Thinking About Retiring Abroad?
What would motivate soon-to-be retirees to seriously consider going abroad for retirement living? In many cases the bottom line is the cost of living, health care costs and having limited Social Security, savings and pension funds to live on comfortably in the United States. There is also the attraction of living in a different environment with pleasant weather and interesting places to explore. Before making too many plans, there are a few things that need careful consideration.
1 . Think about health care: You can receive Medicare coverage while living abroad, but you will have to come back to the U.S. to get your medical care. Another option is to buy a medical policy through the country you live in. These policies can be quite reasonable and good quality. Some places abroad have first-rate medical care. However, before you buy foreign medical coverage, research it thoroughly.
2 . Be aware of possible dual taxation: Even if you live in another country, you are required to file U.S federal tax returns. In addition, you may also be taxed by your resident government. It’s not a big deal if your income is limited, but if you are still working, do some research. You may get a reduction on your U.S. tax in the form of a deduction or credit if you pay taxes to the country you live in.
3. Check out permanent residency requirements: There are a variety of requirements you need to comply with to become permanent residents of foreign countries. If you’re unsure about making a country your permanent residency, apply for a temporary visa and see how it goes. If you’ve lived in a country for five years, you can usually apply for permanent residency.
Some countries are delighted with the prospect of more U.S. dollars, and will gladly accept American retirees. They may also require evidence that the retirees are bringing pension and investment money, or other income. In some countries you may need to open bank accounts or buy some property. On the other hand, if you decide to “bag” your plan and return home, there might be some kind of “exit tax” you will need to pay. Talking to a tax lawyer or accountant with a specialty in expatriate matters is very wise.
4. Add some flexibility to your plan: To set your mind at rest when you settle abroad as a retiree, you do not give up your American citizenship. You can keep your investment accounts at home and have your Social Security checks sent to the U.S. If you are disappointed in overseas living, you can always go back home. There’s plenty of desirable overseas locations to move to, if one or more just doesn’t “do it” for you. Stay flexible and enjoy those golden years.
If your plans for retirement include a desire to live in a place where you can enjoy mild weather, good health care, low-cost of living, opportunities for new adventures, and a different lifestyle, retiring abroad may be the right choice for you. But keep in mind that certain aspects of living in a foreign country should be researched before you make the move.