Retiring Abroad

Imagine walking on a Panamanian beach every day; tasting fresh pasta in your Italian neighborhood Trattoria; strolling ancient Spanish cobbled streets on your way to the market. Can senior living get any better than this?

Retiring Abroad

For many seniors living as an expat is heaven on earth. Retiring abroad can be romantic and fulfilling. But before you say “yes!” to a different country code, consider these factors.

Get your feet wet. Those two weeks you spent in a Honduras resort may have been blissful but actually living in country will probably be different. Before you move somewhere, rent a place in the area you think you want to live. Live there a few months. Then you can experience daily life more closely.

Go shopping. Explore different housing options. Research medical care. Talk to locals. Does it feel like a place that you’ll want to call home? How well do you do with the cultural barriers now that you’re immersed? Are you willing to learn the language?

Find health insurance. An important component of senior living is healthcare. Medicare doesn’t typically cover you outside of the U.S. And most U.S. companies don’t provide coverage if you live abroad. So you’ll probably need to find coverage in your new home country.

Fortunately, the quality of care is good in many countries. And it’s usually less expensive than in the U.S. For example, if you have a permanent residence visa in Mexico, you can get coverage with prescription care for about $300 a year. Under a private plan in Costa Rica, expect to pay about $40 for an office visit. However, wait times, like with any nationalized system, can be long.

Some expats will return to the states using the hospital insurance part of Medicare. But premiums are 10% higher for each year you were not (but could have been) enrolled.

The health insurer Cigna is now offering health, vision and dental coverage to retired workers formerly under their plans. The plan now covers expats in 200 countries.

Considering taxes. Unfortunately, Uncle Sam’s tax arms extend everywhere in the world. So if you’re a U.S. citizen or resident alien, you have to file taxes whether you live in Belgium or Belize. Luckily, many countries won’t tax your Social Security.

Some residents of other countries are taxed at reduced rates. Some are allowed to exempt certain kinds of income. It depends on the country.

You may also be taxed (or exempt) on “certain items of income [you] receive from sources within foreign countries.” In this case, you’d have to file a foreign tax return in addition to a U.S. return.

Banking. Seniors retiring abroad should consider opening a bank account in that country. Do this to avoid currency exchange fees and ATM charges. Use this local account to pay bills.

Apply for a local Visa or MasterCard. You’ll avoid exchange rate differences and conversion fees.

Keep your banking account in the States open. You can have your Social Security check deposited there, then use it to pay bills at home like your federal taxes. You can always transfer money from the U.S. to your account abroad.

Adjusting to Differences. Some of the most popular retirement abroad destinations are in Central American and Mexico. The cost of living is low. Health care is inexpensive. And the climate is appealing. But with these amenities come cultural differences.

Everything moves a little slower. If you’re used to keeping tight schedules, you’ll have to adjust. The sofa you were expecting to be delivered Monday may not show up until Thursday. And that’s not uncommon.

So if you’re ready to relax. Be prepared to relax your mind not just your body. Embrace the differences. Otherwise, life abroad could be more stressful than you thought.


Retiring abroad can be a wonderful experience for many people. Before you make the leap, take a test drive. Live in the area for a few months to get a true feel for what it’s like. Then research the important considerations like health insurance, banking, and taxes. Having a solid grasp on these details before you leave will make your senior living abroad stress free and rewarding.

Updated: Mar 23, 2011


[4] Comments... Read them below.
Alfons Van Hoof On Nov 5, 2014
As you said in the article: living abroad is quite different from spending a holiday there. The advice you offer is solid and useful. I was born and raised in Belgium. I left when I was about 40, leaving behind a lot of security. I was a teacher, and loved it. But could not resist the lure of far horizons. Since then, I have traveled a lot, made my home base in Sri Lanka for fifteen years, and am now living in Cambodia, in Siem Reap, near the famous temples of Angkor. At times it was hard (financially), but I have never had any regrets making the jump. The first 8 years I had a good job, but I wanted to take it a bit easier than spending 12 hours a day (or more) in the office. I went freelance. And I'm still working freelance, mainly as a translator. It took me some two years to built it up from nothing to a full-time ie. I was lucky to live in a 'cheap' country. About $1500 in Sri Lanka, and $1000 in Cambodia, is all I need to livefortably yet generously. I travel, I eat out a lot, and generally work no more than 3 to 4 hours a day on average. You could call me a 'digital nomad', as I can work from anywhere, provided I have a decent (meaning steady, not fast) inter connection. I love being in the tropics. It's usually less hot than most people think. Temperatures average about 25-30C over the year, with some lows in December and January, and some highs in March and April. But as a whole, it's veryfortable. My current 'home' is absolutely charming. A little town (about 300k people) with an even smaller town center. Everything I need is within 1 km distance, and that everything is consistently available too. This high level offort is probably caused by the touristy character of Siem Reap. Some 4 million tourists are visiting Angkor each year, which helps to have a good choice of products in the supermarkets. There's a surprisingly largemunity of (foreign/expat) senior citizens here, many of whom are retirees, or having a similar 'digital' occupation as I have. We're on the brink of creating a closer bond between them. There's already a dedicated Facebook page, and regular meetings and activities are under way. This will certain increase the fun. Yes, I'm happy living here. It answers to all my wishes and requirements, while being an extremely soft landing for my budget. Life at 60 could not be better.

Barbara On Sep 16, 2014
How do you know where the expatmunities are and how do you go about visiting these areas.

Francis On Oct 28, 2013
I would like a more detailed book or current guide on this subject.Any suggestions?

Grant On Oct 26, 2012
Thank you very much for this meaningful article! As an American senior 70 years old, I just don't know if I can continue to afford to live in the good ol' USA. Lot of fear and concern about taxes and possible Social Security pension cuts. Again, thanks so much.

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