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?

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.

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