If your dream retirement plan includes spending an extended amount of time living overseas, you’re definitely not alone. Retiring abroad is an increasingly popular trend for American boomers. Packing up your life and moving to another country is a serious decision, though, so it’s a good idea to become as familiar as you can with your dream environment before making a final decision to retire abroad.
Here’s a checklist of five things you may want to look into before you start packing:
1. Get a feel for what it will be like to live there. It’s easy to become infatuated with a particular location as your future home when visiting on vacation. But there is a big difference between being a tourist and a resident. It may be beneficial to live in your potential new location temporarily before making a permanent move, in order to seek out activities you might like. This can also help you get a flavor for how your day-to-day life would look.
Think about how your day-to-day routine would change if you lived there and which elements you’d like to stay the same — such as going to the gym or volunteering. If you know others who have retired where you’re thinking about, ask them about their experience making the transition, too.
2. Determine what’s required to gain residency. If you want to become a full-time resident overseas, you’ll need to know the rules before relocating. Whether you meet the residency requirements could affect your eligibility for government-run programs offered in your new home country.
You should also understand the laws for an American resident living there full-time. To learn more about these requirements, contact the U.S. Department of State.
3. Weigh your housing options. One question you’ll want to answer: Will you buy a home or rent? Renting may be wiser if you want to take some time to better acquaint yourself with your new surroundings before locking yourself into a permanent home.
Also, think about what would happen if you purchase a home and then choose to move back to the U.S. If that’s a likely possibility, you may want to keep your American home. Take a look at the costs to maintain your current house or apartment and consider renting it out if you want to create an income source.
4. Learn about local medical services. As we grow older, the need for health care services tends to rise. While many countries have nationalized health care systems that cover residents, you may not be eligible to participate. Check on the quality of health care services in your intended new home to determine if medical capabilities meet your expectations.
Also, Medicare won’t cover treatment overseas, so a separate insurance plan may be required. If you think you might return to live in the U.S. someday, you may want to keep paying Medicare premiums so you can maintain future eligibility for the program. Discuss your relocation plans with Medicare and/or your private insurance carrier to determine the best coverage for you.
5. Review financial matters. For example, you’ll want to determine how the currency exchange rate will affect your cash flow. Exchange rates impact the value of the dollar, which affects everything you buy, from groceries to gas.
Keep in mind that your expenses could be much different than they are for you now, particularly if you want to travel more or rely on public transportation.
You may also want to look into transferring some money to a bank account in your new country.
Finally, don’t forget that you will need to continue filing a tax return in the U.S. and potentially paying U.S. taxes as well — though this can vary depending on your country of choice.