The idea of living as an expatriate is nothing new. Ernest Hemingway wrote about it, and Jimmy Buffett made the idea a staple of his music. But back in Hemingway and Buffett’s heyday, ex-pats were more of the exception than the rule. Today, lots of U.S. citizens live in other countries
The lure of foreign lands seems to be greatest among retirees beguiled by stories of a lavish and inexpensive lifestyle. And it’s true.
There are many financial arguments to be made in favor of living overseas. But there are cons, too. So, is retiring overseas worth it for you? Let’s take a closer look.
Finances as an expatriate
Is it really cheaper to retire overseas? Maybe.
Countries like Thailand, Panama, and Portugal can help retirees save money on housing, transportation, and healthcare. For example, the average retiree’s cost of living in Portugal is about $1700 a month. Panama comes in around the same. But before you start searching for real estate in other countries, there are some negatives to consider. First, you’ll still have to pay taxes on income in the U.S.
Worse, you may have to pay income tax in the new country in which you live. Also, Medicare does not follow you in your new country, and if you move back to the U.S., there is a penalty for enrolling. Of course, you still have to budget. Just because you’ve moved to a place with a lower cost of living doesn’t mean you can’t find ways to overspend!
If money is your biggest consideration, you may want to think again. Factors beyond finances cause many overseas retirees to return to the U.S.
Lifestyle as an expatriate
It may be a cliché, but it’s true: there’s no place like home. Living overseas requires adjusting to a new culture and way of life. Many of the amenities we take for granted, like trash disposal, simply aren’t part of life in other countries. The pace of life and language may also be very different for you. And don’t forget, you’ll be far from friends and family in the states.
So, if you aren’t up for the adventure, reconsider moving. On the other hand, if you do like the thought of trying new things, then the ex-pat life might work. You’ll definitely be trying local foods because the cost of U.S. goodies can be exorbitant in other countries.
And you’ll be meeting new people, as well. Many countries have a large and sometimes close-knit ex-pat community. Learn the language and locals in your new country tend to warm up quickly to you, as well.
If you are on the fence about moving, look at countries with stable governments and decent living costs. And don’t be afraid to try before you buy. Try renting a villa or apartment for an extended time. That way, you can feel what life and finances are like in your country of choice. But the bottom line is pretty simple. Retiring overseas just to save money is a risky proposition, at best. Do plenty of research, try an extended stay, and see what happens.