There is a sense of adventure attached to living in the midst of Italy’s historic art and culinary achievements, relaxing on the sunny Mediterranean coast of Spain, or soaking in the Pacific coast of Costa Rica.

While it’s uncertain just how many Americans have retired overseas, about 450,000 Americans received their Social Security benefits outside the U.S. at the end of 2021, up from 307,000 in 2008.¹

If you’re contemplating retiring abroad, living out of the country is not only exciting, but can also be less expensive, potentially increasing the life of your retirement nest egg.

Important Considerations

As tempting as living in a foreign country may be, it’s not for everyone. Before you pack your bags and sell your home, there are a number of steps to take first.

1. Research the country you’re thinking of retiring to. Any candidate country should reflect the lifestyle you want to live and meet those things most important to you in retirement. Examine the country’s cost of living, the quality of its health care system, economic stability, social and political safety, tax regulations, and what its permanent resident requirements are.
2. Are you willing to learn the language? While many European countries have a high percentage of English-speaking citizens, many other countries (including parts of European countries) may not. In either case, the full appreciation of living abroad may not be realized without learning the local language.
3. What are the financial implications? Some countries have a tax treaty with the U.S. to prevent double taxation; others do not. Not all countries recognize the tax-free treatment of Roth distributions. Research local tax rules. A tax advisor knowledgeable in local laws is critical.
4. Always have a Plan B. Much can change over time. It may have to do with the country or area of the country to which you moved, or it may have to do with health issues that require care that you hadn’t considered and can’t be provided locally. Such changes can require a modification in plans.
5. Visit your final candidate country(ies). Reading about a country or a week’s visit 10 years ago is probably insufficient to making such a big decision. Plan to spend an extended amount of time visiting your leading choice(s) to get a more in-depth understanding of the lifestyle and weather.
6. Rent first. Before making the decision to plant deep roots abroad, consider renting so you can beat an easy retreat if you discover unappealing aspects of your potential new home.
7. Get professional legal help. A financial professional experienced in overseas retirement can help steer you clear of unexpected surprises and educate you to the estate planning implications of such a move. They can also help you with multi-jurisdictional tax and regulatory regimes.

Retiring in and of itself is a major life change; retiring abroad is that much more so.  Take the time to do the research so your twilight years are indeed spent in the place of utmost contentment, personally and financially.

Source:

1. https://www.wsj.com/story/americans-are-saving-money-by-retiring-overseas-82297405

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