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?
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.
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:
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.
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.”
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?
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.
TD Ameritrade does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.