Retiring abroad may seem like a dream – and for many it is – but there’s a long list of considerations to make and tasks to complete before you pack your bags.
In addition to choosing the best place to live based on weather and lifestyle preferences, Americans who want to leave the United States need to think about where they will get their health care, how they will receive their benefits social security, if they stay long term, the comparison between the US dollar and the local currency, etc.
“The biggest misconception is that it will be easy,” said Kathleen Peddicord, who together with her husband, Lief Simon, created Live and Invest Overseas in 2008, a website dedicated to overseas retirement. “You have to do your research.”
The couple moved from the United States to Ireland 25 years ago, then to Paris, and now divide their time between Paris and Panama. Their daily newsletter has 500,000 readers interested in moving abroad, and they have six other newsletters with niche topics, like buying real estate or diversifying investments.
Moving to another country is like “rebuilding your life,” but at a fast pace, the couple said. Americans can achieve milestones over decades, getting a driver’s license, opening bank accounts and credit cards, renting a first home, then eventually buying one, and more. But when you retire overseas, it all needs to happen as quickly as possible to maintain a consistent standard of living relative to that in the United States. “Now you’re doing all of those things at once,” Peddicord said. At the same time, these retirees learn a new language or culture depending on where they moved.
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Here are three complicated but crucial things Americans should plan for when considering retirement abroad:
The pandemic has changed the world, including the number of countries that welcome tourists and more permanent visitors. Some countries offer “digital nomad” visas for people who work from home and are looking to do so outside of their current residence. These are short term temporary visas and vary from country to country.
People who wish to stay longer term must acquire a residence permit, which can be temporary or permanent and have income conditions. Temporary visas need to be updated every year or two, Simon said. There are also visas specifically for retirees, which have their own requirements, such as a minimum monthly retirement income. “These programs are also changing,” Simon said. “If you want to live and join a residency program, you should apply as soon as possible because programs change.”
Panama, for example, had a residency program for people from 50 predetermined countries, who would qualify simply because they were from those countries. This rule changed last August. Now visitors to these countries looking for a home must invest $200,000 in real estate or get a job offer to stay.
Buy real estate
Americans may be used to the multiple listings service available in the United States, which advertises available homes on the market, but that’s not common in much of the rest of the world, Peddicord said.
In the United States, home buyers can easily search for properties online. For example, if they want to buy a house in Los Angeles, they can search real estate sites or Google for a property in that area based on their desired criteria, such as number of bedrooms or whether it comes with a swimming pool.
In Europe, each estate agent has their own listings, so people looking to buy property would be best served by meeting with multiple agents, Peddicord said. “They’ll try to show you everything they have, but you see a market share of what’s available,” Peddicord said. “No MLS imposes a heavy burden on the buyer.” Not only do homebuyers have to talk to each agent about their budget, what they’re looking for in a home, and then see what’s out there, but they also have to figure out if the price is right because it’s harder to compare.
The couple recommend renting before buying when retiring abroad, as it gives travelers a chance to see if it really is the right place for them and also avoids transaction costs and transfer fees and higher real estate agencies. It’s also not as easy to get a mortgage abroad, Simon said, and cash purchases are preferable. Mortgages can be restricted by age, such as a limit for anyone over 75, meaning a 74-year-old retiree looking to buy a house with a home loan could only get a mortgage one year.
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Management of bank and investment accounts in the United States
American retirees living abroad can still get their Social Security benefits — those aren’t lost just because they moved outside the United States — but they need to think carefully about where they get them. will receive. Some retirees choose to have their checks deposited directly in the bank, and dozens of countries around the world accept this. Americans can also choose to have their checks deposited directly at a US-based bank and then access the funds through an ATM wherever they live.
Managing investment and retirement accounts can be a bit more complex. The money is still stored in the plan the retirees had saved in, but many brokerages no longer consider those investors to be Americans when they move overseas, Simon said. Americans moving outside the United States should maintain a United States address if they can, for this reason, he added.
However, managing these funds is relatively easy, especially if retirees do it online. When Simon and Peddicord first moved to Ireland they had to receive paper statements in the post from the USA to pay their bills, but now credit card statements and bank statements are readily available online .
Having an overseas bank account may seem complicated, but it’s not illegal and it’s good to have one, especially if you’re out of the country, the couple said. They wrote about IRS filing requirements if you are an American with money in a foreign bank here.
That said, while retirees may want to assimilate in their new country, the couple recommends keeping many US-based financial aspects intact, such as credit cards. Getting a credit card in another country isn’t necessarily easy, especially since newcomers don’t have a credit score in that country and the limits tend to be much lower than those Americans would find it with their US-based maps. US banks and credit card companies also offer great benefits to their customers, including FDIC protection and scammer alerts.
Plan as a resident, not a tourist – and carefully compare it to your life in the United States
People looking to move abroad should not be traveling to their chosen location during peak tourist season, nor should they plan to stay for a few weeks before making their decision. Retirees considering living abroad should try to plan ahead for a few months, at least, to see if the location they have chosen is right for them, from a budget, health care and lifestyle perspective. .
They may even find that the place they really want to live is even more affordable than they thought, Simon and Peddicord said. Retirees sometimes think they have to move to a country closer to the United States to live within their budget, but it’s possible to live in hotspots in Europe for the same amount of money or less than that. they spend in the United States, Peddicord said.
The cost of living may even drop as people get used to the area, find the best grocery stores and pharmacies, and choose restaurants that don’t try to attract tourists, for example. Some areas may be easy to navigate on foot or by bike, so families could potentially reduce the number of cars they own from two or more to one or none.
“The big point we’re making for our readers right now is that if this idea is interesting, you have a window of opportunity right now to take action,” Peddicord said. “Inflation is forcing people to put off retirement, meanwhile the cost of living is so much lower and your US dollar is stronger than it has been in your lifetime for decades in places keys.”