Has your retirement nest egg shrunk like mine? There is at least one way to increase the purchasing power of your retirement portfolio: Move.
I have previously written about how to compare the cost of living in different U.S. metro areas. But maybe you are willing to look beyond U.S. boundaries. Some baby boomers and other retirees have done that already.
Retire and Save Money in a Foreign Country
Some countries enable you to maintain a decent living standard on an income of $25,000 or less.
I don’t pretend to know a lot about any of these low cost retirement havens but I am trying to learn more. I picked up some tips in my readings that you may be interested in.
Preparing for Retirement in a Foreign Country
These are some recommendations that others have about investigating retirement abroad:
Arrange for health care. Your Medicare coverage will not help you if you need care in a foreign country. If you are sick or injured and cannot return to the U.S., you will need other options available. Do extensive due diligence on this first.
Try before you buy. You have to discover if you can adjust to all of the changes that will be necessary if you move outside of the U.S. This means more than a one or two week vacation trip. Instead, find a place to rent and live for an extended stay.
Learn the language. Yes, many foreign countries have thriving ex-pat communities that speak English. But to fully enjoy the culture, you will need some local language skills.
Downsize your lifestyle. No matter where you go, you will not be able to transport 100% of your existing lifestyle to a new country. Pare it back to the minimum. You may like where you find yourself after doing so. If not, you can slowly upsize your life after you settle in.
Adapt to a new financial system. This may involve learning a new currency and maintaining multiple bank accounts in the U.S. and in the foreign country. You will need to set those up in a way that takes advantage of technology and currency changes.
Also, the foreign country may require you to have a minimum pension or Social Security benefit to take advantage of its American retiree welcome program.
Understand the taxes. Just because you are living outside the U.S. doesn’t mean you won’t pay U.S. taxes. Also, you will need to learn if any of your retirement income coming from the U.S. or locally will be taxed by your new government host.
Prepare for cultural surprises. Its not just the language. It could be the slow pace, the afternoon siestas, the endless waiting for basic services. Learn about these in advance so that your frustration and confusion are minimized.
Final Thoughts on Retiring Abroad
I have found some very good resources for those considering retirement in another country, such as Transitions Abroad. A key is to find folks who are already there and are willing to share their knowledge and experience. A blogger would be ideal, as it would be easy to submit and receive questions.
I’m sure there are lots of other issues to consider. Anyone have any experience in retiring in a foreign country?
Photo credit: Willem van Bergen