Introduction to Retiring Abroad
Retiring abroad may not be as easy as it seems, especially if you don’t have dual citizenship or own a home in another country. There are many practical financial considerations to take into account before making the move. Whether you’re motivated by cost of living, quality of life, or political reasons, it’s essential to do your due diligence.
Research and Planning
Before making any big moves, it’s recommended to live in the country you’re interested in for a month or two. This will give you a chance to experience what it’s like to live there and determine if you’ll feel welcome as a new immigrant. You can stay in an Airbnb and fend for yourself as a local to get a feel for the place. Once you’ve found a country you like, it can take anywhere from six months to two years to complete the essential financial, legal, and administrative matters.
Researching Visa and Residency Requirements
An important part of the preparation period is researching the type of visa you’ll need and whether you’ll be eligible for temporary or permanent residency status or citizenship. There are typically two types of visas that may be suitable for U.S. retirees: a pensioner visa or a passive income visa, and a golden visa. A pensioner visa requires you to prove that your assets can provide at least the minimum income required to support yourself, while a golden visa grants residency or citizenship in exchange for a minimum required investment.
Healthcare Considerations
Even if you’ve contributed to Medicare throughout your career, it will not subsidize your care in another country. You’ll need to find out about the requirements to be eligible for benefits in the national health system of your chosen country or whether you need to take out private international health insurance. If you plan to return to the United States frequently, you may want to maintain monthly payments for Medicare Part B, which subsidizes costs for out-of-hospital care.
Social Security Benefits Abroad
Depending on where you live, you can receive social security benefits abroad. The Social Security Administration offers details about what it is and offers a checking tool for payments abroad to tell you whether the agency is allowed to transfer benefits directly to the country where you will live.
Checking with US-Based Banks and Brokerage Firms
While you may choose to open a bank and brokerage account in the country you’re moving to, it’s recommended to also keep your U.S.-based bank and brokerage accounts, as well as your 401(k)s, IRAs, and Roth IRAs. Check with the individual institutions where your accounts are held to see what rules and requirements they have for customers moving abroad. Find out everything from the consequences of an address change to the rules for whether and how you can transact from abroad.
Hiring Professional Help
It’s recommended to hire two certified public accountants: one based in the United States and one based in the country you are traveling to. This will help you navigate the complexities of U.S. tax laws and the tax laws of the country you’re moving to, and avoid accidental double taxation on certain types of income, savings, or investments. A CPA will also keep you updated on your tax filing needs and ensure you complete any necessary forms, such as the Foreign Bank Account Report (FBAR) for the IRS.
