Considering Retiring Overseas?
The pull of retiring overseas can be a big one. Living costs can be much cheaper and the beaches much more beautiful, among other things. There are 4 questions however that you definitely need to ask, and answer, before taking the plunge and leaving the good old US of A for good. Lucky for you we’ve put together a blog on those exact 4 questions. Enjoy.
First, what exactly is your motivation? The fact is, many overseas countries lure retirees with discounts, tax breaks and lower costs of living. Dan Prescher, one of the senior editors at International Living magazine, advises that, if you’re keen on leaving the United States, saving money shouldn’t be your only motivation.
He should know, considering that he’s been living in Ecuador for quite some time. What he warns is that people should follow their heart, not their wallet, and expect to have to adjust to different way of life than they’re used to in the United States. He says that “It’s not like your hometown at half the cost,” adding that “and if you’re not ready for that, you’re going to be disappointed
Second, have you saved enough to give yourself a solid financial cushion? The fact is, most countries require that you have some type of guaranteed monthly income in order to give you a retiree visa. Even if they don’t, moving out of the country without a rather large cushion of savings to protect you is probably not a good idea.
You also need to consider that, if you want to go back and visit family and friends in the states, it’s going to cost you a bit more than if you live a few towns, or even a few states, away.
Third on our list is the question of whether the country you wish to retire in has excellent and affordable healthcare? When you consider that Medicare doesn’t cover your healthcare if you live outside the United States, the country you choose to retire in had better have a health care system that is affordable and high quality.
That being said, the cost of healthcare in some foreign countries is so low that you can actually forego healthcare insurance completely, although it is recommended that you continue paying annual premiums to Medicare to maintain your coverage, should you decide to return to the United States to have any type of major medical issue taken care of.
Our fourth and final question is, you guessed it, how much will you owe the United States in taxes? The fact is, even though you move to another country, it’s almost impossible to escape the reach of Uncle Sam.
Even though you’re not living in the States, the taxes that you would typically have to pay on any retirement income and investments that you have still need to be paid. You might also need to pay local taxes, depending on the country that you choose to live in.
John Flynn, the former president for the Association of American Residents Overseas, warns that filing tax returns can be incredibly complicated and cost thousands of dollars every year. (Insert big sigh here.)
So there you have it. If you can answer these 4 questions without any doubts, and you’ve found a country that you absolutely love, you’re ready to book your flight and make your moving arrangements. Best of luck, and don’t forget to write.