According to the latest statistics of the Social Security Administration, the average Social Security check for a retired worker is US$1,515.75. Of course, this amount can change depending on the type of recipient.
If you qualify for Social Security, you can receive your monthly payment almost anywhere in the world. You can even have it direct-deposited to your overseas account in many countries.
The 7-Step Formula To Live Anywhere In The World No Matter How Much Money You Have
Millions of Americans have retired to other countries in recent years, and more are choosing to retire overseas all the time.
How do you make such a dramatic move? That is, how do you get from the life you’ve been living to a new, better, perhaps cheaper life in retirement overseas?
You break the adventure down into steps.
#1. Determine How Much Money You Have For Retirement
The question isn’t: How much does it cost to retire overseas? The question is: How much money do you have to live on in retirement? To answer this question, calculate what your retirement nest egg amounts to on a monthly basis, including pension, investment, Social Security, and any other income. The key is to approach this monthly.
#2. Identify The Places Where You Could Afford To Live Comfortably On Your Retirement Budget
Where will the monthly retirement budget you’ve identified for yourself buy you the retirement lifestyle you’re looking for? Answering this question is easier today than ever thanks to the internet and the many retire overseas resources available online. Here is a short list to help launch your thinking:
With a budget of US$1,500 per month, consider:
- Cuenca, Ecuador
- Veraguas and Boquete, Panama
- Chiang Mai, Thailand
- Nha Trang, Vietnam
- Medellín, Colombia
- Corozal, Belize
- San Miguel de Allende and Mazatlán, Mexico
#3. Research Residency Options
First, a disclaimer. If you’re not planning to retire to another country full-time but are thinking of spending only part of each year overseas, then you can skip to step #4. Options for establishing legal residency in your chosen overseas retirement haven are important only if you want to retire to that country full-time.
If that’s the case, the good news is that some countries are rolling out the welcome mat for expat retirees today, offering special incentives, perks, advantages, and benefits for the pensioner crowd. They’ve seen what a boon to the local economy foreign retirees have been for Costa Rica and Panama, for example.
In countries offering special retiree visa programs, you typically qualify by showing a minimum monthly income. Other options include making an investment (in a business or a piece of real estate, for example) or having a certain amount of money deposited in a local bank.
#4. Consider Your Options For Health Insurance
Your U.S. health insurance likely won’t travel with you, and Medicare doesn’t apply overseas either. You’ll need to consider your other options for covering your medical expenses in your new country. You could arrange insurance in the country; you could purchase an international health insurance policy; or you could choose to go without insurance and pay health care expenses out of pocket. This last option is not as crazy as it may sound. Depending where you move, the costs of day-to-day medical care can be so low that it doesn’t make sense to insure against them.
Regardless of what you decide to do about health insurance, keep your Medicare. It won’t help you in your foreign country of residence, but it’s a good back-up plan in case of a serious or long-term health problem. If you had to, you could relocate back to the United States, where your Medicare would cover your care.
#5. Understand Your U.S. Tax Obligations Before Retiring Overseas
In this post-FATCA age, moving to another country, regardless of the circumstances, means additional filing and reporting requirements. You can read about these on the IRS website.
If, though, you will have non-retirement income while living overseas, you should seek advice from a tax advisor with experience helping Americans stay tax compliant.
Note that, if you’ll be earning income in your new country of residence, you could also have associated tax obligations in that country, which you should discuss with a local tax specialist.
#6. To Rent Or To Buy
We recommend renting first and maybe renting long-term. However, sometimes, depending on your situation, buying a home of your own and even buying right away can make sense. Regardless whether you decide to rent or to buy, you need to arm yourself with a clear and comprehensive understanding of how to navigate overseas property markets.
The first and most important thing to understand about real estate markets beyond North American borders is that most don’t come with multiple listing services, making it difficult to understand all purchase options that fit your criteria and nearly impossible to identify comps. Listings are not shared so the only way to find out what’s on the market is to work with a number of different real estate agents.
In addition, the key to success navigating foreign property markets is engaging an attorney experienced working with foreigners. You should hire an attorney to help (and to review contracts) not only if you’re buying, but also if you’re renting. Note that, in most countries, a contract, including a lease, is valid only if it is signed and filed in the language of the country.
#7. Prepare For The Administrative Requirements Of Living In A New Country
The practical challenges of launching a new life in a new country include everything from opening a bank account and installing electricity, cable, and Internet to learning a new language and finding a good plumber. On this front, the overseas retiree’s job is easier today than ever and easier all the time, thanks to ever-improving technology. Today you can stay in real-time contact with family, friends, and business obligations anywhere in the world from anywhere else in the world you can get a good Internet connection.
The secret to practical success as a retiree in another country is organizing your life online as much as possible. Do this in advance of your move. It can be much tougher to accomplish what you need to accomplish from another country.
Make sure you can manage your administrative and financial lives virtually. This way, you won’t have to worry about not being able to access an account, to get cash, to move money, or to pay a bill. You want these critical functions to be hassle-free, not a distraction in your new life.
Start with your bank and investment accounts. These are perhaps the most critical pieces of this puzzle and the most important things to get set up correctly before you make your move.
