Retiring Outside of the US? Some Things to Consider

If you’re thinking about packing your bags and moving abroad to live out your retirement years, there are a few things to consider.

Some of these are basic retirement questions: How will you spend your days? What will “home” look like. Then there are also considerations specific to living outside of the United States. 

To kick things off, we’ll start with our favorite topic—personal finance—and then move on to other practical things to mull over, like residency requirements.

Estimate the cost of living outside of the United States

One of the first things you’ll want to think about is how much retiring abroad could cost. You’ll want to price out living expenses in your desired location to get an idea of just how far the money you’ve saved could take you.

Below, we list some potential costs to plan for. This list is not meant to be exhaustive, but it should give you an idea of what to include. 

Home-related expenses

• Housing prices or rent
• Home or rental insurance
• Water, heat, electricity
• Internet, VPN, and streaming services
• Local cellphone service
• Cars, car insurance, and public transit
• Healthcare and prescription costs
• Food (groceries and dining out)

Taxes

• US income taxes
• Local property and income taxes

Visas

• Recurring visa fees
• Residency requirements

Travel

• Recurring travel to and from the US, including any other trips you may expect to take during the year

Understand your healthcare coverage options

Generally, you may sign up for Medicare when you turn 65, but be aware that in many cases, Medicare does not cover healthcare expenses incurred while you’re abroad.

So if you’re planning to live out your retirement outside of the US, it’s a good idea to do some research on your new home country’s healthcare and insurance system. Make sure you understand the eligibility requirements, quality of care, costs, and accessibility.

You may still want to think about hanging onto your Medicare coverage while living abroad, especially if you think you need to return to the US at some point for major surgery or other specific healthcare services. The Medicare Rights Center, a nonprofit consumer service organization, offers a few more pointers here.

Good to know: If you’re eligible for Medicare, it’s important to sign up on time during your initial enrollment period. Otherwise, you may face a late enrollment penalty (visit Medicare.gov for more information).

Don't forget about exchange rates

The value of your money will depend on the exchange rate. Do some research to see how the dollar stacks up against the currency in your potential new home country. When the US dollar is strong, for example, your money could go further, because you’ll get more of a particular currency for each dollar you exchange. 

You may not always be able to predict what the exchange rate will be, since currencies fluctuate, but you could still get a general sense of what you could expect by looking at trends from the past few years. You may also want to work with a currency specialist or foreign exchange expert, who can offer practical tips and help with your planning.

Also, while it might be tempting to convert all of your cash to local currency, it can be a good idea to keep some of your money in US dollars and convert as needed for local expenses. This can help give you some flexibility and reduce unnecessary conversions

Good to know: If you’re collecting Social Security benefits (or expect to), these are paid in US dollars and changes in international exchange rates will not influence how much you receive. Visit the Social Security Administration’s website for more information about receiving Social Security benefits while living outside of the US.

Consider banking costs

You'll also want to factor in any banking costs, like ATM and foreign transaction fees tied to US bank accounts and credit cards, which you may want to hold on to for two key reasons.

• It can be hard to open a local bank account abroad as a US citizen.
• It can help you maintain your credit score just in case you come back to the US. Plus, US credit cards may require payments come from a US bank account. 

Consider your potential retirement locations from a local’s perspective 

In addition to thinking about finances and residency requirements, you’ll want to make sure your new home country checks off certain lifestyle needs. 

So let’s start with location. Your favorite vacation spot may seem like a great place to retire, but your needs as a local are probably going to be different than a tourist’s. In fact, you may even want the opposite of what you tend to look for when you go vacation. This is why when considering your retirement location, it’s important to put the vacation goggles down.

Cities with a ton of activities and people may feel too loud or cramped for everyday living. And for some people, remote getaways could feel too far away and quiet when you’re no longer escaping an overbooked schedule.

Also think about things like the weather and any potential language barriers you may face while going about your day-to-day life. And be sure to familiarize yourself with local laws and customs. Because depending on where you’re retiring, the legal system and culture may be quite different than what we have in the US.

Finally, check to see if there’s a good expat community you could tap into. Having a good support network can make all the difference as you navigate and adjust to your new home country. Once you get acclimated, you’ll be able to share some hard-won wisdom of your own, making new friends along the way.