
How to retire in a foreign country? Living in paradise is entirely possible if you follow these simple steps and get your finances in order
Retiring abroad is many American taxpayers’ ultimate dream – but you don’t just throw a dart at a map, pack a suitcase, and leave your old life behind. You have to plan how to retire in a foreign country.
Retiring in a foreign country offers countless possibilities – but without proper financial planning and preparation, financial and legal pitfalls could derail your retirement. Just imagine being abroad and finding out you’re:
- Paying double taxation
- Facing legal issues with the IRS
- Losing your residency
Luckily, retiring in another country doesn’t have to be hard. Certainly not when you follow these 7 practical steps full of tips and expert advice, from the best retirement locations abroad to navigating tax laws.
Read on to find out how to retire in a foreign country with confidence and financial clarity.
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Contents
- Choose a Destination That Fits Your Lifestyle
- Understand the Legal Side of Retiring Abroad
- Think About the Financial and Tax Implications
- Get Your Residency or Citizenship in Order
- Look into Healthcare Options
- Find Suitable Housing
- Secure Your Investments for the Long Haul
- How to Retire in a Foreign Country: Time to Start a New Chapter

Choose a Destination That Fits Your Lifestyle
Finding the best country to retire to from the USA is a personal matter. As Andrew Raming, who is Senior Manager at investment migration consultancy Henley & Partners, puts it: “You’re retiring to enjoy life, so it’s important to think about whether the new country feels right for you.”

While much is up to personal preference, certain countries do provide higher quality of life at a lower cost of living, have year-round sunshine, and make it easier for American retirees to settle and own property. Let’s look at some of the best retirement countries for U.S. expats:
- Costa Rica is the Pura Vida paradise that many U.S. retirees made their new home. It’s tropical, relatively affordable, and retirement visas are easy to obtain
- Mexico is an expat haven close to home with low cost of living and various visa options. While crime can be an issue, many regions are completely safe
- Panama is tropical and vibrant, with a big U.S. expat community and a straightforward Pensionado Program. It’s also inexpensive and well developed
- Portugal is the new retirement hub for Americans in Europe, offering old-world charm and Mediterranean living at a lower cost of living than other West European countries
- Greece is another charming Mediterranean destination where your savings get you a high quality of life and where you can enjoy a rich old-world culture
- Thailand is an exotic and affordable retirement option but requires careful planning if you want to succeed obtaining a visa
- Ireland is the world’s second-safest country and the Irish are welcoming people. If sweltering heat is not your thing, consider the Emerald Isle
What to Consider When Choosing a Retirement Destination
So how do you find the retirement country of your dreams? “Spend time researching different destinations, and if possible, visit a few to get a feel for the place,” Andrew Raming advises. “Think about how comfortable you’ll be with the new culture and language, how affordable living will be, and if there’s plenty for you to do.”
The retirement consultant stresses you do your own research – and he’s absolutely right. To get you started, we list a few key factors to consider when researching different retirement destinations:
- Assess cost of living: Research the expenses associated with potential destinations. Some places offer significantly lower housing and healthcare costs compared to the U.S., making them popular choices
- Consider cultural factors and language: How are you with the local language and culture? Moving to an English-speaking country like Canada or Ireland might ease the transition
- Evaluate healthcare services: Investigate the quality and availability of medical care. Europe is renowned for excellent healthcare systems, which is crucial for aging retirees
- Examine safety and political stability: Make sure your potential new home has a stable political environment and low crime rates to enjoy a secure retirement
- Explore expat communities: Places with established U.S. expat communities can provide support and social opportunities, easing your integration into the new country
Understand the Legal Side of Retiring Abroad
With your retirement destinations shortlisted, move on to the legalities of becoming a full-time expatriate pensioner. Every country has its own immigration laws. And while many like to attract U.S. retirees, some countries are more picky in what kind of retirees they attract than others (read: the real estate investor-type of expat).
Can a US Citizen Retire to Another Country? Different Visas for Different Needs
Having done your preliminary country research, see what immigration laws exist in the countries that interest you.
Andrew Raming points out that “It’s essential to know the legal requirements of the country you’re migrating to, including taxes, residency requirements, and what’s needed to become a resident or citizen.”
What’s more, the legal requirements for immigrating depend on the visa you’re looking to apply for. “Look into options like retirement visas, investor visas, and residency visas and citizenship through investment,” the senior consultant suggests to us.

These visa options all come with different (financial) requirements. You should identify which visas you’re eligible for and decide whether these make sense for your retirement plans. “Consider things like how much money you need to invest, how long you’ll have to live there, and whether it all fits with your long-term goals, such as permanent residency or citizenship.”
Think About the Financial and Tax Implications
Now that you figured out which destinations are feasible and which are not, it’s time to dig deeper into the finances of moving abroad. Your next question is, “Do I pay U.S. taxes if I retire abroad?”
As a U.S. citizen, your worldwide income is subject to taxation by the IRS independent of where you live.
On that matter, Andrew Raming warns, “Moving to another country can affect your retirement savings, pension, and investments, especially when it comes to taxes. The last thing you want is a tax surprise that disrupts your finances.”

Understanding both local and U.S. tax rules is vital to avoid unexpected penalties (that can get hefty!) or double taxation. “It’s really important to know how taxes will work between your country of birth and your new one. Check if there’s a tax treaty to avoid being taxed twice, and create a plan to manage your investments in the most tax-efficient way possible,” Raming advises.
He strongly advises pensioners to “Talk to a financial advisor who understands international tax laws.”
Tax Implications to Consider
You want to understand your financial responsibilities before retiring abroad, so let’s go through the various tax implications of moving abroad on a retirement income:
- All U.S. citizens have to file annual tax returns with the IRS, even when living abroad
- Find out whether your country of destination has a tax treaty with the U.S. so that you don’t risk double taxation
- You can use the Foreign Tax Credit (FTC) to offset taxes paid to a foreign government against your U.S. tax liability
- The Foreign Account Tax Compliance Act requires you to report all foreign bank accounts holding over $10,000
- U.S. Social Security benefits are generally taxed in the U.S.
- Earning an income working abroad? The Foreign Earned Income Exclusion (FEIE) can help reduce or eliminate U.S. taxes on that income
This should cover the income tax on your retirement income and social security benefits. Next, there are some other country-dependent taxes to consider:
- Property taxes: Understand if your new home country charges annual property taxes or capital gains taxes on property sales
- Wealth taxes: Some countries, like Spain, impose wealth taxes on global assets
- Healthcare taxes: Some destinations require mandatory healthcare contributions for expatriates
Check off the above to meet your tax obligations. However, we highly recommend you go through your financials with a tax advisor before making the big move.
Get Your Residency or Citizenship in Order
With all legal and financial requirements and obligations reviewed, you should be able to pick a retirement destination that matches your dreams and retirement profile. That means you can move on to applying for your visa/citizenship.
This process can either be simple or extremely hard depending on the bureaucracy of your retirement country. (Trust us, some visa applications can be perplexing). That’s why Andrew Raming, who deals with these processes daily, suggests you “Talk to an investment migration consultant to understand the steps you need to take to secure residency or citizenship. Make sure you know what’s involved and how long the process will take, so you can plan accordingly.”

Look into Healthcare Options
You can only really enjoy your golden years abroad in good health and the peace of mind that your health can be taken care of. In other words, you need access to quality health care.
“Healthcare systems vary greatly from country to country, so it’s essential to understand how things work where you’re moving,” Raming notes.
If you’ve done proper research, you already know the basics of the healthcare system in your new country. If your country offers a universal healthcare plan, consider yourself lucky compared to the retirees back home.
In practice, though, many U.S. retirees rely on both public and private healthcare in their retirement destination. And since Medicare usually doesn’t cover medical costs outside of the United States, it’s best you look into health insurance abroad.
Find Suitable Housing
Dream retirement destination, check – now what about the dream house? Finding the right home abroad is important both for your comfort and financial stability. Depending on the local housing market, your financial picture, and your residency requirements, you can choose to rent or purchase a property.
Renting or Buying a Home Abroad
- Opting to rent could be easier as it eliminates owner responsibilities like property taxes and maintenance
- Renting allows you to test the waters in a new country before making a long-term commitment
- Purchasing property can be a good investment, promising retirees returns on their capital
- Purchasing property might be a way to secure residency or citizenship
An alternative strategy could be to have property in your home country (US) and renting that out while living abroad. You can then use the rental income from your US property to fund your retirement expenses in a country with a lower cost of living.

Secure Your Investments for the Long Haul
How to retire in a foreign country ultimately comes down to how long you can stay abroad without running out of money. “You want your money to keep working for you, even after you’ve settled into your new life,” Raming advises. “The last thing you want is to realize you didn’t properly plan your finances for your new country.”

But managing your investments in a foreign country comes with its own challenges. Exchange rates, market volatility, and changing tax laws can all eat away at your investments and erode your financial security.
Without a solid strategy, those hard-earned savings might not be able to sustain your ideal retirement lifestyle.
Andrew Raming suggests, “Work with a wealth manager specializing in international investments to align your portfolio with your new lifestyle.” And to diversify your assets. “Whether it’s real estate, stocks, or starting a business, it’s important to have a financial strategy that keeps you secure in your new environment.”
Plan for Exiting Your Investments Later
As long as your golden years may last, they won’t last forever. Nor might you spend the rest of your days in one country. These are factors you should take into account when managing your investments. “At some point, you might want to sell some assets, move to a different country, or leave your investments to family,” Raming notes.
He advises retirees to “Think about how you’ll manage your investments as time goes on. This includes understanding the rules for selling property, transferring assets, or how inheritance laws work in your new country.”
How to Retire in a Foreign Country: Time to Start a New Chapter
Now that you know how to retire overseas in 7 steps, are you ready to take the leap? Retirement is a once-in-a-lifetime opportunity for a great adventure without the restraints of a working life. Whether you’ll succeed depends on solid expat retirement planning.
Want to retire in a foreign country safely and with peace of mind? ExpatDen helps expats and retirees find and settle into their new country, with specialist advice on travel insurance, healthcare, and more.