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A ton of retirement information (ok, our retirement information) is about saving money so that one day you’ll be able to tell coworkers it’s been real and log out of your office email account for good.
Today, we’re focusing on something different: Things you’ll want to consider if your dream includes retiring outside of the United States. If you’re planning on packing your bags and settling abroad for your second act, there are definitely a few items to put on your to-do list. Some of these are just basic retirement questions: How will you spend your days? What will “home” look like… beach house, apartment, RV, yurt? But there could also be some considerations specific to living internationally.
To kick things off we’ll start with our sweet spot – the money stuff – and then move on to other practical things to mull over, like residency requirements and yes, even the weather.
One of the first things you’ll want to think about is how much it will cost to retire internationally. 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, as well as hedge for things like the exchange rate.
We’ve put down some costs to consider here – the list may look familiar if you’ve ever played with the idea of moving to a new city. But, since you’re considering moving to a new country, you may see some unexpected expenses.
Medicare probably won’t cover your healthcare costs abroad. But you may want to hang onto this coverage if you think you’ll want to return to the US for major surgery or healthcare needs. Why? Premiums can be much higher if you drop coverage and then try to restart it, or if you’ve never enrolled.
The local 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. You can get started by looking at trends from the past few years and add that difference to your costs.
It might be tempting to convert all of your cash to local currency, but some guidance we’ve seen, such as this article from Forbes, suggests keeping money in US dollars and converting things as needed for local expenses.
Good thing to know: If you’re collecting Social Security benefits (or expect to), these are paid in US dollars and international exchange rates will not influence how much you receive. (To be fair, there’s a lot more to know about receiving Social Security payments – such as if you can even receive them – when you live outside of the US. For that information, check out this Social Security Administration guide.)
You may also want to factor in any banking costs, like ATM and foreign transaction fees tied to US bank accounts and credit cards. And – surprise! – you may want to hold on to those US accounts, at least initially, for these two reasons:
Important: See what your US bank requires to keep your account open while you’re abroad. You may need a residential US address. As Kiplinger reported in 2020, using a family or friend’s address is not a solution, but you may be able to open a checking account with the State Department Federal Credit Union.
If you are able to open a local bank account, keep this in mind generally around tax time (your financial advisor can help you track this), you will probably need to file a “FBAR” (Foreign Bank and Financial Account) notice that includes bank account information and balances with the US Treasury’s Financial Crimes and Enforcement Network.
Keep your CPA’s contact information handy even after you move, because you can expect to keep paying US income tax even if you no longer consider the US home. There may be exclusions, but yup, you’re still on the hook for them! In addition to keeping tabs on American taxes and factoring them into your budget, you’ll also want to ask a tax professional about what taxes you may have to pay in your new country, too.
FYI: If you’re curious about the what could happen if you are in serious delinquent tax debt, it’s not great: The IRS’s website says the US State Department can revoke your passport if the IRS considers you in serious debt. In other words, “But I’m retired and don’t live in the US anymore,” is probably not an excuse you can use.
Just like the US has requirements before non-citizens can move in full time, your potential host country might have its own must-haves, like a minimum annual income or net worth. On top of that, there may be different types of visas you’ll need to apply for so you can stay for an extended period of time. And these visas could have different rules. You could be required to pay a minimum in rent every year or you could be required to become a local property owner, for example.
No matter how relaxed you may be or how early you plan on retiring, it’s a good idea to have some kind of health coverage. With that in mind, see what you can learn about the country’s healthcare system, such as its quality of care, costs and accessibility, and if you’re required to have health insurance.
If you’re not a citizen but you’re living in a country with universal healthcare, you may be able to use the public health system once you’ve lived there for a while. In France, for example, you could be eligible after three months.
Now that we’ve reviewed some of the money and logistical considerations, let’s get to the more fun stuff! In addition to thinking about finances and residency requirements, you’ll also want to make sure your new home checks off certain lifestyle needs.
So let’s start with location. A 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. 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.
With that in mind, these are some details to consider while looking for places to retire:
It wouldn’t be surprising if seasonal temperatures are a key reason to relocate. (Summers so comfortable you don’t need air conditioning seem heavenly to us.)
But, there is weather and there is WEATHER. So, before committing to a new address, it could be a good idea to see if major events –hurricanes, floods, fires – are common and how quickly the country’s been able to bounce back from them.
Clearly this is a safety concern, but it could also impact your home insurance coverage and be another item to potentially budget for.
Living like a local can be a lot more fun when it’s easy to communicate with people.
Even if you can get by on English for routine things like buying groceries, it could be worth testing what it’d be like to live there and not be able to fully participate in all of the conversations around you. You may be 100% OK with it. Or you could feel like you’re missing out on opportunities to easily connect with neighbors though things like trash-talking the local sports team or chatting about favorite movies.
The differences between the laws you’ll be living under in a new country and the ones you have in the US could be significant, so it’s a good idea to get a sense of if you’d be able to live with them. For example, in the US, we’re used to criticizing our politicians, but this is not a universal right and can even be a crime in other places.
An American accent may seem like the last thing you’d like to hear once you’ve moved and are living like a non-US local. And yet, even although right now you feel you could live without celebrating one more National Cheesesteak Day (yes, that exists), nostalgia could creep in. When and if it does, being able to reminisce about favorite holidays with a group that “gets it,” can add a bit of heartwarming joy.
Plus, having a network of ex-pats could make it easier to navigate your new country. They will probably have a lot of tips to share. And, once you settle in and someone new turns to you for help, you’ll be able to return the favor by sharing some hard-won wisdom of your own.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.