6 things you need to know if you want to spend your retirement abroad one day

I recently spoke with a couple about how they envision their retirement. They responded, “We would love to buy a property in Italy and retire there.” More and more, I hear people say they want to retire outside the United States, citing the cost of living and access to healthcare. In fact, the number of Americans collecting their Social Security benefits abroad increased 84% from 2020 to 2023. Here are 6 things you need to know if you plan to retire abroad one day.

Cost of living

Realistically, not every overseas destination is automatically going to be cheaper than your city in the U.S. You shouldn’t assume you can get by on less without doing your research. A first step in determining affordability might be to know the country’s cost of living index.

To take it a step further, be realistic about your personal budget and priorities and compare them to the costs in your desired city. One big item in the budget that many of my clients living abroad were not prepared for is the cost of visiting family. If you still have relatives in the United States that you want to visit, this can add up to a significant annual expense.

Visa/Path to Citizenship

Many countries are generous in granting visas to young working families, but are more reluctant when the population ages and cannot demonstrate a high level of employment income. It is important to do your research to ensure that you will be able to spend your retirement in the country you have chosen.

Here are 13 countries with relatively low income requirements that allow retirees a path to citizenship:

1. Argentina
2. Bulgaria
3. Columbia
4. Portugal
5. The Philippines
6. Costa Rica
7. Panama
8. Nicaragua
9. France
10. Ecuador
11. Mexico
12. Chile
13. Mauritius

Housing

In some countries, such as Thailand, non-citizens are not allowed to buy property. However, in others, such as Spain, buying property can be a route to citizenship. If you are planning to buy property abroad but cannot purchase it directly, you may have difficulty obtaining a mortgage.

If you choose to rent rather than buy a home, make sure you know all the costs, inflation, and whether there are any opportunities for rent stabilization.

Social security/pension

To be eligible to receive Social Security payments, you must have worked and paid into Social Security in the United States for at least 40 quarters or 10 years. Even if you are eligible for Social Security, you will not receive payments if you move to a country where payments cannot be sent. The list of eligible countries can be found on the Social Security website.

Some families I have spoken with have expressed that they may want to move to the country they plan to retire in before they retire so they can work there to qualify for that country’s pension. This is a unique situation and could result in a reduction in your Social Security payments if you have fewer than 30 eligible years of work in the United States. I would advise you to check the windfall elimination provisions in each country to determine whether you may be harming your future retirement income with this strategy.

Medical care

As you get older, your need for healthcare can increase significantly. You need to make sure you move to a country where you can access the healthcare you need and that you have the financial means to cover the cost of treatment. As an expat without residency status, you can get worldwide health insurance through several programs.

If you are granted a residence permit and the country of your choice offers free universal healthcare, you may be able to receive treatment free of charge.

Elderly care

In addition to medical care, other needs may arise. When people need help with activities of daily living or need memory care, this has traditionally been categorized separately from many illnesses and injuries. In the United States, this care need is called long-term care and can be incredibly expensive, adding over $100,000 to annual costs.

Some countries with universal health insurance also offer free elderly care, such as the UK and Australia. Unfortunately, these countries are among the most difficult to get into, as retirees often need expensive investor visas.

Diploma

Retiring abroad can be an exciting and rewarding endeavor, but it requires thorough planning and consideration of six critical factors. Prospective retirees must be well prepared to make informed decisions, from knowing the cost of living and housing options to visa requirements and ensuring access to healthcare and elder care. In addition, securing Social Security or pension benefits and evaluating the financial impact of long-term healthcare are essential steps in the process. Through careful research and planning, individuals can create a fulfilling and sustainable retirement experience in their chosen destination.

This informative and educational article does not constitute tax or financial advice and should not be used as such. Your individual needs, objectives and circumstances require the individual attention of your own tax and financial professionals, whose advice and services take precedence over any information provided in this article. Equitable Advisors, LLC and its partners and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations regarding the accuracy, completeness or adequacy of any portion of content referenced in this article.

Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), Member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers retirement and insurance products through Equitable Network, LLC, doing business in California as Equitable Network Insurance Agency of California, LLC. Financial professionals may only transact business and/or respond to inquiries in states where they are appropriately qualified. Any compensation Ms. Jones receives for the publication of this article is earned independently of and entirely outside of her roles with Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-6858774.1 (08/24) (effective through 08/26)