Retiring Abroad: What to Know

Also known as your golden years, retirement is the time of your life when you focus on doing what you want and living how you want to live. For many people, this means traveling and taking vacations that might have been more difficult to take during their working years, such as a three-week trip to Italy or a month-long cruise to the Caribbean. But some retirees go a step further and decide to live in another country.

Retiring abroad can be an exciting and rewarding experience, especially as it lets you reshape your life within a new culture and climate. It can also, however, have its challenges and drawbacks to consider. In this article, we’ll explain what you should know before leaping to a full-time life outside the U.S.

1. Knowing Where to Live

Before moving abroad, it’s important to know where you would feel comfortable living. Often, when you go on vacation to a specific area, you only get a glimpse into how it operates — the people, food, and weather. However, when you live there, you must, in a large sense, assimilate into the culture and landscape.

Therefore, before landing on a place to make your home in your retirement years, you’ll want to consider whether you think you could indeed live there. Here are some useful factors to keep in mind:

• Is the area or country politically and financially stable? That is, does the country have a government with reasonable decision-making and fair laws?
• Is the city safe? Cities with high crime rates or political battles may be dangerous and may be candidates to avoid.
• Do you mesh well with the culture? Countries in other parts of the world will more than likely have different customs and ways of life. Ponder whether you would fit as a resident.
• Do you enjoy the weather? Think about the weather conditions you would ideally want as a resident. This may inform which region you may decide to reside in.
• Do you want to stay easily accessible to your family? If you foresee yourself visiting family members in the U.S., it may be a good idea to select a city in a nearby country or one with easy flights to major connecting North American cities.

A great way to answer the above questions about any place is to do some research both online and by reading guidebooks. You could also try asking people who have been there about their firsthand experience. And, of course, another option is visiting a prospective city for a vacation. Then, you’ll have the opportunity to gain experience and draw your own conclusions on how it feels to stay there.

Though the best place for you may depend on what environment you’re looking for, how safe you want to feel, and which amenities you desire, there are several countries where expats tend to reside in retirement or otherwise. In a 2024 article, CNN named the following as the most popular destinations Americans move to:

• Mexico
• Portugal
• Spain
• The Netherlands
• Germany
• Singapore
• Costa Rica
• Panama
• Italy
• France

2. Residency Requirements

Another important consideration before moving abroad is ensuring you’re able to meet residency requirements in the host country. These can vary drastically and may end up factoring into whether you want to live somewhere. Often, each country will have unique criteria you must meet if you’d like to become a full-time resident.

A common strategy is to try to get a retirement visa, which could allow you to stay in a country for an extended period. It’s important to note, however, that not every government offers one, and, as mentioned, rules can vary. It’s not uncommon for some to impose a minimum age and income requirement. To get one in Thailand, for instance, you must be at least 50 years old and receive at least 65,000 Baht (approximately $1,770.18) per month.

Because requirements and laws vary so much, the best way to find out a nation’s criteria for retirement residency is to visit the U.S. Department of State’s country information website. There, you can look up any country and read comprehensive, up-to-date information about residency requirements, laws, and important travel facts to keep in mind.

3. Healthcare Costs Can Vary

As you age, taking care of your health becomes a foremost priority. Unfortunately, according to the State Department, you won’t be able to get medical coverage from Medicare when you live abroad. Without medical coverage from the U.S., as most stateside retirees usually receive, you’ll need to take other routes to get health care. This may include:

• Paying out of pocket. This would involve paying for health needs on a case-by-case basis and can allow you not to be tied down if you want to travel to several countries. While medical care is often less expensive in other countries than it is in the U.S., this can add up if you need extensive medical care over time.
• Hospital insurance plan. This is an option available in some countries that lets you receive care from a single hospital for all your health needs.
• International insurance. This is a more expansive option that involves getting a policy from a private company that offers services overseas. These can, however, be expensive.
• Public health care. Some countries extend health coverage to foreigners after they’ve gotten residency. In many European countries, for instance, care may come at no cost and, even so, might be very high-quality.

4. Financial and Tax Implications

As you move to a new setting, you’ll likely have to deal with various financial challenges and loose ends. First, you may need to open a local bank account in your new country. In some cases, this is a prerequisite to acquiring residency. You’ll also need to consider how you’ll receive your retirement benefits, such as payments from a pension plan, investment dividends, or Social Security checks. Therefore, it may make sense to have an account in the U.S., as well as one locally.

You’ll also need to ensure you’re staying on top of taxes, both in America and in your new home. If you’re a U.S. citizen, you must still pay and file taxes with the IRS, even if you’re living elsewhere. Per the State Department, this is true even if you don’t hold any assets in the U.S.

As noted, you must also pay taxes in your country of residence. To avoid being taxed twice, you may be able to use a few different credits or earnings exclusions, such as the Foreign Earned Income Exclusion or Foreign Tax Credit. For more detailed information about qualifications, we recommend reading the IRS’s documentation on taxes and retiring abroad, as well as meeting with a tax planning professional.

Finally, it’s important to be aware that exchange rates may vary from country to country. The value of the currency in your new locale may be drastically different than that of the U.S. dollar. In many cases, it’s lower, which can make reduce the cost of living and make your money go a lot longer than in the states. This, therefore, is one of the primary reasons people move to a different country in retirement.

5. Adapting to a New Culture

One of the most rewarding and, in some circumstances, frustrating parts of moving to another country is fitting into the culture. Unlike being on vacation, living somewhere means you’ll have to understand how to live in a new city. Your new country will have a variety of customs, practices, and a new language that you’ll have to grow accustomed to as you settle in.

One drawback is that you’ll more than likely encounter another language with a barrier to overcome. Unless you’re familiar with it ahead of time, you’ll need to try your best to learn at least the basics so you can communicate with the locals.

Another potential issue is that infrastructure, such as public transportation or accessibility, may not be what you’re used to in other places. For example, you may have to spend time flagging down a taxi or waiting for a city bus if you don’t have your own means of getting around. A common way to get around in many foreign cities, such as those in Europe, is by walking or riding a bike. This means you’ll have to strike it on foot if you want to go somewhere or explore the city, which could be a challenge if you’re not as mobile as you were in your youth.

Of course, adapting to a new cultural environment isn’t all negative. Though language and mobility can be difficult hurdles, an overwhelmingly positive reason to head to other countries in your post-working years is the opportunity to immerse yourself in different ways of life and climates. You’ll be able to build connections to people you wouldn’t have otherwise met, experience cuisines that simply aren’t available or as prevalent in the U.S., and explore new landscapes.

6. Seeking Financial Advice is Wise

Before deciding to live anew in a foreign country, it’s a good idea to consult with a financial advisor. Specifically, it would be smart to talk to a retirement planner or someone with expertise in dealing with clients who live or have lived abroad.

As mentioned above, retiring in another country can lead to several complex financial and tax implications. When you meet with a professional, you’ll be able to ensure you have your finances in order before you hop on a jet and begin the next chapter of your life. You may also be able to meet with them remotely to receive ongoing advice.

Frequently Asked Questions

Is the cost of living often lower in other countries?

While it varies from place to place, the cost of living is often lower in other countries than in the U.S. Moreover, due to favorable exchange rates in some countries, your money might go further in another country than at home, sometimes raising your standard of living. For instance, you may find it easier to find a more luxurious living arrangement or feel more comfortable eating out at upscale restaurants.

Can I still collect Social Security in another country?

Yes, you can still collect your Social Security benefits if you live abroad. However, you’ll need to ensure you’ll be able to receive them. A typical strategy is having an account with a U.S. bank and one in the new country. Then, you can receive your payments in your American account and move money at your discretion when you want to withdraw cash.

Should I buy or rent a home overseas?

Whether you should buy a home or rent when living abroad depends on your desires. One factor to consider is flexibility. For instance, if you envision yourself living in one place for the rest of your life, it may be a good idea to buy a home, rooting yourself in your community. On the other hand, if you know you’d like to retire abroad but would like to visit more than one place and stay on the move, it may be easier to rent.