American retirees’ interest in leaving the United States and moving to another country is at an all-time high. It is estimated that 700,000 American retirees are receiving their Social Security benefits while living overseas. For thousands of retirees, such a move has already meant rewarding experiences along with a lifestyle that is safe and affordable.
In this article, we will discuss important things to consider and do if you are thinking of retiring abroad, including deciding where to live, vital documents, finances, family and social communication, healthcare, housing and property decisions, legal issues, and legal residency questions.
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Deciding Where to Move
Perhaps the most important decision you will make regarding retiring abroad is where you want to live. Making this decision involves the enjoyable task of researching places around the world and seeing what emerges as the best match(es) for you to consider.
Whether you know where you’d like to live or not, it is wise to consider the following factors. You don’t want to make a move and then realize that you overlooked a very important factor for your happiness. So, let’s look at things that will guide you in your research to find your happy place. Some of these items will be less important to you than others.
- Language spoken in the country
- Climate
- Proximity to the United States
- Cost of living
- Safety/security issues
- Quality and accessibility of healthcare
- Active and vital expat communities for support, information, and friendship
- Quality of life/daily life concerns
- Freedom of religion and religious communities
- Ease of mobility/transportation options
Even before making your final decision, you can begin collecting and organizing what needs to be done before leaving the U.S. Here are some suggestions born out of the experience of many.
Documents
U.S. Passport
Secure a U.S. passport or make sure your current U.S. passport is valid for at least a year beyond your projected arrival date. This is your most important legal document as an expat living abroad. Until you are a legal resident in a new country, your passport will be used for everything that requires identification abroad, from setting up your electricity account to opening a bank account to getting phone service, etc.
If it is good for at least a year (even longer is better), this will give you ample time in the country to get your new life organized without having to worry about your passport expiring.
Make photocopies of the first few pages of your passport and file them with other documents you’ll be taking with you. If you lose your passport abroad, having copies will expedite the issuance of a new passport at an embassy. One good note to remember is that you can renew your U.S. passport at most U.S. embassies abroad much quicker than in the U.S.
Documents You Should Have on File and Take with You
- Birth certificates – Both official and unofficial copies for all family members. Contact the Vital Records Office of your state government for official copies.
- Marriage license – Contact the Vital Records Office of your state government.
Proof of pension and/or Social Security benefits. This is in case you are planning to apply for legal residency. This is usually a letter from the company managing your pension funds stating the amount of your monthly pension. You can get information on your Social Security income from your monthly statements or from the Social Security Administration.
Medical records. Securing them within the U.S. will be quicker and easier than trying to get them sent once you are abroad. Check with your doctors or medical care facilities on how to secure them.
Finances
Budget Planning
Review your sources of income available for overseas living. Know your bottom line of what will be at your disposal. Consider pensions, Social Security, work income, investments, rental income, etc. Have a clear picture of how much you will have available monthly as you move forward.
Determine what your U.S. monthly expenses will be if you retain property, medical care, trips to the U.S., or business endeavors in the U.S. This will be an estimate, of course.
Don’t forget to include things like home insurance and federal, state, and local taxes. It is important to have an idea of what it will cost to have a life in your home country as well as your adopted country. It is suggested that you overestimate expenses as unexpected expenses will always arise.
Once you know what your U.S. expenses may be compared to your projected income, you will know how much you will need and can adequately research the cost of living in the places you are considering. This will be a big help in determining where you can live comfortably.
The cost of living anywhere depends on local prices, lifestyle expectations, and location. To retire in Costa Rica simply on a conservative budget, a person would need $2,000-$3,000 per month. Couples can often live on $2,500-$3,500.
Location influences costs greatly. We live in a Costa Rican tourist beach town, so prices are higher. Living in rural areas where mostly local products are available would lower costs.
There are people who are very frugal who live on $1,500-$2,500 per month in Costa Rica. International Living reports that a person can live well in Thailand for under $2,000 per month. HousingAnywhere.com reports a monthly cost of living at $1,800 per month in France, depending on location and lifestyle.
Management of Funds and Dealing with U.S. Banks
Most Americans who live abroad keep a U.S. bank account. Many people receive pension funds, Social Security payments, and other income sources directly into a U.S. bank. Talk with your bank personnel to see how accommodating they are to account holders who live outside the U.S.
- Is it easy to transfer money to a foreign account?
- Is there a debit card option that allows customers to withdraw funds from an ATM in other countries without extra charges?
- Can foreign transfers be made on a mobile app?
- What is the cost to make a money transfer to a foreign bank?
If the answers to the above questions raise concerns about the ease of moving your money when necessary, you may want to change U.S. banks early on. In our case, one small regional bank in the U.S. makes it very difficult to initiate a wire transfer from the U.S. without walking into the bank to request it in person.
To initiate a transfer from outside the U.S., you must go through several steps, including formal permissions, questions about the sources of the funds, and continual explanations of why you cannot walk into the bank. So, we established an account at Chase Bank. They allow transfers by phone or by mobile app. Problem solved. It works great, and the transfer fee is even less costly.
Regarding pension and Social Security payments, some people elect to have them sent monthly to a bank account in their new country. It is important to ask about this possibility when you are researching bank accounts overseas. Another option for pension and Social Security payments is to have them deposited into your U.S. bank account and then simply withdraw the funds each month through ATM transactions abroad.
In some places, banks may have a limit on how much can be deposited into the foreign account through transfers from a U.S. bank. The ATM option bypasses that issue.
One last bit of information that might be helpful is that some countries have a limit on how much you can transfer into the country without a full investigation, including paperwork and requests for copies of bank statements, letters from your U.S. bank, and/or information about the source of the funds.
Ask banks overseas about the amount you can send from the U.S. to your bank abroad. If you know the amount, you can plan ahead how to go about the transfer. This can save you delays and frustration.
Eliminate or Scale Down Debt
One of the biggest pitfalls in moving overseas is taking a lot of debt with you. Regardless of where you decide to live abroad, there are going to be financial surprises. Things will cost more than you thought, or you will discover expenses you didn’t foresee, or your expenses maintaining property or businesses in the U.S. will not remain at a constant level.
So, having the freedom of being debt-free or nearly debt-free will be a great advantage.
Prepare for Taxes
Americans are taxed no matter where they live in the world. Many U.S. retirees are unaware of this fact and dreamily believe that if they move to another country, they won’t have to worry about U.S. income taxes. Wrong.
As an American citizen, you are legally required to file an annual tax return with the IRS no matter where you live, and you are liable for taxes assessed on your income regardless of where you live.
So, you need to take this into consideration when reviewing your income and expenses and planning your budget. Of course, you will also be responsible for things such as property taxes if you retain property in the U.S.
Family and Social Considerations
Talk with your family and close friends about your decision to move abroad. You will want and need the support of those closest to you as you make the transition. Surprising loved ones and friends at the last minute before you leave will not foster continued good relationships.
Healthcare
Healthcare quality and affordability are two of the major factors motivating U.S. citizens to move abroad. Healthcare costs in the United States are extremely high, and for many retirees, it is difficult to make ends meet because of healthcare and/or insurance costs.
Many Americans falsely assume that the best healthcare is always found in the U.S. This simply is not true. High-quality healthcare is found all over the world, and usually at much less cost to the patient than in the U.S.
As part of your country research, do not overlook the issues of healthcare. You want to be fully prepared and knowledgeable about your options in each country that you are seriously considering. Many expats have made their final decision to live in a place due to the best healthcare options.
Many countries have universal healthcare for all citizens and legal residents. Costs are minimal.
Here in Costa Rica, my wife and I pay about $120 per month together for the public health system. It operates like an insurance system; however, you pay the monthly amount, and everything is automatically covered at 100%, including prescriptions, treatments by specialists, surgeries, routine doctor visits, prenatal care and child delivery, emergency care, dental care, immunizations, etc., all with no pre-existing conditions limitations. Similar universal health systems and costs are found in many countries.
In addition, excellent private healthcare exists all over the world. Top-notch doctors and hospitals can be found in most countries. As you research countries, ask about the quality and accessibility of private healthcare. If you have ongoing health concerns, you will probably want to locate near the capital or other large cities where the most options are available, both in the public and private sectors.
In some countries, retirees use a combined approach that includes the public system for routine doctor visits, medications, emergency visits, etc., and private systems for surgeries, specialty treatments, etc.
Prices of private care in most countries are much lower than in the U.S. For example, I have had surgery three times in Costa Rica. Each time the cost at a private hospital was about 25% of the costs in the U.S. The care was equal to or better than in the U.S.
It is important to note that many countries have private medical insurance available as well. This can usually be researched online.
One other thing for U.S. retirees to consider is that Medicare does not pay for healthcare costs outside the United States. You can continue in the Medicare system, paying your monthly premiums in case you want to return to the U.S. in the future, but you will not be able to use the benefits in other countries.
Whichever country or health system you elect to use, be sure to bring copies of your medical records to ensure continuity of care.
Housing and Property
One of the major decisions in the process of leaving the U.S. is determining what you will do with your property and possessions.
First, let’s consider property. If you own a home in the U.S., you have various options. One is to sell the property. This relieves you of the responsibility and the financial burden of maintaining a home in a country in which you are not living. For those who want to start over completely, this may be your best option. You can always use the funds to purchase something in your adopted country once you are settled and ready.
Another option is to offer your home for rent or lease. If you decide to do this, it is strongly recommended that you contract a property manager to handle the rental. Over the years, my wife and I have lived in three countries outside the U.S., and each time we have rented our home out.
Our first experience was without a manager, and we arrived home to find our home near foreclosure because of a breakdown in communication between a family member left in charge and the bank. From that point on (22 years), we have used a property manager and had great success, as well as peace of mind.
Search the internet for property managers in your area. Be sure to ask around to learn about people’s experiences with property managers. Solid recommendations from managers’ clients are worth more than impressive websites. Each property manager has his/her own fee structure, of course, but we generally pay about 10% of the monthly rent. It’s been money well spent. Our home has provided us with steady income for many years now.
Of course, there are other options such as having family members live in your house. This is generally not advised, but some people choose this option. Some people who return to the U.S. a few times a year leave their house as is and just lock the doors when they leave again.
This generally works only if you have someone nearby checking on your property regularly. Another option works for some who live in areas like high-tourist locations or large cities – renting out your home as a vacation or short-term rental. Several successful companies like Airbnb, Vacation Rental by Owner (VRBO), etc., can help you get started.
Then there is the subject of your possessions. What do you take with you, what do you sell, and what do you give away? Do you want to put most of your things in storage? Do you want to liquidate everything? Do you have family members who would value some of your things?
As a first step, think about what things are valuable to you and what things could easily be replaced. It is not advised to ship things that can be easily replaced abroad. Once you have considered what you want to take, leave, or get rid of, you will have a clearer view of how to proceed.
Shipping Belongings
Regarding the actual move, think about how you want to transport your possessions to your new country. Some people simply ship everything by boat or plane. With this option, you will have to deal with customs regulations and officials. On our last move overseas, we completely relocated from Indiana to Costa Rica with only suitcases. (We did make several trips.) In the end, it is much cheaper than shipping possessions; however, you do have to carry them, haul them, and deal with them over several trips.
It is a good idea to start scaling down your possessions early in your process rather than waiting until the last month or few weeks. It may take you longer than you think, and you do not want to be delayed or stressed because you have belongings you don’t know what to do with.
Related article: Shipping from USA to Mexico: Procedure, Cost, and Customs
U.S. Mail
One further thing to consider is how to receive your U.S. mail once you are gone. Mail systems around the world vary greatly in efficiency and dependability. Just having your mail forwarded to your overseas address generally does not work well. You may never receive some of your mail. Another reason this is not a viable option is that the U.S. Postal Service will forward mail for a specified period only. Once that period has expired, you won’t receive mail.
Some folks have their mail forwarded to a responsible family member who opens it and lets them know what has arrived and what needs to be done, if anything.
One approach many have used is to engage a mail forwarding system that provides you with a U.S. address. You use that address as your U.S. mailing address. They send the actual mail to you in your new country, where their local office contacts you when you have mail. You go and pick it up, paying the fee for the mail as well as customs fees if it’s an item other than a document. There are numerous international mail-forwarding companies that do this for various fees.
An increasingly popular option is to use a monthly mail service in the U.S. that scans the envelopes that arrive and sends the images to you so you can see what has come. You then instruct them to open and scan the contents and email it to you, or you tell them to discard it.
We have found this to work extremely well. Since we do everything digitally or online, receiving our mail electronically allows us to read everything ourselves and to take care of anything that is urgent quickly compared to trying to receive the physical mail through a delivery system. One company we have been very happy with is www.travelingmailbox.com.
Aside from mail issues, it is recommended to keep or establish a U.S. physical address for permanent residence purposes. For example, we are legal residents of Texas with a permanent Texas address. This allows us to vote in U.S. state and federal elections, and it provides a home address for driver’s license purposes. Keeping a U.S. driver’s license is very important to many expat retirees. (If you decide to renounce U.S. citizenship, this of course is not applicable). Our permanent address is in the same city as our mailing address at travelingmailbox.com.
Legal
There are a few basic legal things you should make sure you have in place before leaving the U.S. Depending on your personal situation (business, legal, financial, property, etc.), there may be other legal tie-ups you should do beyond these basics. It is wise to consult a lawyer or moving expert.
First, update your will in the state of your last residence. Be specific in your will and make sure you appoint an executor. Check to see if the state in which it is created requires it to be notarized or has other requirements. This is especially important if you plan to retain property, bank accounts, businesses, or permanent residence in the U.S. while living abroad.
Second, it is wise to prepare a power of attorney to leave with a trusted friend or relative who will be remaining in the U.S., preferably one who lives near where you may have personal business, assets, accounts, etc. If necessary, he/she can handle things for you that might require your presence.
One other thing that you might consider is to put a trusted child or family member as a signer on your bank accounts. Of course, this must be someone with whom you have absolute trust. It can be very helpful if you are incapacitated overseas and need someone to handle affairs. My wife and I have our children on our accounts. Others I know choose not to do this since there is some risk involved for them. You will know what is wise for you.
Residency
It is important that your presence is legal in any country. Research the residency visas and requirements, and consult with services that help people obtain residency status in your chosen country. “Know before you go.” If you plan to apply for permanent residency, make sure you know what processes will be involved and what documents you will need to have on hand upon arrival.
There are immigration lawyers and/or relocation services in most every country. Google for them.
Now, on to You
Spending your retirement in another country is a decision that requires research and planning. With both of those tools in your hands, you can proceed, looking forward to enjoying the prospect of a new lifestyle that brings adventure, security, and enjoyment.
