/payments.html). Your benefits can be deposited into a bank account in the U.S. or in your new home country with some exceptions.
The U.S. State Department offers a handy checklist that can help you think through all the issues on retiring abroad. To access it, visit Travel.state.gov and search for "retirement abroad."
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.