If you have dreamed of retiring to a peaceful life on the beach and letting your worries fade away, you may have considered living abroad.
Living abroad is a great way to experience a new culture and enrich to your life. While it may sound exciting to pack everything up and go, there are many factors to consider when making the choice to move to a new country. Here are the top 10 things to think about:
The biggest factor you need to consider when moving abroad is livability. How happy are you going to be living in this country? If you are interested in living abroad, it is highly recommended that you at least vacation to the country before moving. You should spend a minimum of two to three weeks, but longer stays will allow you to get a more accurate picture of the environment you will be moving to.
You should also consider the primary language of the country you wish to move to. If this is not your native language you need to gauge whether you are comfortable living in a location where you will need to adapt to communicate with most of the population.
2. Residency Requirements
Moving to a new country is not as simple as choosing what country you want to live in and packing your bags. If you have decided you want to retire abroad you need to look into the residency requirements for your desired location. Some countries have very specific qualifications for residency and the process could take quite a while. But don't be discouraged, many countries offer special incentives to entice retirees.
3. Cost of Living
Once you retire, you will be on a fixed income. There will be little wiggle room for extra or unexpected expenses. Because of this, it is very important to understand the cost of living in the locale you plan to retire to. You need to be sure that your living expenses fit into your budget. Don't forget to factor social security into your living allowances. You can still receive social security while living abroad as long as you live in an eligible country.
Healthcare access, cost, and quality vary from country to country. This factor is particularly important if you have an ongoing health issue. If you are going to need to see a physician more often than an annual checkup, you should make sure you are comfortable with the healthcare system in your desired destination.
Remember, Medicare does not cover healthcare in foreign countries so you will have to find alternative insurance. The good news is that many countries offer free or low-cost insurance, which is often available to new residents.
5. Job Market
If you would like to add a little extra money to your income or just aren't comfortable lounging on the beach all day, you may want to look at the country's job outlook. Are there jobs readily available? Are you qualified to do these jobs? What is the pay? Be aware that if you are living in the country on a retirement visa there may be restrictions as to the type of work you can take.
You are going to have to support yourself in this new country. If you are coming into the country with a foreign pension or bank account you need to consider the ramifications of this move. How easily will you have access to your funds? Are banks readily accessible? Will your savings or monthly payments transfer over seamlessly?
7. Exchange Rate
Your income may be fixed, but the amount it is worth may not be. This is because the value of the U.S. dollar fluctuates. Because of this, you could see increases or decreases in your monthly income. Analyze the exchange rate and any fluctuations and factor this into your monthly budget.
You can't forget to factor taxes into your budget. What do the local taxes look like? You need to consider all potential taxes including sales tax, property tax, and capital gains tax. You should also look into how your retirement will be taxed. If you are making money in the U.S. while living abroad (i.e. retirement income) you will be required to file taxes in both countries. Don't worry, this doesn't mean you pay double taxes. The IRS will give you a tax credit for taxes paid abroad.
9. Estate Planning
You may think you have your estate covered and everything lined out, but things can get a little tricky when you move to a foreign country. If you acquire assets in another country, you cannot simply add the asset to your will and be done with it. U.S. courts usually do not have jurisdiction over transferring foreign property to a U.S. resident.
Additionally, if you plan to spend the rest of your days in a foreign country but want to be buried at home you need to make sure to set aside money to cover this as it is a large expense.
10. Homeownership Rules
You should not expect to move to a new country and have the same rights to buy property as you do in your home country. Many times there are restrictions or additional requirements that need to be met for non-native residents. Check out one of our interactive demos for more information on homeownership.
Retiring abroad can be an exciting adventure. With the proper planning and research, it can be the adventure of a lifetime.
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