Lessons Learned in Retiring Abroad
Category: International Retirement
March 29, 2023 — If you have seen the ads from International Living and other companies you would think paradise awaits you in a sun-soaked tropical paradise. According to the claims, all you need is a Social Security check to find a nice rental, hire domestic help, eat out at good restaurants, and enjoy inexpensive and good healthcare. Unfortunately, while an international retirement can be a fantastic idea, it is not always quite that simple. In this article we will post some of the observations that real people have experienced when they took their retirement to a foreign land. We welcome comments from those who have done it.
International retirement, like any other type, produces a mixed bag. Many people are very happy with their choices, others are OK with them, and some others couldn’t wait to get back to the USA. The comments below are gathered from many articles we have published in the past about international retirement. There usually seems to be two sides to each story; everyone’s experience is unique.
Cost of living by country
For starters, it is cheaper to live in many countries than it is in the U.S. On the Numbeo.com index rankings of cost of living by country, the USA is 16th most expensive (Bermuda and Switzerland are #1 and 2). Countries that are popular for expatriate retirements are often less costly: Costa Rica is 56th, Panama 58th, Portugal 66th, Thailand 79th, and Mexico 92nd. Slightly more expensive countries include Ireland at 18th and France at 21st. But is it possible to live a life of luxury on a Social Security budget? The answer depends on where you retire and how much your SS benefit is. Just go in with your eyes open!
Comments from Members
Can’t Fit in: There is so much good about Chang Mai, Thailand, that it has been difficult for me to finally admit that this is not the place I want to spend the rest of my life. I do not fit in. I will never ever learn to speak Thai. As good as everything else is I do not want to feel isolated from everyone else around me, so I have to move on. Things like this you will not know until you give it a try. Member
Don’t Believe Everything You Hear: I have been retired in San Miguel de Allende, Mexico for 5 years. These have been very good years with many friends and little crime. Good healthcare, cultural activities exceeding anywhere else I have lived. Do not believe everything you hear or read. The news has it all wrong. Bad stuff happens anywhere and there is more crime and shooting deaths happening in the USA then almost any where else in this world. Member
Social Security Income: Ecuador is great for single women who can’t survive on paltry Social Security payments. Member
Inexpensive and good healthcare. “Europe generally has good health care provided you are granted access to it”. Dave: ” I have several good doctors, had a double cataract/lens replacement operation done a couple years ago for less than 1/4th the cost in the USA, see a specialist when I want to for about $9.00. That’s not my co-pay, that’s the whole pay at his office in our local hospital. I also have something not many Americans back in the USA have .. my doctor’s cell phone number in my phone, along with his receptionist’s.” Jane
Corruption and crime. “Danger is directly proportional to poverty and we Yanks have no idea as to the degree of poverty that exists in these countries”. Paul
Language barrier: I would recommend France without reserve but only if you’re willing to become fairly fluent in the language. Generally they are the least likely folks to want to speak English. Spain is a good second choice but beware of areas being too remote. Member (Note: many comments were made encouraging retirees to try to learn the local language, which assures a better experience).
Philippines: My wife and I have been very happy in the Philippines now for nearly 7 years. Moving here was a great decision. If for some reason we had to move, Thailand (where I lived several years in the past) would would be my next choice. Asia is not the choice for a great many Americans, which is fine with me … I took a look at many popular US places, ike “Adult Communities” in Florida and they left me cold. Dave (Note: many other commenters were very positive on the Philippines).
Fitting in: There are places where Americans are welcome. If one accepts these people and adapt to their culture etc, there is no problem. Blend in, be a part of, do not set oneself aside, much less “above” the population. It’s most often arrogance and the ignorance that goes with it that alienates. Jeff
Love Ecuador: Never had a problem in Ecuador. Should be higher on the list. Its safe, cheap, uses the dollar and has great topography. Ecuador is number one in my book. Here is how we moved there at
atruetalltale. Luna.
Costa Rica – Pura Vida! The absolute jewel of Costa Rica is the Little Switzerland area, famed for its mountains, waterfalls and gorgeous views. Turrialba is the main town. Dave.
Love Panama: I am from Panama and we can’t wait until my hubby retire to move there. If you like the ocean we have both Pacific and Atlantic (less than 1 hour driving) and if you like mountains we have spectacular ones. Annie
Immigration. I love that Ireland was first on the list but, as with most countries – you cannot just pack a suitcase,get on a plane and show up at Dublin Airport and tell them you’re here to retire! We lived in Scotland during our early married years and would LOVE to go back there but the UK has strict rules about emigration. Member
Don’t Rush: NEVER pack up your household and move, enmasse, to someplace you have never been! (like New England, Tennessee, or South Africa.) Rent for a few weeks during the year, or for a few months, before you settle in. Member
Leaving France: My wife and I are retired and currently live in France. The food and wine are good, and I like to characterize the country as an “amusement park for adults” because of the cuisine, culture, natural beauty, art, etc. However, the bureaucracy is quite difficult, and we are heading back to the US as soon as we sell our house because we cannot seem to acquire a long term residency card. Member
Building troubles in Mexico. A while back we published the experiences of an American who built his dream house in Mexico. Just about everything went wrong. His experience confirmed that locals have the advantages in that they know the system. Be very cautious when you buy real estate in a 2nd or 3rd world country – and construction requires extra caution. Hire a carefully vetted local attorney before you do anything.
Bottom line
The comments above are just a tiny segment of the hundreds that our Members made to the “Further Reading” articles below. If you are interested in an international retirement, do your research, which you can start in the treasure trove of comment from these articles. It might be for you, or might not. Crime, safety, medical care, distance from relatives, and fitting in are all important topics to consider – and not just cost of living.
For further reading:
Comments on "Lessons Learned in Retiring Abroad"
Tony says:
Don’t forget income taxes. Mundane but critical. Most articles gloss over the subject or fail to mention it all- and for good reason, since its likely a deal breaker for many Americans. The USA has been described by more than a few accountants as an “open air prison” because it is one of only a few countries that has Citizenship Based Taxation. Most countries have residential based taxation and don’t impose income tax at all on their own expats unless they return home. Most of these will tax world wide income too, but only if you become a resident. An American could move to Mars and he or she would still need to file and pay U.S. taxes even if they never return. There are countries that have tax treaties with the USA to avoid double taxation but there are plenty that don’t. The IRS provides a Foreign Earned Income Exclusion that is generous but this only applies to wages earned overseas not to your retirement income. There is also the Foreign Tax Credit but it only applies to Foreign Sourced Income, not income from USA sources. Your new country will tax your retirement money if you become a legal resident and you will have to apply to them for any credits. Regardless, you will have to file income taxes with both USA and your new country every year even if you owe nothing after all credits and deductions. Some of these foreign countries even tax unrealized gains from your traditional IRA and many don’t recognize ROTH iras! Bottom line-if possible, only move to a country that has TERRITORIAL income taxation; places where they only tax income earned inside their country and they don’t tax world wide income.
JoannC says:
Tony raises some excellent points about taxation. Many Americans are retiring to France without fully investigating the tax situation. They have a wealth tax that taxes real property assets wherever located, and if you die while a tax resident of France, unless your spouse inherits all your assets, the inheritance tax can reach as high as 60% on your worldwide assets. Many think their assets will be protected if they are in a US trust but France doesn't recognize trusts. It's a good idea to thoroughly investigate the tax consequences of becoming a resident in another country *before* moving abroad.