12 Critical Things You Need To Know About Retiring Abroad

INVESTING - SAVING FOR RETIREMENT
Retiring abroad can be an incredible experience — and a culture shock.
Updated July 17, 2023
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Today’s retirees are active, vibrant, and ready to take on the next chapter in their lives.

Many were wise enough to get ahead financially and may have several options for retirement — including living abroad during their golden years.

Retiring outside the U.S. can be an incredible experience, but it is important not to underestimate the challenges that come with it. Here are 12 things to think about before retiring abroad.

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Visiting family back home might be costly

Jesse B/peopleimages.com/Adobe grandparents helping children

If you have children, grandchildren, siblings, and close friends in the U.S., you'll probably want to visit them relatively often.

Look into flight and travel prices between the U.S. and the places you are considering spending your golden years. Before you move, remember that there could be a long, expensive flight between you and your grandchild’s first birthday.

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Living somewhere is different than vacationing there

leungchopan/Adobe Woman using map

When considering places abroad to retire, you may run down the list of your favorite vacation spots, from London to Belize and Quebec City. But vacationing somewhere is different than living there.

Look at whether a location has what you need day-to-day, including medical access, proximity to family, grocery stores, and more everyday needs you may not consider while traveling.

Every day will exercise your brain

shurkin_son/Adobe Woman thinking

Monotony isn’t good for brain health. You need variation and excitement in your days to keep your mind sharp, and moving abroad will certainly deliver that.

Every day will be different, and you’ll have the opportunity to explore places you never imagined, which will continuously flex your cognitive muscles.

A language barrier could present challenges

fizkes/Adobe woman looks at laptop screen feels confused

You can probably get by with a translation app or pocket dictionary when you're on vacation. But what about when you’re trying to schedule a medical appointment or get a car fixed?

Consider the language barrier when you move abroad and whether that’s an exciting challenge or a dealbreaker.

Walkable neighborhoods might be easier to find

Prostock-studio/Adobe Senior couple walking

You can find walkability in many cities abroad, including Europe, South America, and Central America. Pair that with a location with pleasant weather, and you could enjoy an easy way to stay active and in shape during retirement.

Imagine yourself walking to dinner, the market, or a museum. It’s like you’re on vacation — except it’s now your everyday life.

The cost of living is often less

Prostock-studio/Adobe Senior couple looking at computer

If you find yourself in a situation where you need to cut costs to live on a fixed income, retiring abroad could come with significant savings — and without the need to drastically adjust your quality of life.

Housing might cost significantly less abroad, particularly if you’ve been accustomed to an area with a higher cost of living.

Buying a home might not be a straightforward process

fizkes/Adobe Someone talking to an older couple

If you owned your home in the U.S., you may assume you’re going to buy a place in your new home country. However, it’s often not that simple.

New residents face obstacles to buying a home in many places. If you plan to buy, it’s often worth hiring an expert who can walk you through the process and keep you informed about what your rights are and which legal issues may arise.

Taxes differ from country to country

Elnur/Adobe Old couple discussing paperwork

Taxes could be a plus or a minus, depending on your destination. You’ll owe U.S. taxes as a U.S. citizen no matter where you live. And, in some countries, you’ll also owe taxes to the government in your new home.

Thanks to tax treaties, some countries don’t tax U.S. citizens, but this is a piece of the puzzle you want to have in place long before you choose and move to a new country.

Medicare won't cover you outside the U.S.

Tinashe Njaku/peopleimages.com/Adobe Doctor talking to older patient

The reality of getting older is that medical care typically becomes more important. Unfortunately, Medicare doesn't cover care outside of the U.S. for retirees who move abroad.

But that doesn’t mean you have to write off moving abroad. Some countries subsidize medical care, which could give you access to lower-cost health care. Look into whether you qualify as a non-citizen upon moving.

Living abroad can impact your estate planning

Studio Romantic/Adobe Older couple signing paperwork

Leaving an inheritance can trigger taxes, and moving abroad doesn't help you avoid those taxes. The federal estate tax will be levied against your estate if it's large enough, even if you’ve been living abroad for years.

You could also get hit with additional taxes and other estate regulations from your new country. An estate planning attorney could help sort out what a wisely drawn estate plan looks like when you live between two places.

Banking might be expensive

Studio Romantic/Adobe Someone meeting with a banker

Moving money internationally isn’t always simple, so look for a local bank that has an agreement with your U.S. bank. It might be wise to maintain accounts in both countries.

Ideally, your U.S. bank will have an agreement that limits fees on cash transfers to a bank in your new country.

It might be difficult to become a citizen

chika_milan/Adobe Someone learning something new

If you plan on moving abroad and immediately pursuing citizenship, it might be time to consider whether that’s possible.

Some countries make it difficult to obtain citizenship. Clearly understand the rules in any country that you are considering calling home.

Bottom line

ravipat/Adobe Couple looking at computer

Retiring abroad is not a simple or easy process. But whether you plan to retire early or at a later date, finding a new country to call home can be the adventure of a lifetime.

Like anything in life, it’s a matter of weighing the pros and cons and deciding whether you’re up for the challenge.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.

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Author Details

Heather Bien Heather Bien is a writer covering personal finance and budgeting and how those relate to life, travel, entertaining, and more. With bylines that include The Spruce, Apartment Therapy, and mindbodygreen, she's covered everything from tax tips for freelancers to budgeting hacks to how to get the highest ROI out of your home renovations.

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