Americans Retiring Abroad

For many Americans, the thought of retiring abroad has considerable appeal – there is an undeniable sense of adventure for those inclined; living expenses can be quite reasonable or even “cheap” depending on the location and circumstances of your relocation; for those with foreign-born spouses your retirement could be a sort of “coming home” if you’ve settled on the country from which your spouse is native born. Because of these reasons, it’s becoming more and more common for American citizens to look abroad for creative and compelling retirement opportunities. But this exciting next step in your future life also has a few challenges, so prepare yourself and get “armed” with as much information as you can in advance of your big move.

Social Security provides a considerable income source for most retirees in the United States, and the same can be true of American citizens living overseas. The Hun Financial site has a great article to get you acquainted with specific concerns and issues for American Expats when dealing with Social Security income:

Social Security for American Expats and Retirement Abroad expats working and retiring abroad may receive U.S. Social Security benefits if they are eligible. However, there are several special issues that American expats must first consider such as bilateral social security agreements and foreign pension plans that can impact the total amount of benefits received. This Thun Research note addresses common issues American expats and their foreign spouses encounter when receiving U.S. Social Security benefits abroad. Furthermore, Social Security strategies to maximize wealth accumulation with this important retirement asset are also discussed.

As of 2014, the United States had entered into Totalization Agreements with 25 countries. Totalization Agreements have two main purposes. First, they eliminate dual Social Security taxation, the situation that occurs when a worker from one country works in another country and is required to pay social insurance taxes to both countries. Second, the agreements fill gaps in benefit protection for workers who have divided their careers between the United States and another country.

Many American expats end up marrying a foreign spouse. Depending on the situation, the foreign spouse may be eligible for spousal and survivor social Security Benefits. The next section gives a brief overview of general rules regarding the treatment of foreign spouses for determining Social Security benefits. For more detailed information concerning a specific situation, it will be essential to visit the Social Security Administration website to check for regularly updated policy and tax treaty changes.

The Social Security Administration is not a financial advisor and will not provide detailed information on strategies for maximizing Social Security benefits. To make an informed choice about beginning Social Security benefits, it is essential to review a retiree’s household budget, health, financial savings, life insurance, and plans to work in retirement. With a complete financial picture in mind, strategies to maximize Social Security benefits can be made. See full article

We are fans of retirement abroad here at, but we have to admit there are some unique issues that you’ll need to grapple with when you decide to retire in a country far from your familiar home. This article from Merrill Lynch will supply you with the right question to ask yourself before you make a move to retire overseas. These are some tuogh qustions to ask yourself, but don’t be discouraged from your dream – use this list and an opportunity to educate yourself and prepare in advance for your new adventure:

Retiring Abroad? Here’s What You Need to Know

Is your family on board?
The migration of a close family member across the globe can change the family dynamics, whether between children and parents or within couples.

How will you handle health care needs?
Access to quality health care is paramount in retirement, so be sure to understand the relative cost and quality of care in the country where you hope to retire.

Are you looking for a tax advantage?
If lower taxes factor into your decision, think again. The IRS taxes U.S. citizens on income no matter where they live.

How does the cost of living really compare?
You may be able to buy a beachfront home in Mexico for far less than what you would pay in the U.S., but you need to consider your entire budget.

Will you be able to work?
Although many of today’s retirees hope to work during their retirement, living in a foreign country may make employment more complicated.

How will you manage your assets?
Because finances can usually be managed from afar with relative ease, expat retirees can keep their assets in the U.S., where the economy and political situation are relatively stable.

Can you adjust?
After the fantasy of living abroad becomes reality, some expats find themselves feeling isolated, particularly when they don’t speak the local language.

How will you connect with family and friends?’
Lengthy plane rides can grow more difficult as you age. E-mail and video services make it easier to stay in touch with family members and friends back in the U.S. Read: Retiring Abroad? Here’s What You Need to Know

Us News has a similar article on the 5 factors you must consider before moving abroad – but this article is focused primarily on the financial factors that you need to carefully weigh:

5 Financial Factors to Consider Before Retiring Abroad – US News

5 Financial Factors Retired CoupleDo you dream of retiring to a sunny, exotic locale where the dollar stretches further and every day brings a new adventure? It’s an alluring proposition for many Americans who are choosing active retirements in places like South America or Europe or Asia.

Still, while the idea is intriguing, it’s not right for everyone. “It takes a certain kind of personality, a tolerance for novelty and challenge,” says Dan Prescher, special projects editor at and co-author of the recently released book “The International Living Guide to Retiring Overseas on a Budget.” (He and his wife live in Ecuador.) “If you move abroad thinking you’re going to [a cheaper version of the U.S.], that’s not going work. If you’re moving to a place you like, a culture you’re interested in with better weather – those are the reasons that people should consider moving abroad.”

1. Health care costs. Medicare does not cover medical costs incurred overseas, so some American retirees living in other countries plan Medicare runs back to the United States to see their doctors and then fly back to their adopted country.

2. Cost and quality of living. Prescher suggests spending as much time as you can in the country where you intend to retire to get a feel for the local culture, and see if it’s an environment you’d enjoy.

3. Return travel to the United States. If you plan on making trips to a doctor covered by Medicare or a VA hospital, you’ll want to factor those travel costs into your retirement budget.

4. Currency fluctuations. In countries that use the U.S. dollar or peg their currency to ours, retirees shouldn’t necessarily worry that the dollars they receive from Social Security or individual retirement accounts will lose value due to a variable exchange rate.

5. Taxes. Moving out of the United States does not exempt you from filing a U.S. tax return, a fact that frustrates many expats.

See full article

When you’ve evaluated all your options, carefully weighed the pros and cons of overseas retirement, and STILL decided it’s a great thing – take heart, there are thousands of people who have blazed the trail and made it work for them. Here’s a wonderful piece from Yahoo Finance that chronicles 5 Americans who managed to pull it off, and their stories:

How these 5 Americans planned their perfect retirement abroad – Yahoo Finance that Americans are living longer than ever than ever before, more retirees are choosing to move abroad after they leave the workforce. In 2013, the Social Security Administration sent benefit checks to more than 373,000 retirees living outside the U.S., up from 307,000 in 2008.

As far as choosing the perfect destination for your golden years, the options are practically endless. If you receive Social Security benefits, you can still get your check in just about every country in the world (with a few exceptions). Some countries offer perks specifically aimed at attracting expat retirees, like Ecuador, which peddles discounts on everything from public transportation to flights. And Panama gives expats a break on utilities and offers a special visa that allows anyone receiving a monthly pension to live there permanently.

Fantasizing about retiring in another country is one thing — actually packing up your American life and moving is quite another. There are obvious challenges, like making sure you’ve saved enough to cover your expenses in another country, and others, like learning a new language and getting used to cultural differences you may never have anticipated — all of which can make the transition difficult. So we tracked down a handful of retirees who have successfully created new lives for themselves abroad to find out how they did it.

Here are their stories (note: some answers have been edited for clarity and space): See full article

The government’s passport and travel site has a good list of reminders and tips as you are doing your planning. It also contains links to important tax, health and safety tips from other “official” entities such as the IRS and country-specific information. abroad requires careful planning.  Here are some important steps to take before you go:

Immigration and residency laws differ greatly from country to country.  Determine if you need a visa to enter and reside in the country where you want to retire by reviewing the Department of State’s Country Specific Information.  If dual citizenship is an option for you, review our information on dual nationality before taking this step.

Determine your retirement budget, and allow for exchange rate fluctuations and inflation.  You may want to meet with a financial adviser before you go and consider such things as opening a local bank account.

Leaving the United States does not exempt U.S. citizens from their U.S. tax obligations.  While some retirees may not owe any U.S. income tax while they are living abroad, you must still file a return annually with the IRS.  This is the case even if you move all of your assets to a foreign country; you may still be taxed on income regardless of where it is earned.

U.S. citizens 18 years or older who reside outside the United States are generally eligible to vote absentee in U.S. elections.  In addition to voting for candidates for federal offices, voters from some states may be eligible to vote in elections for state and local offices and referendums.   For more information, visit the Federal Voting Assistance Program’s website. original article here

As the saying goes, “youth is wasted on the young.” Don’t let the reverse be true – use the experience gained during your life to carefully evaluate your retirement options. This can be a wonderful and exciting new chapter in life, but also can offer significant challenges if you aren’t prepared. Investigate and take advantage of the perks you might find from countries aiming to attract expat retirees and you’ll be well on your way to safe, exciting and relaxing adventure in your new home land.