Several reasons may prompt you to consider retiring abroad. Maybe you want a different climate or a chance to experience a different culture. Maybe you hope to travel to all the cities you never got a chance to visit when you were younger. Or maybe you hope that by moving elsewhere, you'll be able to stretch the savings you have a little bit further.
That last one is more common than you think. Depending on where you choose to live, retiring abroad can result in big savings, but it brings some of its own challenges too.
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How retiring abroad can save you money
Retiring abroad can help you stretch your dollars further if you choose a country with a lower cost of living than the U.S. In some cases, that difference can be substantial. For example, the cost of living in Costa Rica, including rent, is about 33% lower than the cost of living in the U.S. Retirees in Portugal often get by comfortably on just $2,500 to $3,000 per month, according to International Living.
Healthcare is an area with big savings potential. In the U.S., Medicare Part B premiums average $185 per month in 2025. That's $2,220 a year, not counting deductibles or copays. Original Medicare also has a lot of gaps. Many seniors need some sort of additional coverage, either through an employer or a supplementary policy. That can cost thousands of dollars per year. In contrast, basic expat medical insurance in Mexico costs around $1,200 to $2,000 per year, including emergency care and outpatient services.
If you opt for a small town or a smaller house than you're used to, you could save even more money in your new home. Exact savings will vary depending on your lifestyle and where you live, but you could save thousands or even tens of thousands of dollars per year by retiring abroad rather than in the U.S.
Retiring abroad has its challenges
If you're thinking about retiring abroad, you might anticipate challenges like a language barrier or figuring out everything from how to get your visa to how to get a driver's license in your new home country. But you may also have to contend with financial challenges.
For starters, you will still owe U.S. taxes on any withdrawals you make from tax-deferred retirement savings, and you could owe taxes in your new country as well. You'll likely need a tax professional in your new country to help you navigate this.
Some countries also have rules requiring you to demonstrate that you have a certain amount of funds before you can get a long-term visa. For example, Malaysia's Malaysia My Second Home (MM2H) program requires you to have six figures to be approved.
If you want everything to go smoothly, it's best to begin preparing well in advance and to work with someone in your new country who can help you figure out how to navigate all of these challenges. Search for expat services in your new country to find someone who can help.
You'll still need a lot of savings
Regardless of where you plan to retire, there's a real possibility that your retirement will last 20 to 30 years or more. That takes a lot of money. The 4% rule says you should save 25 times your annual expenses and withdraw 4% in your first year of retirement. Then, you adjust this amount in later years for inflation. It's supposed to help your savings last at least 30 years.
However, Morningstar now recommends withdrawing just 3.7% of your savings in the first year to ensure you don't run out of money too early. You may need to adjust this a little yourself, especially if you plan for a long retirement.
Once you've set your savings goal, keep an eye on your progress. Make sure you're comfortable with your nest egg and your retirement plan before you pack up and head for another country.
