About 10 years ago, I left my comfortable life in the U.S. behind and boarded a plane to retire abroad… first in the U.K. and, eventually, in Switzerland.
As I stood there with 8 suitcases to my name, I could not have imagined the adventures (and pitfalls) that lay ahead of me. Since so many older adults are embracing overseas retirement, the time feels right for me to share the lessons that I have learned… especially as an American.
Of course, many of these lessons apply to people of all nationalities, but, a few (especially taxes and visas) are specific to Americans. So, I hope that you find my advice useful!
When many of us choose to retire overseas, we think that we will spend the rest of our days sipping cocktails on the beech or playing golf. In reality, many of us will end up rethinking retirement entirely and end up working full or part-time at some point in the future.
For some of us, the reasons to return to work will be purely financial. We just need the cash. Others will miss the social interaction or sense of accomplishment that comes from working.
So, my first piece of advice when it comes to retiring overseas is to assume that you will have to work in the future. At the very least, you should understand the rules so that, should you have to work again, you won’t be shocked to find that you have no practical options for making money.
Let me give you a few examples of situations that many retirees do not anticipate…
Are you even allowed to work in your chosen country? Now, I’m not a visa expert – and I’m certainly not providing specific advice here – but, having talked with many overseas retirees, I can tell you that visas can become a big issue if you decide to work again. For example, many countries have specific retirement visas and, in many cases, these visas DO NOT allow you to work.
Do, some people ignore these rules and freelance or teach “under the table?” Of course! But, I wouldn’t bet my future on not getting caught!
Are there funky tax laws that can hurt you? I was lucky to be able to legally work in my chosen country, but, I was surprised by the way that some of the local laws impacted me. For example, while I continue to pay their equivalent of Social Security, as a foreigner working after retirement age, I will never be able to collect any benefits.
What about U.S. taxes? Once again, I’m not a tax expert and I’m not giving specific advice, but, you really should speak to a tax professional before retiring overseas. Many Americans are shocked to find out that they are still responsible for paying taxes in the U.S., even if they legally reside in another country. If your income is low, certain rules, like the “Foreign Earned Income Exclusion” may help. But, if you go back to work, you may be surprised by a big tax bill from Uncle Sam.
There are also specific rules about paying tax on Social Security if you continue to work, but, these apply regardless of where you live. Once again, the best tax advice I can give is to seek our professional tax advice!
Finally, and this should probably be obvious, finding work in a foreign country when you don’t speak the language is tough. Most seniors that I have talked to who actually took the time to learn the local language after retiring abroad said that it took 5 years (or more!) for them to become comfortable enough to even consider working for a local company. And, that’s with consistent study, 1-hour or more a day!
Please don’t get me wrong. Despite the fact that I chose to retire overseas, I still think that America is the greatest country on Earth. But, the truth is that many people around the world don’t share this view.
Whether they disagree with our politics (or politicians) or simply see Americans as “those loud people who just can’t help striking up a 2-hour conversation when I’m trying to sleep on the plane,” Americans have a mixed reputation overseas. Many are still in awe of the U.S. but this feeling is often mixed with frustration, jealousy or just a lack of understanding.
The good news is that you can stand out as an American by avoiding the stereotyped behaviors that so many foreigners expect from us. When you turn down the volume a few notches, try to embrace the local culture, learn a few words in a foreign language and leave your political assumptions at home, you will be surprised by how friendly people become.
Do a quick Google search for “best places to retire” and you will find dozens of lists of countries that, supposedly, offer amazing lifestyle options for next to nothing. Many of these countries, like Panama, Costa Rica and Ecuador really are magical for… and this is the key point… the right people!
The challenge with lists of “best places to retire” is that they cannot tell you if a country is the best place to retire *for you*.
For example, many lists of great overseas retirement locations use cost of living as a key ranking criteria. But, in my experience, whether a country is really cheaper in a particular category depends on your specific needs.
Many countries offer free or low-cost health care to retirees. But, have you checked to see if they cover the specific conditions that we are dealing with (or have a genetic predisposition for)? What about if, like in the United Kingdom, healthcare is cheap but you may have to wait months to see a doctor? What happens if you need more than just “basic care?” Will you have to travel back to the U.S. for specialist treatment?
Here’s another example. Many retirees move to a country without really thinking about how much it will cost to visit their grandkids. Moving to Bali becomes much more expensive when you factor in 2 trips back to the U.S. each year. Then again, maybe you don’t have grandkids – or are happy just using Skype – in which case, this really isn’t a consideration.
The point here is that none of us should rely purely in “best places to retire” lists. The only list that really matters, when choosing a retirement location, is the list of our own needs and desires.
Sometimes, it’s not the big things that you miss when you retire abroad. It’s the little things.
Stereotypes about American’s be damned… sometimes I really DO miss striking up conversations with strangers on the bus. I DO miss the smiles and meaningless (in the eyes of some foreigners) “how are you’s?” that result in one-word responses. I miss Dunkin’ Donuts (Ok, that one I’m not proud of!) And, I miss all of my friends and family that I left behind.
But, ultimately, I don’t regret my decision to retire abroad. It has given me a quality of life that I would find hard to replicate in the U.S. It has exposed me to new cultures and languages. And, it forces my brain to stay young, as I am constantly exposed to new ideas, places and people.
So, if you are thinking about retiring overseas, I say go for it! But, before you take the plunge, take a month and live in each country on your list. Airbnb has great options in most countries… and most places offer long-term rental discounts.
Have you ever thought about retiring overseas? Why or why not? Which countries would be at the top of your list? Let’s have a conversation!