Leaving the workforce can put you in a quandary after decades of full-time work. But what if retirement was brimming with delicious food and beautiful weather? Retiring abroad can bring you just that and so much more. Here are five general things you should take into consideration before retiring abroad and recommendations for five countries to retire in.
A financial advisor can help you create a financial plan for your retirement needs and goals.
How to Retire Abroad
If you’d like to retire abroad, these five practical steps can help you ensure that you land in a spot that you’ll love:
Choose where you’d like to live. The decision that will inform almost every other factor of retirement is where you want to reside. You might choose your favorite vacation spot, the country from which you draw ancestry, or a popular choice among retirees. For example, many retired Americans choose Japan, Canada, the United Kingdom, Mexico and Germany.
One factor likely to drive your decision is income. While the Social Security Administration will send payments to retirees living in most countries, it excludes specific countries. You won’t be able to receive Social Security distributions in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, or Uzbekistan.
Assess visa requirements. Each country has different stipulations for those applying for a residency visa. For example, U.S. citizens can easily get a visa to live in countries like Mexico, Belize and Panama. Typically, you’ll have to provide proof of a specific level of monthly income or purchase property above a certain value threshold to receive a visa.
Alternatively, countries such as Australia, Italy and Portugal grant dual citizenship if your parent or grandparent was born there. Therefore, if your family hails from a handful of countries, you could become a citizen and retain U.S. citizenship.
Consider housing options. In most foreign countries, you’ll face the same question for housing as you would in retirement in the United States: Rent or own? Both come with their pros and cons. For example, owning a home may be necessary to acquire a visa in some countries. However, obtaining financing can be challenging for expats, and there may be significant legal ramifications for homeownership in other countries.
On the other hand, renting usually presents less hassle and requires less financial commitment. However, rental standards and practices vary worldwide, so it’s recommended to do your homework before signing a lease. If you’re still learning the country’s language, working with a bilingual professional can smooth the process.
Estimate healthcare expenses. Health insurance is crucial for people of all ages and locales, and healthcare costs in the United States are among the highest in the world. While retirement can take some of the sting out of paying for healthcare, your expenses will ultimately depend on where you live and how soon you sign up for Medicare.
Enrolling in Medicare and Medicare supplements can help you save money, as waiting can increase your premiums. If you plan on returning to the United States in any capacity while retired, getting this coverage is critical to avoid extra fees and access doctors while in the U.S.
Medicare doesn’t provide health insurance in foreign countries, so you’ll have to assess the health insurance situation in your country of residence. Generally, you’ll pay out of pocket or purchase another insurance plan that’s valid in your country. Fortunately, many European countries have cheaper health insurance and healthcare costs than the United States. Additionally, countries like Spain eventually add expats to their public health plan, drastically reducing costs.
Pay your taxes. While living in another country may provide a dream lifestyle, it won’t make taxes vanish. You’re liable for income taxes no matter where you live, although several countries’ tax treaties with the United States can reduce your taxes on foreign income. In other words, you may not have to pay taxes twice on what you earn by working in another country. Likewise, the Foreign Tax Credit can eliminate taxes you might owe the U.S. government on foreign investment income.
However, the federal government still taxes income from your individual retirement accounts, pensions, 401(k)s and Social Security distributions. Some countries grant expats exceptions for taxes on Social Security, but it’s wise to plan to pay taxes on all your retirement income to ensure you can afford it. Regardless of your financial situation, the IRS requires U.S. citizens to file taxes yearly, even if you don’t owe anything. Plus, expats file a mandatory report of foreign bank accounts that had a balance of $10,000 or more during the last year, whether for a day or months on end.
Where to Retire Abroad
Americans have dozens of places to choose from for retirement, from sunny beaches to charming villages. Here are five countries to consider:
Spain. With at least 300 sunny days per year, inexpensive, top-notch healthcare, and permanent resident status after five years for expats, Spain is an excellent place to retire. The country boasts a vibrant culture, geographical variety, and cities with gorgeous architecture. Living is affordable in most areas, and you can rely on its world-class public transportation system.
Panama. If you take a plane from Miami, you can fly three hours south to this popular retirement spot. Panama has year-round Caribbean sunshine without experiencing hurricanes. Additionally, residents can enjoy a variety of cuisine, outdoor activities, and public resources. Plus, retirees can access fantastic healthcare and benefit from the country’s economic stability.
France. One of France’s main strengths for retirees is affordable housing, about one-third cheaper than in the United States. This cultural and culinary powerhouse of Europe has a comfortably warm southern region and a universal healthcare system that makes nearly all forms of care cost next to nothing.
Mexico. The United States’ neighbor to the south, Mexico is accessible by plane or car. The country is exceptionally affordable for retirees, offers quality healthcare, and hosts over one million American residents. The location makes migrating south for the winter and back to the States for the summer easy. Plus, obtaining residence is as simple as showing proof of monthly income.
Costa Rica. Full of national parks and offering a broad range of outdoor activities, Costa Rica is a beautiful Central American country for retiring expats. It offers affordable, first-rate healthcare and a stable governmental system.
Bottom Line
Retiring abroad can be the next exciting adventure for your golden years. It’s a good idea for retirees to consider housing, visas, taxes and affordable healthcare in their desired country of residence. By researching different countries, retiring Americans can find a comfortable, enjoyable place for decades to come.
Tips for Retiring Abroad
Retiring abroad involves a lot of moving pieces. A financial advisor can help you create a solid plan for retiring in another country. SmartAsset’s free tool matches you with up to three 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.
While settling down in a country vista sounds like a dream, it can also be logistically challenging. Figuring out taxes and visa qualifications can be enough to dissuade some hopeful retirees. However, bank fees can also take a hidden toll. Your U.S. bank accounts can be drained at $2.50 a tick or 3% of all money withdrawn. While a charge here and there might not break your budget, a year’s worth of transactions can create a gigantic expense.
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Source: https://finance.yahoo.com/news/5-best-countries-americans-retire-130032473.html