Considering Living Abroad in Retirement?

You see articles from time to time in mainstream news sites about how some people retire and live in a foreign country where the cost of living is lower. These articles seemingly are always accompanied by pictures of tropical lagoons and sailboats.

And it’s true that many countries have a lower cost of living than the U.S. So one’s money theoretically goes further.

Some things to consider: Taxes
You need to be aware of the U.S. tax laws if you are a U.S. citizen living abroad. Yes, you are required to report income earned in another country. Yes, you are required to pay taxes on income earned in another country.

See this: “Taxpayers Living Abroad” https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad

Some things to consider: Healthcare
Of course, cost of living is only one thing. There are many considerations to be aware of. Healthcare quality, availability and costs figure prominently in things to consider. Does your medical insurance cover you there? Do you need to buy additional or different medical insurance?

Some things to consider: Food
Are you comfortable with the local cuisine? You won’t be eating American food anymore. Is what is available there what you are interested in?

Some things to consider: Personal Life
Will you be alone? Are you going with a partner or spouse? Do you have ties to the country you are going to? Is there a network you can easily be part of when you get there? Do you speak the local language?

Some things to consider: Money
What are the rules governing moving money from the U.S. to the other country? And what are the laws moving money back to the U.S.? You’ll need to look at the U.S. laws, as well as the laws in the country you are considering. What are the local rules about a foreigner buying property?

By the way, in a foreign country, you are the foreigner.

Some things to consider: Culture and Social Conditions
One does not want to be caught in the middle of some social upheaval. Will you wake up one morning and see tanks in the street and a change of government? Spending time investigating social, political and cultural stability is essential.

Some things to consider: Travel
What are the capabilities for you to travel back the the U.S. when desired? What are the difficulties of transport, visa and travel restrictions, if any.

These all are normal things to consider, and there are many more.

But there are three other important factors that I rarely see mentioned:

1. Social Security when living abroad.

U.S. citizens can usually continue receiving Social Security when living in most foreign countries (there are some exceptions, like North Korea and Cuba). There are some foreign countries that the U.S. will not send your Social Security benefit to if you live there, you’d have to travel back to the U.S. to collect accumulated benefits in some cases.

If you have a green card and qualified for Social Security, there are more complex rules on receiving Social Security when living abroad. Generally, if the country you will be living in has a tax treaty with the U.S., you can receive Social Security. If not, your Social Security stops after six months until you reside in the U.S. for at least 30 days. You can usually get the unpaid benefit upon returning to the U.S.

See: “Your Payments While You are Outside the United States” https://www.ssa.gov/pubs/EN-05-10137.pdf

2. Medicare when living abroad.

In most cases, Medicare does not cover you when you are outside the U.S. So in this case, you will likely need to obtain other insurance. You can continue to pay Medicare premiums if you live outside the U.S., but you won’t be covered until you return. If you stop paying Medicare premiums, and then return to the U.S. and re-enroll, your Medicare premiums will rise about 10% for each year you were not paying Medicare premiums.

See: “Your Payments While You are Outside the United States” https://www.ssa.gov/pubs/EN-05-10137.pdf

3. Green Card holders when living abroad.

It is possible to lose one’s green card by living outside the U.S. for too long, regardless of which country one was in.

If a green card holder travels outside the U.S. for less than six months, then there is no problem returning to the U.S. Outside the U.S. for more than six months and less than one year, then one “applies” for readmission using the green card upon returning to the U.S. More than one year but less than two years requires applying for a reentry permit. More than two years requires applying at a U.S. embassy or consulate for a Returning Resident Visa. Maintaining ties in the U.S. is helpful when dealing the immigration examiners.

See: “Can a U.S. lawful permanent resident leave multiple times and return” https://help.cbp.gov/app/answers/detail/a_id/820/~/can-a-u.s.-lawful-permanent-resident-leave-multiple-times-and-return

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Suffice it to say, things can get complex and not every experience can end happily. Be aware of your situation before making changes. Be aware that rules change, too.

Are you a U.S. citizen or U.S. permanent resident who retired and lives abroad? What has been your experience?

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