Many people consider moving abroad to live the rest of their lives on a dream vacation. While many experts suggest people think hard about moving abroad after retiring because of concerns regarding mobility, healthcare, and homesickness, many people favor a foreign destination for its better weather, culture, and physical and emotional well-being. However, before making the plunge, you need to focus on a few important things:
Decide on the Destination
According to U.S. News, the most popular foreign countries for American retirees are New Zealand, Switzerland, Spain, Portugal, Australia, and Canada. The top considerations for choosing a place will likely be a pleasant climate, affordability, a well-developed public healthcare system, friendly residents, established property rights, and a favorable tax environment. Moreover, the country should be one where you will be eligible to receive Social Security payments from your solo 401k account. Think hard about how you will manage if you move to a non-English speaking country.
Citizenship and Visa Requirements
Some countries may allow citizenship if you qualify, allowing you to receive all associated benefits. However, you should choose one that permits you to retain your American citizenship so you can move back or travel. You should find out the visa requirements because there may be limitations on residency or visas need periodic renewal and involve application and renewal fees if you don’t want different citizenship. Some countries need proof of income of specific amounts or the purchase of property of a qualifying amount for issuing visas.
Many countries impose restrictions on property purchases by foreigners. You may find it difficult to get financing because American banks will generally not approve mortgages abroad, and local banks may insist on your purchasing a life insurance policy of the value of the mortgage with the bank as the beneficiary. Consulting a lawyer in the country you want to settle in is a good strategy. You may even consider renting as an option, but again, you should find out what the rent includes because property owners may not furnish the units as per American standards.
The cost of healthcare is important regardless of age, but it is of special significance for retired persons. Experts advise signing up for Medicare, and supplements, immediately upon becoming eligible, even if you want to live abroad. Otherwise, you could face penalties if you want to return to the U.S. however, you should know that you cannot avail of Medicare benefits abroad. The cost of private healthcare and medical insurance is generally cheaper outside of the U.S. You should network with the American community in the country of your choice to find out how they manage affordable medical assistance and what you should be alert for.
In addition to the above-discussed considerations, you also must figure out the income tax implications of living abroad. If you retain your American citizenship, you need to pay the taxes mandated by IRS; however, certain amounts may be exempt depending on the tax treaty with your country of residence. You will find it worthwhile to consult a tax lawyer to stay on the right side of the complicated laws.