Until recently, the idea of retiring in a foreign country may have seemed unthinkable to the average person. It was something only the very wealthy could even contemplate! Yet, in recent years, more and more Americans are discovering that retiring abroad can actually be easier than they believed.
The Great Recession changed everything about the way we think and save for retirement. Many Americans saw enormous losses in their portfolios, their homes lost value due to the housing crisis, and the cost of living shot up due to increases in gas and grocery prices. Those planning for retirement realized they would have a smaller monthly income than they had planned, while also needing more money for living expenses. Many workers realized they would have to put off their retirement and continue working for some time. Others still wanted to retire on time, but looked for creative solutions to these problems.
Ease of communication and greater resources led to a solution for many Americans. By communicating with friends and family in a similar position, and doing independent research on the internet, many Americans discovered the simplicity of retiring abroad. The cost of living is so low in some foreign countries that a very comfortable lifestyle is possible on a much lower monthly budget.
Of course, before retiring abroad, it’s important to consider a few factors:
- the cost of moving – this is often negligible when compared to the lower cost of living, but it’s money you will definitely need upfront
- the cost of travel to visit family – don’t forget to budget for trips to come home and visit the grandkids, or consider buying the family a vacation in your new country
- visit your country of choice several times to ensure you’re making the right decision – this will require some time and money for travel in the planning stages
- ensure that you comply with tax laws – you face a choice between moving your money to a foreign bank, which can be tricky, or leaving it in an American bank where it is subject to currency fluctuations
- if you hold more than 10,000 dollars in currency outside the U.S., you are required to fill out the Report of Foreign Banks and Financial Accounts form
Retiring overseas can carry some great advantages, but be sure to speak with your financial advisor and tax professional before doing so. Have these discussions during your planning stage, not after the move, so that you’re well aware of necessary procedures and can plan your finances accordingly.
