Retiring abroad has become a popular trend for many Americans. There are many reasons to retire overseas, including a lower cost of living, a slower pace and sandy beaches. But before you move, there are some things to consider. Here’s a checklist with practical steps to help make your retirement overseas a reality. You can also work directly with a financial advisor who can help you figure out a step-by-step plan for you to retire in your desired location.
Visit the Country First
You might be eager to move to your retirement haven. You might have read about it online and felt it sounded like the perfect fit. But the reality might be different. There might be people out there who had a genuinely wonderful experience, but that doesn’t mean yours will be the same. While visiting, you can get a general sense of the landscape, how accessible the city is and the nearby amenities. If you are thinking about moving to this place, don’t just visit for a weekend – consider visiting for a few weeks or even a few months.
Rent Before Buying
After visiting the place you may want to move to, the next step is not to buy a house or apartment but to rent first. Even if you’ve already visited for a few months, you might realize later that it isn’t the right fit. This is very similar to moving to a new state in the U.S. as you’ll need time in the area to know which spot is right for you long-term.
In some cases, it can take six months to fully determine how you feel about a place. During this time, you might also decide to keep your home in the U.S. if you happen to own one here. If you have family obligations that could bring you back to the States, renting will make it easier to return if necessary.
Find Health Coverage
Health insurance can be one of the biggest obstacles for people who want to retire abroad. For example, Medicare won’t pay for healthcare services overseas, so you might need health insurance for the country that will be your destination. At the same time, you may want to continue paying into Medicare in case you ever return to the U.S.
While you might be able to find health coverage from a U.S.-based company that will cover you in the location of your choice, you may need to research how local insurance works where you’re going. Some countries might have affordable enough care that you don’t need insurance and can just pay ad-hoc while others might give you certain benefits if you buy property in the country.
Plan for Taxes
Taxes can be another big pain point for those who want to retire abroad. If you want to remain a U.S. citizen, the federal government expects you to keep paying taxes, even if you live abroad. This can result in so-called “double taxation” if you are also paying taxes in your country of choice. However, the U.S. government does have a foreign-earned income tax exemption, which allows you to exclude worldwide income up to a certain amount.
Many countries will also give you a long-term visa that doesn’t require you to pay taxes if you meet the requirements. Typically this means that you won’t earn any money in the country and can prove that you have sufficient funds to support yourself or you and your spouse.
Consider Recreation and Social Activities
It’s important to have time for recreation and social activities, especially for retirees, who often don’t spend time socializing with people at the office. While there are probably opportunities available no matter where you go, they might be different from what you are used to. Other cultures might enjoy different activities or watch sports with which you are not familiar. Ask yourself whether you can see these becoming something you participate in every week or if they are just too different.
Plan for the Transportation You’ll Need
How easy is it to get around in the place you are considering? Are there sidewalks and bike lanes that make it accessible for everyone? If you are used to driving in the United States, will you buy a car or will you opt for public transportation?
In some parts of the world, gas is much more expensive than in the U.S., especially in European countries. Mobility is crucial to maintaining a high quality of life, so you’ll want to know how you will get around before moving abroad.
Run the Numbers to Verify Your Ability to Afford Living in the Area
You should also be sure you can afford to move abroad. Fortunately, Americans have a bit of an advantage here because it is the 15th most expensive country in the world, according to Numbeo. But if you want to live in a place like Switzerland or Singapore, you might find that your costs go up, not down.
And don’t forget that moving can be quite expensive. Plane tickets, extra taxes, health insurance and storage are among the costs you might incur when moving overseas. Thus, it’s a good idea to run the numbers to see if you have the budget for an overseas move.
The Bottom Line
Retiring abroad is a big decision, but it has become increasingly popular. In some cases, the cost of living might be lower and you might find yourself soaking up the sun on a pristine beach. While retiring abroad can be a great decision, you should ensure it’s the right fit first. You can do that by visiting first and renting before buying. Also, see if the country has everything you want, such as recreation, transportation and social activities.
Tips for Retirement
- A financial advisor can guide you through major financial decisions, like determining your investing strategy and even managing your assets for you. If you don’t have a financial advisor, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Deciding how to invest can be a challenge, especially when you don’t know how much your money will grow over time. SmartAsset’s investment calculator can help you estimate how much your money will grow to help you decide which type of investment is right for you.
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