Have you thought about retiring abroad? Technology makes it easy to maintain U.S. connections. Online banking can be done from almost anywhere; smartphone apps let you see and talk with family and friends inexpensively; and satellite TV lets you watch your favorite movies, television shows and sports.
And with the media constantly putting out stories about the cheapest places to retire in the world, it can be tempting to take the plunge.
But here are five considerations:
Banking and currency. In foreign lands, locals often charge Americans more for goods and services. If you keep your savings in U.S. dollars but use local currency to pay expenses, you are vulnerable to fluctuating currency markets.
Medical care. Medicare stops at the border. That could force you to return to the USA when you need health care. Otherwise, you may have to buy an expensive international health insurance policy or pay for treatment yourself. Some countries offer health care that rivals the USA, but most don’t. Evaluate the country’s standards before you decide to relocate.
Taxes. If you remain a U.S. citizen, you will still owe U.S. taxes. Treaties with some countries let you avoid their taxes if you’re paying U.S. taxes, but this does not apply everywhere. That means you might be taxed twice – by the U.S. and the country you’re living in. Some Americans “expatriate” – meaning they renounce their citizenship – to avoid double taxation. This might not be helpful if your new domicile has higher tax rates than you’d pay in the U.S. Low taxes also mean reduced government services. Road maintenance, police and fire services, building construction codes, food regulations and health care might be poor or nonexistent. Wheelchair ramps and other accommodations for people with disabilities might not be required, while smoking could be permitted in public places.
Real estate. Some countries don’t let foreigners buy property. Others limit the ability for retirees to obtain a mortgage.
Culture and lifestyle. People in different countries have different views and behaviors. Love baseball? You might have to trade it for cricket. Enjoy movies? Lounging in outdoor cafes is the thing in some places. Want to shop? In some countries, merchants close for hours each day. Groceries might not refrigerate eggs and other perishables. Political views and election experiences could be very different from what you’re used to. And then there’s the language difference.
Finally, are you sure you’ll be comfortable being thousands of miles from your parents, siblings, children and grandchildren? Don’t kid yourself that you’ll return often to the U.S.; in some countries, your ability to leave and return is restricted, and the time, cost and effort could make the idea unpalatable. For all these reasons, we recommend you rent for a year or two before you decide to make the new locale your permanent home.