Seeing the world is a dream for many -- a dream that often gets deferred until retirement due to time and financial constraints. Some retirees choose to move abroad so they can immerse themselves in another culture. Others see retiring in a different country as an opportunity to stretch their dollars further than they could in the United States.
There can be a lot of upsides to retiring abroad, but it also comes with its own set of challenges. If you're considering it, make sure you have plans for the following five things before you start selling your stuff.
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1. Health insurance
In the U.S., most seniors rely upon Medicare for their health insurance needs. But Medicare's coverage abroad is extremely limited. Typically, the only time the program will cover healthcare in another country is if:
- You're in the U.S. when a medical emergency occurs, and the foreign hospital is closer than the nearest U.S. hospital that can treat your medical condition.
- You're traveling through Canada by the most direct route between Alaska and another U.S. state when a medical emergency occurs and a Canadian hospital is closer than a U.S. hospital.
- You live in the U.S. and a foreign hospital is closer to your home than a U.S. hospital, regardless of whether an emergency occurs.
None of these are likely to apply to you if you move to another country in retirement. You'll need to research the health insurance that's accepted in the country you plan to retire in.
2. Social Security
It's possible to claim Social Security benefits abroad in most countries. However, if you plan to retire in any of the following countries, you might run into issues:
- Azerbaijan
- Belarus
- Kazakhstan
- Kyrgyzstan
- Tajikistan
- Turkmenistan
- Uzbekistan
You may be able to qualify for an exception if you're retiring in one of these countries and agree to restricted payment conditions. Contact the Social Security Administration to learn more.
Plus, you will not be able to get Social Security benefits in any circumstances if you retire to Cuba or North Korea. However, if you later move out of one of these countries and return to the U.S. or go to a country where the U.S. can send Social Security benefits, you can collect all the back benefits you're owed.
3. Budget
The cost of living varies significantly by country and by where you live within the country. Research how much common expenses, like groceries, housing, insurance, medical care, and transportation cost and compare them to what you're used to paying now. This is key to budgeting enough for your retirement costs.
You may need to do this several times as you near retirement. Costs in the country you plan to retire in may rise faster or slower than costs in the U.S. You'll need to keep track of this and adjust your savings strategy accordingly.
4. Taxes
Taxes get more complicated when you retire abroad. Unless all your money is in Roth accounts, you'll still owe the U.S. government a portion of your retirement savings. You may also face some taxes, like property taxes, in the country you move to.
Consider consulting tax professionals in the U.S. and the country you plan to retire in to get an idea of what to expect. Make sure your annual retirement budget includes enough for taxes. This is another step you may have to repeat more than once as tax laws change over time.
5. Logistics
Finances aren't the only challenge you'll have to navigate when retiring abroad. You may have to learn a new language. You'll have to sort out your visa. You may need to get a driver's license in your new home country.
You can make the transition easier by planning for these things in advance. The internet can be helpful, but you may also want to consult with someone who lives in that country to help you understand the steps you'll need to take.
Retiring abroad can be the beginning of an exciting adventure. But it's not something you want to rush into. Plan carefully and consult experts to make sure you're not forgetting anything important.
