“The Increase in Americans Retiring Overseas”

America can be an expensive place. Having personally lived overseas, it’s not to say that other areas are always cheaper, but the reality is that more and more Americans are finding retirement locations that they love and are also easier on their retirement budget. The number of Americans receiving their social security benefits while living overseas has increased from 413,000 to 760,000 in the last three years alone. In this article we explore popular overseas retirement destinations as well as some common pitfalls that are often overlooked if you are considering retiring overseas yourself.

What to Consider BEFORE Moving

Taxes – Unfortunately, your income is always subject to U.S. taxes regardless of where you live in the world. While many countries have tax treaties and agreements with the USA that lower or offset your tax obligations to the IRS, it’s important to note that you still have to file taxes in the USA every year even if you’re living overseas. It’s important to understand how the IRS works with the country you plan on relocating to and to hire an international tax expert to assist you going forward.

Bank and Retirement Accounts – It is usually advisable to keep most of your money and retirement accounts in the US to capitalize on their tax advantages. That being said, some US institutions and brokerage firms drop customers who only have a foreign address so be sure to call your institution to understand if this is the case before making the move. In your new country, understand fees on wire transfers and consider finding a credit card that doesn’t have any foreign transaction fees associated with it.

Estate Planning – It might make sense to re-do your will and wider estate planning documents if your move overseas is long-term. Does your U.S. will still hold merit for your international assets? Working with an experienced estate planning attorney who understands the laws in both jurisdictions is worth their weight in gold.

Healthcare – Medicare usually doesn’t cover day to day healthcare services outside the US so it’s important to understand how you would be covered in your new country. What does their healthcare system look like and what is the quality of the care? In some cases, it could even make sense to continue paying for Medicare coverage while you are overseas since you can face hefty penalties and long delays should you ever decide to return to the USA with lengthy gaps in your Medicare coverage.

Popular Destinations

While a cheaper cost of living can certainly be a big motivating factor to retiring overseas, there are many other aspects that retirees value. Weather, healthcare quality, language, and proximity to family and friends also play a big part. Recently International Living released a study that surveyed Americans who had retired overseas to rank their experiences across ten categories from housing, to climate, and government stability. Based on their research, here are the top 10 countries to retire to in 2024:

1. Costa Rica
2. Portugal
3. Mexico
4. Panama
5. Spain
6. Ecuador
7. Greece
8. Malaysia
9. France
10. Colombia

Final Thoughts

There is certainly an allure to retiring overseas. Sometimes, people go on vacations and fall in love with a city and think they want to live there. Other times, the decision to move can be purely motivated around money. Whatever the driver is, I always encourage anyone considering this big of a decision to pursue a short-term visa and renting for an extended period of time before making any longer-term decisions. Spending 3 to 6 months in one destination can allow you to really be immersed in the local culture, see the pros and cons of every day life, and also help you realize if you can be OK living that far away from family and friends.

Living abroad and eventually retiring abroad can be a great decision, but make sure your eyes are wide open before making the decision.