You’ve worked hard your whole life. And if you’re like many people, you dream of the day you can start your carefree retirement. But to have a carefree retirement, you need careful planning. If you’re currently in that planning stage, it may be worth taking a look at a lifestyle that’s gaining in popularity: comfortable retirement abroad in a foreign country.
Choose Your Future: Finding the Right Retirement Destination
The first step in turning retiring abroad into a reality is choosing your destination. But when faced with a (literal) world of opportunity, choosing one country can be challenging.- Climate: What type of weather do you prefer?
- Culture: Do your values align with the nation’s culture?
- Language: Do you know the local language? If not, are you willing to learn it?
- Healthcare: Does the country’s healthcare system meet your needs?
Top Retirement Destinations Around the World
If you aren’t sure where you want to live after retirement, check out these popular destinations:1) Portugal
Portugal is both scenic and affordable—its cost of living is roughly 29 percent lower than that of the U.S. In recent years, the Portuguese government has also taken steps to attract retirees: Many new residents are eligible for ten years of tax benefits!Healthcare in Portugal is accessible, although there is a downside. EU residents get access to free healthcare immediately, but Americans must live in the country for five years and become permanent residents beforehand. However, you can purchase health insurance in Portugal, and it’s significantly less expensive than U.S. health insurance.
2) Costa Rica
Retiring to a tropical paradise is a dream for many, and you can achieve that dream in Costa Rica. However, becoming a permanent resident can be difficult.There are three different programs you can take advantage of when applying. The Pensionado visa is designed for retirees with at least $1,000 in monthly retirement income. The Rentista visa is an option with less strict income requirements.
And if you have the capital to invest in Costa Rican infrastructure, you can take advantage of the Inversionista program. This residency visa requires you to invest at least $200,000 in a qualifying business.
These paths don’t give you permanent residency status immediately; you must renew your residency every two years. You can apply to be a permanent resident after three renewals in a row (six years total).
3) Ireland
Ireland is ideal if you want to retire in a country with breathtaking beauty and a rich cultural heritage. However, it’s more expensive than some popular destinations; living in Ireland costs almost as much as living in the United States.Additionally, Ireland has stringent requirements for getting a visa and becoming a resident. To take advantage of its unique program for retirees, you first need to prove that you have a yearly income of at least €50,000 per person. You also need to have an emergency expense fund of roughly $250,000.
Once you get a visa, you must renew it yearly for five years. After that, you can apply for a five-year visa. You can then apply to be a permanent resident after 10 years has passed.
Healthcare in Ireland is relatively affordable, even if you pay out of pocket. You can also access both public and private health insurance.
Financial Considerations
Make sure you understand how moving to another country can impact your finances. Here are some things to think about:1) Taxes Can Be Complicated
No one wants to pay double taxes. But if you’re a U.S. citizen living in another country, the IRS still requires you to file a tax return.The good news is that most retirees in foreign countries don’t end up paying income taxes (unless it’s on retirement account distributions—more on that below).
- You have a valid state driver’s license.
- You have a U.S. bank account.
- Your immediate family lives in the state.
- You own a car registered in the state.
- You’re registered to vote.
- You own a house or other property in the state.
- You still have a state mailing address.
- United Arab Emirates
- Qatar
- Bahrain
- The Bahamas
- Monaco
- The Cayman Islands
- Oman
2) Currency Exchange
The U.S. dollar usually has more purchasing power in foreign countries. But to avoid surprises before you move, ensure you understand the exchange rate.3) Cost of Healthcare
Chances are good that your current healthcare policy won’t cover you if you move abroad. The United States has some of the most expensive healthcare in the world, so medical care is likely to be more affordable wherever you move. However, before moving, look closely at the country’s healthcare programs and determine what type of coverage you will qualify for.4) Retirement Income Options
If you live in a foreign country, you can still receive distributions from your retirement plan. Unfortunately, many of those distributions are still subject to taxation:- 401(k): All withdrawals are subject to taxation.
- Social Security: Tax guidelines are typically similar to those for U.S. residents, although you won’t be taxed if you live in certain countries.
- Traditional IRA: Withdrawals are taxed like income.
- Roth IRA: All qualified withdrawals are tax-free.
- North Korea
- Cuba
- Belarus
- Azerbaijan
- Kazakhstan
- Moldova
- Kyrgyzstan
- Turkmenistan
- Tajikistan
- Uzbekistan
Preparing for the Move
Living abroad during retirement can give you a new sense of freedom. But, like all significant steps in life, it takes some degree of planning. Here are some tips to help you get ready for the move:- Make a Healthcare Plan: Health insurance benefits vary greatly from country to country—before you move, make sure you have options for accessing and paying for medical care.
- Consider Transportation Options: Try to understand the country’s transportation infrastructure—researching flights to and from the United States and deciding whether you need to own a car are two great places to start.
- Gather Documents: Before applying for a visa or moving, make sure documents like your passport, Social Security card, birth certificate, medical and dental records, driver’s license, and marriage certificate are at hand.
- Look Into Banking: See if your bank has a branch in your new country; if it doesn’t, ask how you can make sure you’ll have access to your funds.
- See If You Need Additional Immunizations: You might need another vaccine or two before you travel.
- Consider Pet Transportation: Some countries restrict what types of pets you can have, and they might require animals to quarantine.
Real-Life Experiences
One example of a successful overseas retirement is Christina and Amon Browning, a couple who moved from the San Francisco Bay Area to Portugal to retire early.Thanks to the high cost of living in the Bay Area, the couple realized that retiring there would be nearly impossible. They tried to earn and save as much as possible, and they could retire in Portugal when Christina was 41 and Amon was 39.
Dave and Marcia Murray are another great example. They could retire in Grecia, Costa Rica, when they were 66 and 69, respectively. Both had lived and worked in Michigan. They opted to take early retirement packages and sell their home to buy land in Grecia. Using those funds, they built both a home and a guest house.
