5 Things You Need to Think about When Retiring Abroad
Retiring to sunny climbs is an attractive concept for many, but there is more to consider than wandering through Tuscan vineyards or spending endless sunny days on the beach. We investigate five practical considerations prospective retirees need to contemplate before moving abroad.
1. Cost and Quality of Living
Compared with the United States, the cost of living is significantly lower in many other countries, so retirement dollars go further. However, it is vital to consider all potential expenses, from food and rent, to transportation, to insurance and medical care.
In addition to healthcare costs, retirees also need to research which benefits they are eligible for. Individuals who qualify for US Social Security benefits can still receive these even if living overseas. However, if you have other forms of retirement income, it is imperative to investigate the legal position of not just your host country, but the one you are leaving behind.
2. Taxes
Depending on domestic policy, US retirees may need to file and pay taxes in their host country in addition to federal taxes due in the US. However, US taxpayers who are required to pay taxes to a foreign government may be eligible for Foreign Tax Credits.
One inter-country treaty that specifically benefits US retirement savers is the US-Malta Income Tax Treaty. Even without leaving the United States, investors can achieve significant reductions in their tax liabilities by investing in Maltese Pension Plans, essentially benefiting from tax-free distributions.
Other incentives include increased versatility over Roth IRAs, with potential to draw distributions earlier. Malta Pension Plans also offer the ability to contribute non-cash assets, creating significant tax deferment potential.
3. Medical Care
Before relocating to another country, it is vital for retirees to consider how they will meet medical costs. US Medicare cover does not apply overseas. For most expats, it is prudent to take out private medical insurance to cover post-retirement healthcare needs.
In many countries outside the US, however, the cost of healthcare is considerably less. France and Mexico, for example, are both known for their affordable healthcare costs. Nevertheless, it is vital to investigate the host nation’s healthcare policies towards foreign nationals.
4. Visas
Many countries worldwide require settlers to obtain a visa. Nations such as Guatemala, Costa Rica, Belize, Australia, Indonesia, Mauritius, and Malta have specific visas for retirees, requiring evidence of adequate funds, good health, and no criminal record.
5. Fitting In
A quaint town in Portugal may be an attractive venue for a week’s vacation, but the reality of living there on a permanent basis may be rather different. Escaping to the country may seem a tempting proposition, but priorities and capabilities change over time. The key is to conduct careful research and planning, retaining a realistic attitude.
Retiring abroad is not for the faint-hearted, but for many, it is the start of an exciting adventure. Navigating a new country, a new language, and quite possibly a whole new way of life represents the beginning of a whole new chapter, keeping things fresh and exciting.
