Thinking of retiring in a more exotic location? From choosing a location to healthcare, here's what you need to consider.
If you’ve traveled in a foreign country such as Costa Rica, Portugal or Thailand, you may have dreamed about turning your vacation location into a permanent home.
Retiring abroad is an increasingly popular choice for Americans. The U.S. Social Security Administration sent more that 613,000 retirement-benefit payments outside the U.S. in June 2014, a more than 150-percent increase from 2002, reported International Living magazine. Those statistics don’t include the thousands of retirees who keep a domestic bank account while living overseas.
No matter your situation, retiring abroad successfully requires a lot of research and careful planning. That includes some important considerations such as lifestyle, health and finances.
“If you’re optimistic and want an opportunity to reinvent yourself and adapt to a new culture, then you’re more likely to enjoy retiring overseas,” says Chuck Bolotin, vice president for business development for Best Places in the World to Retire in Tucson.
Finding the right location for retirement can be daunting, especially if you have the whole world to choose from. There are a variety of “best places to retire” lists generated every year based on research and anecdotes from expats around the world. They not only evaluate how pleasant and peaceful a place is, but consider issues such as the cost of living, access to healthcare, ease of travel, weather conditions and a range of other amenities.
There are many different ways to retire in a foreign country: Some people chose to live away from the U.S. full time, while others travel back and forth. Most maintain a portion of their assets in the U.S., Bolotin says.
Joe DeVito, a financial advisor with RBC Wealth Management in Phoenix, has a client who retired in his mid-50s and moved to Thailand. He bought a small hotel there and lives off the income from the property. “He kept about one-fourth of his investment account in the U.S., which I continue to manage with him, but he hasn’t touched that money yet,” DeVito says.
James Covell, a financial advisor and managing director of RBC Wealth Management in New York, has several clients who have retired to places such as Israel and the Caribbean. Each has kept a residence in the U.S. to use for visits home and as an investment.
“All of their assets have stayed in the U.S. other than the real estate they have bought overseas,” says Covell. “They each have a small account for cash in the country where they live.”
If you’re planning to retire abroad, here are three important factors to consider before you go:
Healthcare:Retirees moving overseas should keep in mind that they won’t be able to use Medicare in that other country, but they can find insurance policies to cover them internationally. The cost of healthcare in other countries is often lower than in the U.S., so in many places you can pay out of pocket rather than relying on health insurance. “It’s wise to check if the local hospital is accredited by the Joint Commission International, which indicates that it meets high standards,” advises Bolotin.
Every country is different, so do your research. Find out if there are doctors available who speak English and how easy it will be to see specialist if you have a medical condition. You’ll also need to check on the availability of your prescription medications. Covell says his clients in Israel have access to excellent healthcare, but those in Aruba return to the U.S. for their medical needs.
Economic and political stability: It’s a good idea to get in touch with the foreign consulate and find out more about day-to-day life in your chosen destination. Safety is an important consideration, particularly because wealthy Americans can become targets for criminals. “I have clients who spend part of the year in Mexico and they opted to buy property within a Four Seasons resort for security,” says Covell. DeVito recommends consulting a lawyer in your home country to explain how to protect your assets while overseas. “It’s important to know about your financial security and safety when you’re living abroad,” says DeVito. “We take these things for granted in the U.S.”
Financial implications: Moving to some foreign countries can lower your cost of living, but you should be aware of the legal and tax implications of becoming an expat. For example, your Social Security benefits can be direct deposited into a U.S. account and withdrawn at your local ATM. Bolotin says it’s increasingly difficult to open a foreign account because of U.S. federal regulations, so many expats keep a U.S. account for larger amounts and a small local bank account if there isn’t a branch of their U.S. bank where they live. He also notes Americans must file a U.S. tax return even if they live in another country.
Exchange rates are a further consideration. DeVito says splitting your assets between American and foreign currency can help mitigate the risk of drastic adjustments. DeVito has a U.S. client who retired in Canada and has been careful to keep an eye on currency rates before moving any money. His client in Thailand benefited from a favorable currency rate when he moved there and immediately converted a substantial portion of his assets into Thai bahts. “I warned him, though, that rates change all the time and he needs to be careful to keep an eye on it if he wants to return to the states,” says DeVito.
Retirees moving abroad should also think about how easy it is to travel back and forth to visit friends and family back home. Many retirees choose a destination with decent access to an airport, making it easier to stay connected.
Before you seriously consider moving overseas to retire, experts agree that it’s always best to spend some time visiting that country before taking the plunge to becoming a regular resident.
International Living encourages you to ask the following questions: “Are you an urbanite or do you prefer the wide-open spaces? Would you prefer a tropical climate with year-round sun or more temperate weather that reminds you of home? Would you rather live by the sea or on a mountainside? Sample the exotic delights of Asia or explore the rich cultural heritage of Latin America?”
Only you can know where you’ll be happiest in your Golden Years.
This article was originally published on Forbes WealthVoice.
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