Are you thinking about spending your retirement outside the United States? Whether you're seeking a more comfortable climate, a lower cost of living, proximity to your family or enticing financial programs, it's important to consider how such a move might impact your finances.
Before you sell your house and book your flight, you'll want to check off these five financial planning items to ensure that retiring outside the United States goes smoothly for you.
1. Health Care
The U.S. offers some of the world's best health care to retirees. If you're considering retiring outside the United States, it's important to research the health care options in the area where you plan to live. Good questions to ask about health care services in your new locality may include:
- Are services available in English?
- Where is the local hospital?
- Are there other medical facilities/doctors/nurses nearby?
- Where are specialists that you may need located?
- Are you planning or expecting any procedures?
- What will it take to get prescriptions filled?
- What are your options in terms of private/public hospitals and paying for medical services?
2. Health Insurance
When you're planning for retirement outside of the United States, it's wise to think ahead and arrange health insurance before you leave to ensure that you don't get stuck with hefty bills for out-of-country medical services. This could mean signing up for Medicare and/or private health insurance.
If you're over 65 and qualify for Premium-Free Part A Medicare insurance, contact the U.S. Embassy in the country where you'll be spending your retirement for details on enrolling. It's also important to find out if you qualify for Part B Medicare insurance, though it could come with a higher premium.
Some countries, such as Panama, offer low-cost and high-quality health care and insurance for American expat retirees.
3. Property Ownership
Retiring outside the U.S. will likely mean finding a home to rent or purchase, so it's important to note that real estate transaction laws and property ownership rules vary from country to country.
You'll need to research the laws around expat/foreign ownership, which could impact your residency requirements, property taxes and how long the property must be occupied each year. Speak with a local attorney in the area where you plan to retire for help with navigating property ownership.
4. Income Tax
Will you receive pension income in retirement? If so, you'll need to discuss the tax implications of retiring in another country with your accountant.
The U.S. federal income tax on your pension income won't change based on where you live. However, depending on which country you move to, you could have additional taxes on your pension, investments or other sources of income in your new home country.
5. Life Insurance
As with health insurance, it's best to arrange your life insurance before you leave the country if you plan to retire outside of the States. American insurance companies usually require medical exams, and they'll also require that you sign the final life insurance policy in the United States. Talk to your financial advisor or insurance professional about arranging coverage before moving.
Retiring outside the United States is an exciting and major life decision. By taking the time to research and thoroughly plan for your retirement, you can ensure that your move goes as smoothly as possible without having to worry about too much once you're settled into a new country.