Retiring abroad is one of those ideas that seems as dreamy as it is daring. I remember the first time I seriously considered it. I was sitting in my backyard, sweating through another summer power bill and wondering if there was somewhere in the world where the utility costs were cheaper, the views were better, and the lifestyle didn’t involve quite so much yelling at squirrels for knocking over my tomato plants. That’s when the fantasy became a plan. But once I dug into it, I realized it’s not all palm trees and piña coladas—you’ve got to think about taxes, visas, and health care. I know, not as fun as beachfront cocktails, but stay with me. I’ve got the lowdown, and I promise to keep it as breezy as a Caribbean retirement. Retiring abroad can be like a vacation abroad, only permanent!
Let’s talk taxes. I’ll admit, I hoped that retiring abroad meant escaping the IRS like it was a nosy neighbor peeking over the fence. No such luck. If you’re a U.S. citizen, Uncle Sam doesn’t care where you hang your hammock—you’re still required to file a federal tax return each year, no matter where you live. That includes reporting your worldwide income. And if you have foreign bank accounts totaling over $10,000, you also have to file a Report of Foreign Bank and Financial Accounts (FBAR). It’s not quite the paperless paradise I was picturing.
The good news is that there are tools to prevent you from being double-taxed. There’s the Foreign Earned Income Exclusion, which might not help much since many of us are living on Social Security, pensions, or retirement accounts. But the Foreign Tax Credit can be useful if you’re paying taxes to your new country of residence. And some countries, like Costa Rica or Panama, don’t tax foreign retirement income at all. Bless their tax codes.
Still, to make things easier, I made a promise to myself: I’d get a good tax advisor before packing a single suitcase. Preferably one who specializes in expat tax issues and doesn’t fall asleep when I start talking about Roth conversions. If I had to offer one golden piece of advice, it’s this—don’t try to outsmart the tax system with Google and wishful thinking.
Now, about visas. I used to think a visa was just that shiny card in my wallet that gets me into trouble on Amazon. Turns out, when it comes to international retirement, a visa is your official permission to stay in another country. And they come in more flavors than a retirement home jello buffet.
Every country has its own visa categories and requirements. Some places roll out the red carpet for retirees. Mexico, for example, has a Temporary Resident Visa for those who can show a certain monthly income or savings. Panama has the Pensionado Visa, which is basically a “We Love Retirees” club that even offers discounts on everything from movie tickets to dental care. I don’t know about you, but I’ve never been offered a senior discount on root canals in the States.
Other countries, like Portugal, offer a D7 visa for folks with passive income—think Social Security, rental income, or annuities. But before you start forwarding your mail to Lisbon, know that these visas often require proof of income, health insurance, background checks, and sometimes even in-person consulate visits that feel more like job interviews than retirement plans.
And don’t get me started on the bureaucracy. It can be a slow, winding process with documents translated into multiple languages and notarized six ways from Sunday. I learned pretty quickly that hiring a local immigration attorney or visa facilitator can save your sanity. The fee is often worth it, if only so you don’t have to explain your pension statement to a government official who thinks a 401(k) is a type of cheese.
Healthcare is the third piece of the expat puzzle, and let me tell you—it’s a big one. As much as I’d like to imagine I’ll live out my golden years in perfect health, reality includes doctor visits, prescriptions, and maybe the occasional hip that makes a clicking noise when I get up too fast.
The big question is this: can you access decent healthcare in your new country—and will it bankrupt you? Surprisingly, many popular retirement destinations offer excellent healthcare at a fraction of U.S. prices. I’ve read stories of retirees in Thailand paying $50 for a doctor visit and $500 for surgery that would’ve cost them $15,000 back home. That’s not just savings—that’s “I can still afford to spoil the grandkids” savings.
Countries like Costa Rica, Portugal, and Malaysia have high-quality medical facilities and physicians trained in the U.S. or Europe. And in many cases, you can buy private health insurance plans for much less than you’d pay for a Medicare Advantage plan stateside. In fact, if you retire abroad before you’re eligible for Medicare, these private plans can be a lifesaver.
But don’t ditch Medicare altogether. Even though it doesn’t cover care abroad, it’s worth keeping if there’s a chance you’ll come back to the U.S. for visits or need treatment stateside. I personally plan to keep my Medicare Part A, since it’s usually premium-free, and then weigh the pros and cons of dropping Part B if I get solid local insurance. But I’ll talk to an expert first—because once you drop Medicare, getting it back isn’t exactly like re-subscribing to Netflix.
Now, all this talk about paperwork and planning might sound overwhelming, but here’s the fun part: retiring abroad can be absolutely magical. You might wake up to the sound of waves instead of traffic. You might find yourself strolling cobblestone streets to get your morning coffee for $1. And you might just feel like you’ve added ten years to your life by slowing down and enjoying the moment.
But you’ve got to go into it prepared. I started with a short trip—three months in Portugal to test the waters (and the pastries). I talked to local expats, visited clinics, and asked the kinds of questions that make my kids roll their eyes. I even practiced my Portuguese. Okay, I practiced ordering wine, but it’s a start.
The truth is, retiring abroad is part dream and part due diligence. It’s about more than finding a place with lower costs and better weather. It’s about building a life that fits who you are now—and who you want to be in this next phase. And if that means trading in my backyard squirrels for a Costa Rican howler monkey, well, at least I’ll have stories to tell. Just one perk of many, I think!
So, whether you’re thinking about the beaches of Mexico, the mountains of Ecuador, or a quiet Italian village where everyone calls you “Nonno,” take your time, do your research, and make sure your new home abroad is more than just a postcard fantasy.
Just promise me one thing: send a postcard when you get there.
Resources to help out:
- Internal Revenue Service (IRS), “U.S. Citizens and Resident Aliens Abroad,” https://www.irs.gov
- U.S. Department of State, “Retirement Abroad,” https://travel.state.gov
- International Living, “Best Places to Retire,” https://internationalliving.com
- Medicare.gov, “Medicare Coverage Outside the U.S.,” https://www.medicare.gov
- Expat Exchange and Expatica for country-specific healthcare and visa requirements
Planning for your retirement can be tricky, and there are questions you have like everyone else. If you want to learn and explore more ideas for yourself, check out my book here for more information:
Happy retirement planning!
Leave a Reply