Have you thought about retiring abroad?
For many of us, our visions of retirement include extended stays exploring new locations in other countries. Could this or some other idyllic vision be your future?
The realities of retiring abroad can be exciting, but at the same time overwhelming. Complex financial strategies need to be considered before grabbing your passport and setting off for the unknown.
In this episode, we discuss seven crucial financial considerations that you’ll need to keep in mind if you are interested in retiring abroad.
Considerations for Retiring Abroad
The Social Security Administration reports that more than 400,000 people are collecting their Social Security payments from abroad. International retirement is becoming more popular in our ever-shrinking world. However, many complexities come with becoming an expat. Here’s what you should consider.
Create a plan – Before taking the leap, it is important to put together a blueprint of what life will look like for you. First, consider whether retirement is even possible when you are planning. It can be helpful to sit down with a financial planner first to see when retirement will be a possibility. Next, you’ll want to carefully consider your chosen location. Do you want to relocate there or take extended trips there instead? Would you prefer to travel to multiple locations or truly live abroad?
Banking Considerations – To alleviate the headaches of access to cash, you’ll want to have a bank account set up before you arrive so that you can pay your bills in your new country. Wise is one way that you can move your money from your US accounts to accounts in other countries. You’ll also want to be aware of foreign transaction fees. If your credit card charges these fees you’ll want to consider getting a new card. Lastly, take into consideration currency exchange rates, there won’t be any getting around these fees if you are dealing in a foreign currency.
Your taxes won’t disappear – As an American citizen, you are still required to file your taxes even if you live abroad. Expat taxes can be complicated endeavors, so it will be essential to have a qualified tax expert help you who is familiar with the country where you live.
Your investments – Investment regulations vary from country to country, so you’ll want to understand the foreign tax implications of your investment income. There can be a greater risk along with unexpected fees and taxes when living off your investment income abroad.
Real estate considerations – You’ll need to carefully consider whether you want to buy or rent in your new locale. Political stability and safety are two things to keep in mind. It might make sense to rent first before rushing into buying property.
Health insurance – Remember, Medicare doesn’t work abroad, so you’ll need to purchase a separate health insurance policy in your adopted country. Consider whether you can find quality healthcare and understand the costs.
Your estate planning may change – Your will may not apply to the assets in your new country so you’ll need to become familiar with the estate laws in the country where you reside.
Remember that retiring abroad complicates just about everything in your financial life. You’ll want to have financial professionals who are familiar with your new country as well as the laws in the US. Listen in to hear what else you need to consider before moving abroad.
Outline of This Episode
- [0:36] Overcoming frugality in retirement
- [2:15] More people are retiring abroad
- [3:44] Put together a blueprint of what life will look like for you
- [5:00] Dealing with finances
- [6:53] Dealing with taxes
- [8:40] Dealing with investments
- [10:32] Dealing with real estate
- [12:24] Dealing with healthcare
- [13:41] Dealing with estate issues
Resources & People Mentioned
- Kiplinger – Want to Retire Abroad? Five Things to Know About Your Money
- Kitces – Cross-Boarder Financial Planning for International Clients
- International Living – How to Live or Retire Overseas Part-Time
- The Retirement Podcast Network
- Morningstar – This couple’s quick visit to Mexico led them to a dream retirement there
