Whether heading for a beachside paradise or Old World city, you have much to do when planning your perfect overseas retirement.
“Picking the place can be a lot of fun, but not so much are the nitty-gritty details,” says Kathleen Peddicord, Live and Invest Overseas publisher who’s been offering advice to American ex-pats for more than 30 years.
Many retirees get the place right but the due diligence wrong, says Mike Cobb, co-founder and CEO of ECI Development, which manages Latin American residential communities serving many seniors from North America.
One caution is to avoid “margarita madness,” Cobb says. That’s when you cut loose during vacation and suddenly sign a condo contract. Americans who have enjoyed a high level of consumer protection often are not ready for the buyer-beware environment overseas.
These planning tips from Peddicord, Cobb and others will set you on the right course for your best overseas retirement adventure.
1. Know thyself
Keep focused on what you want — and what you don’t want, Peddicord says.
Think about what you would most like to view outside your window each day, she suggests. Perhaps a beach, river, waterfall on a mountainside covered with wildflowers or Paris-like cityscape?
Say you want the beach. Do you want to go snorkeling, like in the Caribbean, or body surfing, like on the Pacific coast, Cobb says. Do you want a hot, moist place like Miami or Houston, or dry like Phoenix?
What do you want to leave behind, asks Peddicord. For many from the North, it’s winter. They want no snow shoveling and no ice on the windshield.
2. Determine your budget
Most retirees move overseas to seek a higher quality of life at a lower cost of living.
“If money is not an object, the world is your oyster,” Cobb says.
Most people want to know where they can live well on, say, $1,500 a month. That probably won’t get you Mexico’s Cabo San Lucas, but it might get you a smaller town along the Baja California peninsula, if that’s where your interest lies.
Check out Peddicord’s advice on “5 Countries Where You Can Retire on $2,000 a Month or Less.”
Cushion your budget against inflation and exchange-rate fluctuations with an emergency exit fund. Health problems, political unrest or just missing the grandkids could push you to return to the States unexpectedly, experts say.
3. Do sweat the small stuff
Tackling life’s details isn’t as sexy as dreaming of beachfront margaritas, colonial capitals or Old World architecture, Peddicord says. However, they are just as important when planning for an overseas retirement.
To get the details right, ask yourself questions like these to spur your thinking:
- How close to an English-speaking church do you want to live? Or how close to a supermarket? The answers make you think about if you want a car, want to walk or want to take public transportation, in which case you will want to check out how reliably the buses run, Cobb says.
- Do you want to stream NFL games or Zoom with the grandkids? Then you’ll want somewhere with reliable internet connections, Peddicord says.
4. Give your health care needs a checkup
Even if you’re healthy when you move overseas, you might need medical care and support. The Medicare system generally will not cover health services you get outside the U.S., although some Medigap policies will pay for foreign travel emergency care that is needed within 60 days of when you leave the country.
Health care overseas often is as good as or better than in the U.S. and likely will be cheaper, Peddicord says. She rates France as having the best care at less cost, and Portugal’s is free if you’re a resident.
While the State Department recommends private insurance, care can be cheap enough to skip it, depending on where you go, Peddicord says. But keep your Medicare Parts A and B in case you suffer some catastrophe such as a car crash or cancer diagnosis and want to return to the States for care, she adds.
Be sure your new home is accessible to hospitals, clinics or doctor’s offices, Cobb advises. Living 10 miles outside a city may look marvelous, but you could be stranded if storms wash out roads to town.
5. Rent before you buy
“I’m a huge fan of renting at least three months, preferably six or even a year, before buying something,” Cobb says, acknowledging that may sound crazy coming from a real estate developer and seller.
Renting gives you plenty of time to look beyond tourist zones, evaluate housing types and how close — or not, if you prefer — they are to shops, restaurants, doctors and other places you might frequent.
“If you rent in the rainy season and like it, you will love it the rest of the year,” Cobb predicts.
Some countries such as Costa Rica and Panama offer pensioner visas, making it easy for retirees to gain residency, Peddicord says.
Check out countries’ visa and residency requirements on this State Department website.
6. Mind your money
Decide if you need a local bank when you move, but keep your U.S. bank too.
Carry two U.S. bank credit cards, Peddicord advises. One bank or the other inevitably will deny a transaction when it detects you using your card in a foreign land, even if you told the company of your travel plans, so you’ll need the second as a backup. Your U.S. cards also likely will have higher credit limits than new ones issued by local banks, she says.
Remember, you still have to pay U.S. taxes. The IRS says you are taxed on your worldwide income, but you may qualify to exclude any foreign earnings up to an amount adjusted annually for inflation. The exclusion amount for 2021 is $108,700.
If your income is only from retirement benefits such as Social Security, pension payments and retirement account withdrawals, your situation will likely be tax-neutral, Peddicord says. It can get complicated if you earn money in your new country, so check local regulations.
7. Ignore the naysayers
When you get beyond the fun part and you’re stuck in the swampy details of relocation and friends or family are questioning your decision to move overseas, keep the end goal of adventure and a better life in sight, Peddicord says.
“If this appeals to you, you owe it to yourself to give it a chance,” she says.
For some, their first move doesn’t work out but another country does — maybe Panama is a better choice than Costa Rica, or Spain ends up beating Portugal. Or maybe living abroad only part-time is the right choice.
“But the biggest regret I’ve heard is, ‘I wish I had done it sooner,'” Peddicord says.