- Retiring abroad is an exciting and fascinating experience, but be prepared for culture shock.
- Laws and processes differ significantly from country to country, so expect life in another country to feel different than in the U.S.
- The more research and planning you do for your move abroad, the easier you’ll transition.
- It’s not necessary to dive into a new country head first — try taking a month-long trip first to see how you acclimate.
Retirement involves considerable thought and planning. When you want to retire, how much money you’ll need to save and what you’ll do with all your newfound free time are questions that require answers, which aren’t necessarily easy to come by.
An increasing number of Americans are finding their answers by moving abroad. Depending on the destination, the cost of living alone can improve your quality of life. But retiring abroad requires some planning of its own.
Figure Out Your Lifestyle Goals
When you make the decision to retire abroad, once you leave the office for good, you’ll be in unknown territory if you don’t have goals in mind. Your first goal should be determining the kind of lifestyle you want to live.
Sit down with a notebook and be honest about why you want to retire abroad. Here are some questions to get the ball rolling:
- Are creature comforts and lower costs important to you?
- Do you want to live somewhere new or exotic?
- Are you choosing to move abroad to cut costs and retire early?
There probably won’t be a single reason for your decision. If you’ve given it some thought, you probably have a few.
Do Your Research
Once you know why you want to retire abroad and the kind of lifestyle you want to lead, you can start narrowing down your options and putting all your ducks in a row before you make your move. And there’s no way to sugarcoat it — this part is frustrating and time-consuming.
Unless you have a very specific location in mind, you’ll probably have a few countries on the table. Each is probably wildly different in terms of visas, residency, property laws, healthcare, taxation, etc.
Once you get past the bureaucracy, you’ll need to research those countries’ cultures, languages, cities and neighborhoods. You’ll also need to figure out a budget and how you’ll convert your money into the local currency.
Consider the Various Visa Options
One of the biggest obstacles you’ll encounter in your research is figuring out a strategy for getting a visa. As a U.S. citizen, you don’t need a visa for most countries for recreational visits, but the requirements for moving to any of those countries vary wildly.
While details vary from case to case, many countries offer financial investment visas or citizenship based on familial descent. If you’re single and looking, marrying a local is an option in most countries. Whatever strategy you go with, it’s essential to understand the specific criteria for the country you choose and prepare for a lot of bureaucracy and paperwork.
Settle On Your Dream Destination
Once you understand your lifestyle goals, the legal requirements, the economics, the cultural differences and all the other variables that go into choosing your retirement destination, it’s time to weigh the pros and cons of your shortlist and choose your dream destination.
Once you pick the country you want to move to, if you haven’t done so already, you can start looking at specific cities and locations you might want to live in. It’s a good idea to do an extra layer of research here since amenities you may take for granted in the U.S. might not be available in other countries.
Take Your Retirement Abroad for a Test Run
Once you’ve chosen your destination, the best thing you can do to help prepare for the inevitable culture shock is to take a long trip there. The catch is that you should mimic everyday life as much as possible. In other words, don’t turn it into a vacation.
Book a month or longer using an app like Airbnb so that you’re staying in a comfortable home, not a transient hotel. Try to do everything you would in everyday life, like paying bills, running errands, using public transportation and interacting with locals.
How you feel about your test run will tell you whether you’ve picked the right destination. And if you have, it’ll also help ease the transition once you finally move there.
Visiting the U.S. as an Expat
It’s common for retired Americans living abroad to return home to visit friends and family. And considering the distance and logistics involved in getting to the airport, many choose countries close to the U.S., or at least ones with adequate travel infrastructure.
Keep this in mind when choosing your new home. If you’re an urbanite, for example, imagine living in a rural Latin American country, which may not have the same amenities and infrastructure you’re used to.
If your goal is to move to another country but continue traveling and returning to the states for short visits, be sure to consider these issues before choosing your retirement destination.
Deciding What to Do With Your Existing Home
If you own property, you’ll need to figure out what you plan to do with it. Even if your home is paid for, you’ll still have property taxes, which are burdensome if you’re trying to lower living expenses.
One option is to turn your property into passive income by renting it out, though you’ll need to hire a property manager to run things for you. This is also a good option if you think you might decide to return someday.
If you have no intention of moving back, selling your home will pad your finances and offset any unexpected expenses. Depending on the country you move to, you might even be able to buy a comparable new home with money left in the bank.
Consider Health Care Costs
Regardless of your age, once you’re retired, it’s common for health costs to increase. And before you leave the U.S., ensure you’re enrolled in Medicare or basic health coverage. If you return without enrollment, even temporarily, you could be fined.
Before you move to your dream destination, you’ll need to research how the country’s health system works and what kind of coverage is available for retirees in the new country.
These days, there are a large number of countries throughout North and South America and Europe that provide public and universal health care systems. But depending on your residential status in your new country, coverage will vary from place to place.
Like most other processes, buying a home abroad usually doesn’t work as it does in the U.S. It can be a headache if you don’t know the local rules.
To begin with, depending on the country you choose, you may not have the freedom to choose the region you want to buy a house in. On the other hand, the process could be a breeze. For example, as an American, you can buy property in Mexico sight unseen.
In any case, be sure to enlist the help of a lawyer familiar with your destination’s property laws to avoid any scams. The American embassy in the country usually has a list of lawyers who can help you with the process.
Consider Economic and Political Stability
It’s important to start following the news and media for the country you’re moving to and pay attention to your destination’s political and economic climate. If you plan on becoming a citizen someday, you’ll want to know about the country you’ll eventually call home.
Once you’re established in your new home abroad, it’s important to build a support network with neighbors and make new friends. Expatriate communities are common all over the world and can be a great starting point for building new relationships.
As a Global Citizen, You’re Still an American Taxpayer
The IRS won’t forget about you just because you moved to another country. In fact, the U.S. is one of two countries in the world that tax based on citizenship rather than location. As an American citizen, your income is still taxable by the federal government, regardless of your new living space abroad.
But don’t despair. The U.S. government has tax treaties with some countries, which may even exempt you from taxes based on your income. As a retiree, if you lead a life void of excess luxuries, chances of excessive taxation are slim, though you’ll still need to file a federal tax return every year.
Temper Your Idealizations and Prepare for Some Culture Shock
Once you’ve made all your arrangements, landed in a new country and moved into your new home, it’s completely natural to feel disoriented. Culture shock is real. When you’re dropped into a foreign environment, astonishment can give way to frustration.
That said, if you follow the tips in this guide and do as much planning as possible, you’ll find your stride, settle in and eventually experience an amazing new life abroad, rich with possibilities. With a little patience and the understanding that no country, government or society is perfect, you’ll grow from your new experience and become a better citizen of your new country and the world.