If you’re planning on retiring but retirement communities are not your go-to destination, living overseas sounds like the perfect method to stretch your retirement dollars further. Add the new culture, unexplored landscape, and warmer climate, and your decision’s 90% made.
But the remaining 10% may tip the scale. Therefore, before you decide to spend your golden years in a different country and dust off your passport, take a look at some of the things you should know about living overseas.
Living in another country, especially in your retirement years, may seem like a dream come true. Just think of the warmer climate and picturesque villages in Italy. But before enjoying the Italy sun, remember there are some legal aspects you should take into consideration.
One of the most important is knowing all the residency requirements in your country of choice. For example, Peru offers an indefinite retirement visa conditioned that you don’t earn any other professional income while Vietnam provides a tourist visa instead of a retirement one, which you need to constantly renew.
So, do your research thoroughly!
Potential Tax Surprises
For some, taxes are an exciting opportunity to get a refund while for others, taxes are downright scary. Imagine what it would be like in a foreign country if you don’t have all the information you need.
Don’t think non-earned incomes such as pension are not still taxable in the US even if you’re living in a different country. The same goes for distributions from retirement. Another thing you should keep in mind is that each country has its own set of rules when it comes to taxes. So, don’t hesitate to consult a tax expert prior to moving.
As a financial advisor, John Piershale states, “Some people keep most of their money in U.S. dollar-based assets and then convert to the local currency as needed. On the other hand, if you think the dollar will weaken, you may want to keep most of your assets in the local currency.”
Experts recommend people who want to retire to a foreign country to choose a retirement destination where the U.S. dollar is used, or the exchange rate is pegged to it. This significantly lowers the chances of currency fluctuations.
Quality of Healthcare
Nothing is perfect in this world. And the U.S. healthcare system makes no exception. Be that as it may, in the U.S. you know exactly what you’re gonna get.
When it comes to international healthcare, there are numerous factors retirees have to consider such as emergency response time, the existence of nationally or globally accredited hospitals, facilities, availability of prescriptions, etc.
As for the prices, “Costs will likely be much lower and access may or may not be improved in other countries. Quality is also a top consideration, and the U.S. ranks 37th on the World Health Organization’s list of global health. American retirees may actually get better care abroad,” says Suzanne Garber, co-founder of Gauze.
Loss of Medicare
Medicare is an important part of the American healthcare system. For this reason, it’s essential to find out if by retiring outside the US you get to keep your healthcare insurance and benefit from the same services.
“While Social Security isn’t generally impacted by living abroad, traditional Medicare does not cover medical expenses outside of the United States. Some Medicare supplement plans do cover up to $50,000 of foreign emergency expenses, but this is meant for travelers, not retirees living abroad,” says Michael Newcomer, principal founder of Novel Insurance and Wealth Management.
To avoid losing health services, experts such as Ken Moraif, senior advisor with Money Matters in Dallas, recommend retirees to keep paying for Medicare Part B, in case they ever want to come back to the U.S.