Retiring outside the US: What to expect

There are many reasons US nationals may decide to spend their retirement in another country. Among these are lower living expenses, family members abroad and a more temperate climate.

For those considering the move, there’s much to consider: whether you’d be happy apart from local connections; whether you can afford the lifestyle you desire and if you’re prepared to put in the work – filing multiple tax returns, for example, or learning a new language.

Primarily, this article is aimed at those who’ve already decided that retirement abroad is the right choice for them. It aims to answer common questions such as ‘where are there existing expat communities?’, ‘how does the healthcare system work?’ and ‘can I avoid double taxation?’

It also seeks to reassure retirees experiencing last-minute jitters. Moving house is considered to be one of the top 5 most stressful life events alongside divorce and the death of a loved one: it’s natural to feel anxious ahead of the big move.

Common questions among soon-to-be expats

What are my VISA options?

For US nationals emigrating abroad, there are several options depending upon where you’re planning to relocate. Two of the most popular include the ‘Golden Visa’ – an immigration investment program – and the ‘Retirement Visa’ – which also requires proof of funds.

Golden visas are available for US citizens in Austria, Canada, Germany, New Zealand, Portugal, Spain and the UK – amongst other countries. Investment options vary by country, but for the most part the required sum ranges from $250,000 to millions of dollars.

Retirements visas are slightly different. Offered by countries such as Dubai, Portugal, Italy and Thailand, they require that applicants be ‘of retirement age’ and have enough money to support themselves. ‘Sufficient funds’ may be measurable via savings or a monthly income.

What are the living costs in X country?

Numbeo’s 2023 Cost of Living Index factors in housing indicators, perceived crime rates, healthcare quality, transport quality, and other statistics such as food prices and monthly income.

Out of popular expat destinations including Canada, Japan, Mexico, Germany and the United Kingdom, Numbeo calculates that Canada is the most expensive and Mexico the least.

Nevertheless, living costs are unanimously below what a New York City resident would expect to pay: living in Canada costs 66% of what it would cost someone in NYC on average. In Mexico, residents pay a mere 37.3% of NYC living costs, while those in Japan pay 64.6% and UK-dwellers, 61.5%.

Will I experience culture shock?

Culture shock is an experience specific to the individual and the circumstances; however, it is common for people moving to a new country to experience some of the recognized symptoms. These include anxiety, confusion, and uncertainty.

Such responses are usually part of the adjustment process and will pass in time. Symptoms can be overcome more readily where new expats adopt an open-minded attitude, making an effort to understand cultural and structural differences.

Investopedia breaks culture shock into four common phases: honeymoon, frustration, adaptation and acceptance. This reflects the cycle wherein newcomers experience an initial thrill, a subsequent feeling of disorientation, a period of adjustment and finally, a sense of confidence and familiarity.

The process of experiencing and overcoming culture shock is very common, and nothing to be afraid of.

How do I access medical services?

Knowing how to access medical services should be a priority for anyone moving to a new country. Waiting until you need to use local healthcare facilities before familiarizing yourself with how they work could cause painful delays which are easily avoided by forward planning.

The US Department of State website has a database listing doctors and hospitals in foreign countries. Once you’re in your new home, you may prefer to ask the opinion of locals who are familiar with the services – but in the meantime it’s a good idea to know where your nearest facility is in case of an emergency.

Another consideration is whether local healthcare facilities have English-speaking team members. If you don’t speak the native language of your new home country, be sure to use tools such as the US Embassy database to search specifically for English-speaking healthcare providers.

Will I have to pay tax twice?

Taxation can be complex to navigate for soon-to-be expats, as once again it’s country dependent. Many US emigrants opt to consult a tax attorney or advisor before making the move.

Wherever you move, however, one factor stays the same: unless you renounce your US citizenship, you will still have to declare any money withdrawn from retirement accounts.

Having to pay tax in the US may not be such a bitter pill to swallow if your new home country waives local taxation: in much of the Caribbean, for example, there are no capital gains or inheritance taxes.

Other countries offer reduced taxation for non-native residents – Portugal, for example, allows Non-Habitual Residents (NHRs) a pension tax rate of 10%.

Can I buy property abroad?

If you’re retiring overseas, you may want to buy a property abroad. Fortunately, very few countries prohibit foreign citizens from purchasing property, so you can make this dream a reality.

It’s important to note that while many countries will allow you to buy property, there may be different restrictions or criteria. For instance, if you want to purchase property in Australia then you’ll need to apply for permission, and you’ll typically only be able to buy newly built dwellings.

Saving money when retiring abroad

If you are looking to maximise the returns on your pension payments when retiring abroad you will want to consider your currency options.

At Currencies Direct, we offer more competitive exchange rates than most high street banks. Coupled with our fee-free transfers, you could make immediate savings by transferring your money with us.

You’ll also gain access to a range of useful services, like the option of fixing a favourable exchange rate for up to a year or automating your regular overseas payments.

Dealing with last-minute nerves

Last-minute nerves are a normal part of preparing to move abroad: with all the planning, you probably hadn’t given doubts and worries a chance to surface earlier in the process.

Hopefully the suggestions above have helped to allay some of the pre-departure jitters, but if you’re still feeling on edge, consider compiling a list of all the reasons you’re moving home and the things you have to look forward to.

Focusing on the positives can help guide anxious expats towards a brighter mindset from which concerns will seem smaller and less significant. Otherwise, common anxiety-reducing tactics include breath exercises and journalling. Offloading your worries onto paper can get them out of your head and help you to realize any key themes such as fear of loneliness or isolation.

Try talking to existing expats about such fears and finding out their solutions. Even if their situation isn’t translatable to yours, sharing concerns and receiving validation may be cathartic enough to zap those worries away.