The Retiring Abroad Checklist

in Retirement Planning by

Retiring abroad is a lifelong dream for many. If you’ve contributed enough to a retirement account for most of your working life, the dream can turn into reality. But before you get your passport in order and start packing, there’s a long road of preparation to see if moving abroad is the right decision for you. Here are some points to consider.

Scout Your Location

Visiting areas around the globe where you may want to retire should be at the top of your to-do list before making the move. Perhaps you visited Thailand in your 20s and thought it was great. But things change over several decades, including yourself. The heat and pollution you didn’t mind as a young buck might just be a little too much for you now. If you can afford to visit for a few weeks, then do it.

While there, check out real estate prices and other livable factors, as well as the things that attracted you there in the first place: weather, activities, customs, peer groups, food, and walkability.

Rent Before Buying

Moving abroad isn’t always permanent. You may decide after a few months that your new homeland isn’t for you. A wise move is to rent first to test out the neighborhood. It generally takes at least six months to get an idea of your surrounding area. Only then should you consider buying.

Even if you decide to stay long-term, renting may be a cheaper option that can provide flexibility if you decide to move someday or decide that moving abroad isn’t for you. Who knows? You might even want to move to another country during retirement. Research the local rental customs as well. For example, in some countries it is common practice to pay for a full year of rent up front, so know what you’re getting yourself into in advance.

Consider Health Insurance

Since Medicare doesn’t pay for health care outside of the United States, you may have to buy health insurance or pay out of pocket for health care in other countries. Find out if the country you’re considering is known for quality medical care. Some countries allow retirees who have established residency to participate in their national health plans. (According to the IRS, U.S. citizens who live outside of the country for at least 330 days in a year are usually considered residents of that country.)

Learn the Language

While much of the world speaks English, you’ll only help yourself by learning the local language. Besides spending several months getting the basic phrases down through your favorite online language resource, consider renting a couple TV shows or movies in the local language to immerse yourself further. In addition to learning the language, spend some time studying the city’s map and major landmarks so you’re able to hit the ground running. The last thing you want to do is not speak the language and not know where you’re going.

Compare the Cost of Living

Comparing the cost of living of your hometown to your new global city will show you how far your dollar will go. Create a spreadsheet comparing the cost of rent, food, and transportation between your top five cities under consideration.

According to Forbes, Singapore is the world’s most expensive city to live in, followed by Hong Kong, Zurich, Tokyo, Osaka, Seoul, Geneva, and Paris. And while there are plenty of cities on the flip side, keep in mind that oftentimes, things are cheap for a reason. It’s up to you to find something in the middle that makes the most sense.

Think About Transportation

Unless you really like driving in a foreign country, where driving rules can be different than in the United States, you’ll likely want to live somewhere that has good public transportation. The cost of cars can be sometimes triple the cost back in America due to hefty important tariffs.

Some questions to consider include: How often does the subway system you’re considering run? Does it run 24 hours a day like the Copenhagen Metro does? Is it as clean as Hong Kong’s? Does it have the technology (heated seats, Wi-Fi) that Seoul does? Or is the public transportation expensive and relatively non-existent like San Francisco’s?

Factor in Leisure Activities

The lack of American sports abroad can be one of the biggest disappointments for expats. Instead of American football, you’ll be relegated to soccer or rugby. If you’re a college basketball fan, you’ll unlikely be able to catch the March Madness action we so love here in the States.

But when retiring abroad, most people think of swimming in the ocean, relaxing next to the pool, going on a hike, lounging at a sidewalk cafe, or exploring new sites. It’s smart to find out the local festivities and traditions before going. Understanding seasonal weather patterns is also important since some countries experience heavy droughts or monsoon seasons.

Don’t Forget Taxes

Paying taxes is part of life. If you continue having income as a U.S. citizen, the IRS still expects you to pay U.S. taxes, no matter where you live.

U.S. citizens, or resident aliens of the United States who live abroad, are taxed on their worldwide income, but they may qualify for a foreign earned income exclusion for up to $104,100, which helps reduce taxable income. Your new country’s tax laws will still apply, and you may be able to claim any taxes you pay to a foreign country.

Take into Account Safety

The political stability of a country is a major part of your safety as a foreigner living in another country. Recent government upheavals may put you off moving there. You can look up a city’s crime index for more information.

Check Your Finances

Last, but certainly not least, finances will play a huge role into your retirement abroad plans. Even if you’ve saved enough for retirement and expect to be able to afford the cost of living when moving abroad, living the expat life can still turn out to be more expensive than planned. Perhaps you join a country club, hire a maid, and then a cook since labor is relatively cheap. Pretty soon, you’re blowing through your budget due to lifestyle inflation. Just because you’re abroad doesn’t mean you shouldn’t continuously stay on top of your finances.

Our Take

If you’ve still got a little bit of adventure in you, and you don’t mind being far away from family, retiring abroad might be a fantastic choice. Why not leverage your buying power for a more comfortable retirement overseas?

Contact a Financial Advisor

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  1. Financial Samurai

    Thanks for the checklist Aaron. I used to live in Kuala Lumpur, Malaysia for four years, and I could definitely see myself retiring abroad for several years. Probably not permanently.

    Food is great and cheap in Malaysia, and the price per square foot is around $200-$250 for luxury. Not bad!


  2. May

    Great list. My parent retired and spend 6 months of the year in Europe. They purchased a small (tiny) home there and a property management company manages it for them when they are not there – they rent it out weekly and it helps cover their costs. Everyone thought they were crazy but it has worked out really well so far…

  3. Brian

    Great advice. Do you have info available on cities in Mexico? I know San Miguel de Allende is popular for expats.

    • Susan Mccrary

      Lake Chapala area and the village Ajijic. They have the Lake Chapala Society in Ajijic. American retirees have been living there since the 1950’s.

  4. Octave Malta

    Try before you buy, i think it is the most valuable tip of all, made a mistake like that before moved to a country , without knowing what to really expect there.

  5. satya

    Very nicely written, Could you write about that how minimum coverage can help if you are in abroad?


  6. Anna Wilson

    Is there a website that already has all the cost of living and facts for comparison ready? I am looking at my retirement future now and trying to plan ahead. Financial Advisor says it looks bleak even with my 401k, pension, and social security. But if I move overseas, can I still collect SS if I don’t change my nationality?

    Other than Caracas, which I wasn’t impressed with when visiting there last year, do you recommend any other South or Central America cities? Another website recommended Grenada and Peru? Just looking at all options. How many allow pets?

    Thanks Aaron! Great article. Just too short!

  7. David Alan Binder

    Love your top 10 list; however, more information will be needed by all of us wanting to retire south of the USA, in my case. Mexico seems to be it for me due to the closeness to US and some of it even drive-able to get to.

    I have done some research and my blog shows what I’ve come up with thus far:

    I plan to continue to research and up it as I go along and since we have about 1 1/2 to 2 years to go I can take my time.

    Full disclosure: My site is mainly for writers; however, there is a lot of good and useful information and wisdom to be gained there.

  8. James C

    For the life of me I can’t see why I’d want to purchase property abroad. One can rent, move, see more places, rent. Stay lean, mean and a traveling retired machine.


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