Unless you happen to have dual citizenship or own property in another country, retiring abroad isn’t always as straightforward as those idyllic travel shows might suggest.
Whether you’re drawn by lower living costs, a better quality of life, or even political considerations, there are some economic factors you really need to mull over before making such a move.
“It’s essential to do your homework,” says Leo Chubinishvili, a financial planner from New Jersey with Access Wealth.
No matter where you’re considering, it’s wise to test the waters—try living there for a month or two. The last thing you want is to dive headfirst into complicated legal and administrative processes only to discover you don’t really enjoy your new home, or you feel out of place as a newcomer.
“Personally, I would suggest booking an Airbnb for a month. You need to ensure it’s a place where you feel happy and at home,” advises Adalberto Pucca, who leads global mobility services at Global Citizen Solutions, an organization that aids people in relocating from over 40 countries.
Once you have settled on a country, it may take anywhere from six months to two years to tackle essential financial and legal tasks.
During that time, be prepared to do a lot of research, consult with tax and other professionals, secure visas, find housing, and ensure you have the necessary health insurance for your new location—all while accounting for any potential delays.
Research visa and residence requirements
The primary considerations during this preparation will revolve around the type of visa you aim for and whether you’re looking for temporary or permanent residency, or even citizenship.
According to Pucca, U.S. retirees generally have two types of visas that might suit their needs, which can differ based on individual circumstances.
In many nations, the first kind is a retiree or passive income visa. This requires you to demonstrate that your savings and investments can cover your living expenses, which varies by country. Just a heads up—if you plan to work remotely for a U.S. company, you’ll need to verify that your visa allows for any active income from abroad.
There’s also the golden visa option, which can provide residency or even citizenship in exchange for a significant investment, like purchasing property or investing in local assets.
Pucca notes that golden visa requirements are often more lenient compared to those for a retiree visa, with less stringent stay requirements. Investment minimums can range from $250,000 to over $1 million.
Even if you’ve been paying Medicare throughout your career, it doesn’t guarantee that your medical care abroad will be covered.
Therefore, it’s essential to understand what it takes to receive treatment through your new country’s health system or whether purchasing private international health insurance is necessary.
If you plan to return to the U.S. frequently or have intentions of returning eventually, consider keeping your Medicare active. Chubinishvili suggests continuing your monthly payments if possible, as Medicare Part B helps cover outpatient care.
Additionally, if you don’t enroll in Medicare when you’re first eligible, the Social Security Administration warns that you might incur extra costs later.
It’s also crucial to evaluate the quality of healthcare available in your newly chosen destination. If it falls short, you’ll want to set aside a budget for treatments in the U.S.
Depending on your new location, you might still be eligible for Social Security benefits. As of 2024, about 712,000 expatriates will receive these benefits, including over 463,000 retirees.
For more details on what the Social Security Administration provides and whether you can receive benefits in your new country, it’s wise to check their official resources.
Contact your US-based bank or brokerage firm.
Although it’s possible to open bank or brokerage accounts abroad, Chubinishvili advises clients to maintain U.S.-based accounts, including retirement accounts.
Before you leave, it’s best to familiarize yourself with the rules for customers moving overseas from each institution where you hold accounts. Clarify how a change of address might affect your services, and ask about trading from overseas or how your financial advisor can assist you while you’re abroad.
Both Pucca and Chubinishvili recommend having two accountants—one in the U.S. and another in your destination country—to navigate the complex taxation rules effectively.
Why is this important? Understanding the intersections of U.S. tax laws with those of another country can be quite intricate—especially if there’s a tax treaty involved.
With expert advice, you can avoid double taxation on income or investments. Also, bear in mind that you may need to file tax returns in both nations, necessitating assistance with IRS and local tax agency forms.
