Looking To Retire Abroad? How To Choose a Retirement Location

What should retirees look at before making the decision to retire abroad? How do benefits (tax, lifestyle, and otherwise) compare to top U.S. destinations?

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Key Takeaways

  • What kind of retirement lifestyle are you looking for? See if retiring abroad may be right for you
  • Considerations for your decision to retire abroad

Do you dream of living in that cute little mountain town you visited on a trip to Tuscany, or perhaps spending your retirement on the beaches of the Caribbean or Bali?

While some Americans may think about retiring to a place like Florida—one of the top places to retire in the U.S.—some of the best places to retire aren’t in the U.S. at all. In fact, some of the most affordable places to retire are abroad.

What Do You Want?

When thinking about the best places to retire abroad, focus on why you are moving, says Kathleen Peddicord, author of the new book How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad. She has written about living and retiring abroad for more than 30 years.

“Why are you making the move? It's really important to start there, because otherwise you … can be captured by some place that sounds really wonderful—and could be really wonderful—but might not make sense for you because you aren’t really clear in your mind what you want,” she says.

She suggests asking questions such as:

  • Are you looking for a lower cost of living?
  • Will it be full-time or part time?
  • Will you need to earn an income?
  • Do you want to start a business?

Taxes, Finances, and Other Considerations

Cost of living and taxes are big reasons to move, Peddicord says. Portugal is considered one of the best places to retire in Europe, and Peddicord says it’s much cheaper than Florida.

Nuri Katz, president of Apex Capital Partners Corp., an investor immigration firm, says U.S. citizens still need to pay U.S. taxes wherever they live unless they renounce citizenship, which comes with its own fees and taxes and other serious implications.

When looking for the cheapest places to retire in the world, you still need to think about your financial needs. It’s unlikely as a retiree you’d be able to get a job, Katz says. If you think you’ll need to supplement your retirement income, check to see what the rules are to start your own business. Some countries don’t tax foreign residents’ earned income, such as Panama, she says. There’s no income or inheritance tax in Saint Kitts and Nevis, and Americans living abroad have an income tax exemption of slightly more than their first $90,000 of earnings.

Healthcare, Residency, and Other Potential Deal Breakers

Keep in mind practical things like access to healthcare and health insurance, along with residency rules when living overseas, too.

If you want to move permanently, Katz recommends talking to an immigration expert to help you navigate the intricacies of retiring abroad.

And be honest with yourself about what’s most important to you. Make a short list of the deal breakers and don't compromise on them. There are enough hassles and challenges to living abroad.

“The point of this is to improve your life either financially, or because of the weather, or just improve the overall quality of your life,” she says. “If it turns out that watching a Sunday football game is really important to me and I can't access it here, that’s something I should have thought about really early on. It's okay to be honest with silly things that are important.”

Retirement Planning

Regardless of your age, saving for retirement should typically be a priority in your overall financial plan. How much do you need to save to reach your retirement savings goal?

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