Why Retirement Abroad Is Worth Considering

Some people spend their entire work lives dreaming of finally escaping the rat race and retiring abroad to a simpler, prettier place. Others scoff at the idea of dealing with tons of potential complications just to put themselves further away from family and friends. There is a third group, however, that will benefit the most from this series of articles, and that is the individuals open to the idea and curious about learning more. Before we extoll the benefits and highlights of retiring abroad, however, it is important to address some very common misconceptions.

In this guide, we will answer the following questions:

• Common Misconceptions about Retiring Overseas
• Cost of Living Differences
• Other Financial Benefits
• Exploring New Cultures and Lifestyles
• Opportunities for Adventure and Travel
• Learning New Languages, Skills, and a New Way of Life
• Personal Growth

Common Misconceptions about Retiring Overseas

1. It’s only for rich people.

People commonly associate the idea of a foreign retirement as retreating to the family’s chateau in France or luxury beach house on some exotic island. In fact, people from all different backgrounds and financial levels retire abroad each year, often spending less than they would if they had stayed in the US.

2. You’ll lose touch with your family and friends.

Friends and family are only a Facetime away now, as high-quality internet service is almost ubiquitous around the globe. There is indeed a mental barrier where someone in a foreign country “seems” further away, though if you choose to retire somewhere in Central America, you may not physically be that far away at all. Trips home become more special, and your new exotic locale will likely have friends and family members anxious to come visit.

3. The healthcare systems are poor and life will be dangerous.

High-quality healthcare is very much available in nearly every country you’d consider as a foreign retirement site, and the costs are likely to be much lower than what you’re used to paying in insurance premiums or out of pocket back home. While crime is certainly higher in some parts of the world and foreigners may indeed be seen as potential targets in some scenarios, this is certainly not true everywhere. Be smart, do your homework on where you’re planning to live, and treat it like you would any big city or unknown area.

4. The language barrier will make everything too complicated.

If this is a dealbreaker for you and you have no desire to learn a new language, you can always retire to an English-speaking country, or at least one with a significant number of English speakers or ex-pats. If you do, however, decide to make learning a new language part of your retirement adventure, you’ll often find a remarkable sense of achievement in overcoming minor hurdles and will meet many, many interesting people along the way. There are times when you will want a trusted bilingual associate at your side, such as when negotiating a property agreement or making a sizable investment, but a bit of study and practice will soon make the minor stuff a cinch.

5. You’ll have to endure a lower standard of living.

This really comes down to what makes you as an individual happy. If you can’t imagine life without your luxury sedan and having 100+ gourmet restaurants at your doorstep, then your foreign retirement options will be limited to the world’s major metropolitan areas. If you get more joy from things like the beach, relaxing, and exploring local towns, you’ve got a lot more options at your disposal. If there are certain creature comforts you simply can’t live without, you can always use Amazon if you don’t mind paying the customs duties, or have visitors bring you that special bottle of wine or kitchen appliance you can’t seem to find anywhere. Apart from minor differences in the availability of certain items, most foreign retirees actually enjoy a higher quality of life at a lower overall cost.

Cost of Living Differences

Housing

After years of paying elevated rent and mortgage amounts, many US retirees are often pleasantly surprised, if not shocked, by countries with lower housing costs in Central America and South America, Southeast Asia, Eastern Europe, and beyond. This is true for both renting and buying, though you’ll certainly need to do extensive research before putting down significant capital on a purchase.

Healthcare

Many retirees discount the possibility of retiring abroad simply because they are concerned about future health issues and don’t want to give up their Medicare. This is a valid concern, but not one that should scare you away from exploring the possibility of a foreign retirement. Many of the countries most popular amongst foreign retirees are popular for the very fact that they do indeed have advanced and affordable healthcare programs. International insurance is another option, especially if you’re planning to travel a great deal during retirement.

Food, Clothing, and Entertainment

Obtaining the basics is usually much cheaper than in the US, particularly in regard to grocery shopping and things like fruit and vegetables. This can lead to not only a more cost-efficient lifestyle, but a healthier one as well. There will always be expensive options (and ways to overpay), but day-to-day goods and even occasional splurges like concerts and dinners out can be remarkably affordable. When considering retirement abroad, it’s important to understand that you will be making major changes in where you shop, what you eat each day, and even what you do for fun and to relax, so it’s good to keep an open mind about not only what you’ll be spending but what you’ll be getting in return.

Other Financial Benefits

In addition to lower everyday expenses, retiring abroad can offer other financial advantages that stretch retirement savings further, and some countries even offer special financial incentives like lower utility bills to prospective retirees, such as Panama’s Pensionado program. Other potential benefits include:

• Currency Advantages: Retirees with savings in US dollars will typically see their money go further in terms of purchasing power in a new country, though currency exchanges (and exorbitant conversion rates) can cut both ways. A basic understanding of currency stability, inflation rates, etc. will help you make decisions, but all in all, dollars have traditionally appreciated against the majority of foreign currencies.
• Access to Affordable Services: Many retirees are shocked to find that they can now afford luxuries abroad that were once out of reach in the United States. Extravagances such as having a cook, driver, or live-in maid can be much more affordable and commonplace in foreign countries.
• Enhanced Social Security Benefits: Retirees receiving Social Security benefits typically find that their monthly checks go much further when living abroad. Many live exclusively off of monthly Social Security checks, touching their savings only for major purchases or travel.
• Tax Implications: Some countries offer favorable tax treatment for retirees, including exemptions on foreign income or capital gains. You should talk to a tax professional to make sure you understand what’s expected of you in terms of taxes in your new home as well as back home in the US.
• Real Estate Opportunities: Property prices abroad can be much lower, and some retirees are able to purchase a home outright. Additionally, renting out properties to tourists or long-term tenants through services like Airbnb can create an additional income stream during retirement.

Exploring New Cultures and Lifestyles

While money will always be a factor, retiring abroad isn’t just about saving money – it’s also about starting a new chapter of your life and experiencing things that aren’t readily available in the United States. Whether you’re seeking solace on a secluded beach or looking to explore museums and architecture in a major metropolis, there is quite literally a whole world of opportunities out there for you, not to mention countries full of new people to meet. Even if you’re not planning on an overly active lifestyle and just looking to relax in a nice spot, you’ve also got the opportunity to pick the exact type of climate you’d like to enjoy for daily activities. If you’ve spent your work life bundled up in layers of clothing, now’s the chance to finally make that move to a more temperate climate.

Opportunities for Adventure and Travel

Many foreign retirees find themselves getting bit by the travel bug and using the opportunity to continue to explore and expand their horizons. Having a new home base puts a myriad of new less-expensive travel destinations within reach, and this can be one of the most exciting and rewarding parts of retiring abroad. The possibilities are truly limitless in this sense, as living in a foreign country can give even a minor trip to the corner market a sense of wonder and potential to become an adventure.

Learning New Languages, Skills, and a New Way of Life

What better way to celebrate your newfound time and freedom than by dedicating a bit of time to bettering yourself and learning new things? Life in a foreign country provides the opportunity for this in spades. And while some may shy away from the challenge of learning a new language, this can be an incredibly rewarding experience that introduces you to a whole world of new and potential friendships. And though the prospect of communicating each day in a foreign tongue may seem daunting, some foreign languages are relatively easy to learn. Similarly, retiring abroad allows you to dedicate more time to activities and hobbies that may not have always been possible in your previous life. Retirees enjoy a wide range of interests, from gardening to social clubs to sports, and what better way to spice things up than by doing the things you love in a whole new country?

Personal Growth

After decades of working and putting others first, retiring abroad gives you an opportunity to focus on what truly matters to you and to live life on your own terms. What this means can vary by person, whether it’s trying those things you never had the time for before, or simply reenergizing in a comfortable new community. Regardless of your personal goals, a major change of scenery can spark individual growth in nearly every facet of your life.

Conclusion

The idea of retiring abroad is unfortunately plagued by misconceptions, but those willing to dig deeper into the topic will find a wide range of benefits both financially and personally. What was a massively complicated undertaking just a few decades ago has been made exponentially easier thanks to the internet and other modern amenities, but you will still need to do your homework to see if it’s right for you. In future articles, we’ll cover the next steps to take in planning a foreign retirement, including How to Choose the Right Country for Retirement, the necessary documentation, and the logistics of making the move.