Where do you want to retire? Do you think that far into the future? I have no idea where I will live in 30 years, but it will most likely not be in NYC because of the high cost of living.
It is common in the US for retirees to move to New Hampshire, Colorado and Maine. The low cost of housing, low crime and good health care are the main factors for people to retire in those states. But others want to live outside the US. What factors should they look into?
On of my cousins is moving to Costa Rica when he retires in a few years. His wife is from Costa Rica and they just recently bought a condo there. He has been planning this for awhile and is looking forward to the next chapter in his life.
Factors to Consider
Language
Do you speak the native language? If not you will need to learn the local language if you want to assimilate into the community. Moving to Central America? Learn Spanish. Want to live in Brazil? Learn Portuguese. I feel that it would come across as snobbish if you choose to only speak English in those countries. Asking for help, ordering food at a restaurant, shopping at stores and general conversation would be more pleasant while speaking the native tongue. Also, if you are moving to an English-speaking country it would be a good idea to learn the local slang.
Health Care
Who doesn’t think about health care as we get older? That’s right, no one. You will need to research health care options in the country you are thinking of moving to. Medicare does not cover health services in foreign countries. Many countries have less expensive public or private health systems in comparison to the United States. Costa Rica and Mexico, even allow foreigners with resident visas to buy into their national plans.
Finances
This would not be a Personal Finance blog if I did not state the following: Take care of your money. You will have to investigate how you will access Social Security benefits and your savings while living abroad. Will you need a local bank account, or can you access U.S.-based accounts? If you set up a local account, be aware of U.S. reporting requirements that require you to report overseas bank and investment accounts, with severe penalties for noncompliance.
Keeping a bank account in the U.S. is a good idea, especially if you return frequently to the States. Some banks have closed expat accounts, citing Patriot Act provisions designed to thwart financing of international terrorists. Some people get around this problem by maintaining a U.S. mailing address. For further advice go to www.americansabroad.org.
If you use a foreign bank account to pay bills and for every day spending money, you will probably have to file an annual Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury. This form is mandatory if the total value of your foreign financial accounts exceeds $10,000 on any day during the calendar year. Failure to comply with this reporting requirement could trigger stiff penalties.
Crime
Crime is on everyone’s mind. When you retire all you want is peace and quiet. Many expats say that the reports of crime outside the U.S. are often exaggerated. Daniel Prescher of International Living, who previously lived in Merida, the largest city in the Yucatán peninsula, says drug violence in Mexico is limited to isolated border areas. Still, American retirees may be targets for crime, particularly in countries with a high poverty rate. For additional information on the risks, visit the State Department’s Retirement Abroad advisory.
Steps to take
- Rent before you buy
- Take care of your finances before moving
- Find out about local health care
- Check out the State Departments website
- Have a plan for the rest of your life
Best of luck to my cousin and to all of you who are considering this move.
What foreign country would you consider retiring to?
Mike
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