How do you retire overseas?
After more than 30 years thinking this through, I feel pretty confident in my answer to that question.
You break the adventure down into steps.
Boiled down, you need to address six big issues.
Step #1: How Much Money Do You Need To Retire Where You Want?
The answer depends, of course, on where you’d like to live… but also (and sometimes more so) on how you’d like to live. The more “local” your lifestyle, the lower your cost of living.
You’ll need to create a budget based on costs on the ground considered through the filter of the way of life you imagine for yourself.
Here are some sample budgets for some of the world’s best places to think about reinventing your life in retirement to help prompt your thinking on this first-step issue.
Step #2: Visas And Residency
How can you stay legally in your new country… and for how long?
In these days of tightening immigration control and rising visa costs, some jurisdictions are definitely more appealing in this regard than others. Some countries make it nearly impossible for a foreign retiree to stick around indefinitely… while others roll out the welcome mat for expat retirees and investors offering special incentives, perks, and advantages.
Step #3: The Nuts And Bolts Of Getting Established Overseas
Will you need a car? A new driver’s license…
What documentation will you need to open a bank account…
How will you pay your bills… both locally and back home…
Should you ship your household goods with you (maybe)? Your car (almost never a good idea)…
Will you need to learn a new language? If so, what’s the best method…
How can you stay in real-time touch with friends, family, and business ventures back home (this is easier and cheaper all the time)…
How do you get utilities connected in the place where you’re moving… and which phone and internet service package is the best option for you…
Where should you shop for bed linens… lighting fixtures… furniture… dishware…
How can you find reliable craftsmen when you need them…
Can you bring your pets with you (yes, probably)… and what paperwork will be required…
Should you invest in homeowner’s insurance… renter’s insurance…
And on and on.
Step #4: Taxes
Your tax burden is one thing that’s hard to get excited about no matter where in the world you’re living. But it’s also something you can’t ignore.
The good news is that, depending on your strategy in moving abroad and where you decide to relocate, you could wind up paying far less in tax than you do right now.
If you have only retirement income, your move to a new country should be a tax-neutral event.
If, though, you’ll be earning income in your new country of residence, you could be in a position to earn up to US$105,900 per year tax-free if you qualify for the Foreign Earned Income Exclusion.
In addition to income tax, also look at what local (sales) tax you’ll be liable for and, if you’ll be buying a home of your own, the local rates of property tax.
Qualify for incentivized retiree residency programs (available today in many countries), and you’ll be able to bring your household goods and sometimes even your car with you into the country tax free.
Step #5: Finding A Place To Live
This is one of the biggest questions to answer when making a move overseas—and one that’s inspired many a heated debate… including among the Live and Invest Overseas team, where points of view differ.
Generally, I say rent first and maybe rent long-term. However, sometimes, depending on your situation and the local market, buying a home of your own and even buying right away can make sense.
Step #6: Health Care And Health Insurance
First, yes, you can get excellent health care overseas. In many places the standard of care is as good or better than in the United States.
Second, it will cost you less. The United States is the most expensive place in the world to seek medical care today.
Third, neither your Medicare coverage now, in most cases, nor your U.S. health insurance will travel with you. The good news is that you have many good options for health insurance abroad… all, like the cost of medical care itself, far more affordable than the cost of U.S. health insurance.
Lief and I have a policy that covers the two of us and our son anywhere in the world and that costs US$3,000 per year. That’s the total annual cost for all three of us.