At first glance, the thought of retiring overseas may seem like an attractive idea. You could spend your golden years living in an Italian village, traveling through Asia or relaxing on a Central American beach. For many retirees, retirement is the ultimate opportunity to not only see but also experience other parts of the world.
Before you sell your home and belongings and book your flight, you may want to take some time to consider some of the logistical, financial and even emotional challenges. Moving overseas is no small project. That’s especially true if all your friends and family are here in the States.
Below are a few questions to ask yourself about your planned international retirement. If you haven’t asked yourself these questions, now may be the time to do so. You’ll want to have solid, well-thought-out answers for these questions before you start your overseas adventure.
What are the costs of getting your income?One of the biggest costs with an overseas retirement could be the very process of receiving your income and using it in your new home country. Most of your income sources, such as Social Security, pension benefits and investment distributions, will be paid in U.S. dollars, which you will then need to convert to the currency of your adopted home.
Before moving, be sure to investigate the exchange rate. Will you lose spending power after you convert? And how volatile has the exchange rate been? Can you make a reasonable estimate of what it will be in the future?
Another income-related issue to consider is taxes. Even if you are living overseas, you will have to file a U.S. tax return as long as you are an American citizen. You may also have to pay income taxes in your new home country, meaning your tax bill could increase significantly. Be sure to plan adequately for your new tax situation.
How will you pay for health care?It’s an unfortunate reality for many retirees that they need more and more medical attention as they age. With old age, the body becomes less resilient and more vulnerable to injury and illness.
In the United States, Medicare serves as a health care coverage system for retirees. However, Medicare usually doesn’t cover services provided outside the U.S.
Some countries that are actively recruiting U.S. retirees may allow you into their national health care system. In other countries, you may need to buy a private insurance plan. And you could possibly decide to pay all costs out of pocket, especially if you relocate to a country with modest health care expenses.
Also, you may want to check out some hospitals and doctors before you relocate. The last thing you want is to suffer a medical emergency overseas and then discover that the quality of care doesn’t meet your expectations.
Will you be lonely or homesick?Don’t underestimate the emotional challenges related to an overseas retirement. Making new friends as an adult can be tricky, especially in a foreign culture. Also, if your family and friends are back in the U.S., you may miss their presence more than you’d expected.
Take a hard look at your current life to determine how you’ll react if you go a year without seeing your children or grandchildren. What is the real likelihood that they will come visit your new home? Given your budget, how often can you afford to fly back to the States?
After answering these questions, you may decide that it’s better for you to take extended vacations in your desired country rather than moving there altogether. However, if you do decide to move forward with the relocation, make sure you have a detailed plan and budget in place.
At Coventry Financial in Scottsdale, Arizona, we can help you identify your biggest challenges and develop a plan for overcoming them. Contact us today. We welcome the opportunity to help you see the world during your retirement.
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The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
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