Retirement: U.S. vs. Abroad

Be sure to considers these pros and cons

Retirement planning raises many questions: When can I retire? How much should I save? Will I continue to work and/or volunteer? What will I do to stay active? One factor that influences how you answer all of these questions is where you plan to retire—either at home in the U.S. or someplace abroad.

While most Americans spend their retirement in the U.S., a growing number are opting to retire overseas. Here are the pros and cons of each option to help you decide.

Key Takeaways

  • Retirement in the U.S. offers a predictable and familiar lifestyle, and you'll be close to your friends and family. But it can be expensive and lead to a boring routine.
  • Retiring abroad can bring new and exciting experiences, a change of scenery, and a lower cost of living. But it can be tricky to navigate taxes, long-stay visas, and language and cultural differences.
  • If you're thinking about retiring abroad, it's a good idea to live in the overseas destination for at least several months to make sure it will be a good fit (a good vacation spot doesn't necessarily make a good place to live).

Retire in the U.S.

The majority of retirees either stay in their existing homes or make in-state moves. For many people, family is a big reason to stay home—especially if there are grandkids in the picture.

Advantages of Retiring in the U.S.

  • Established professional connections. These help you secure part-time or less stressful full-time work during retirement.
  • Established social networks. These enable you to remain physically and mentally active without the need to make new friends.
  • Family. It's easier to spend time with children, grandkids, and other family members.
  • Support. You're not among strangers if anything goes wrong.
  • Trusted providers. You can stay with familiar doctors and hospitals, car mechanics, hairstylists, etc.
  • Stability and convenience. You can depend on a certain level of predictability for everything from infrastructure to the brand of toothpaste available at your local grocery store.
  • Comfort zone. You can maintain your “normal” routine.

Disadvantages of Retiring in the U.S.

  • Expensive. The cost of living in the U.S. is much higher than in many parts of the world.
  • Rising healthcare costs. While the standard of care is excellent, healthcare costs are enormous. Estimates show that a healthy 65-year-old couple retiring in the U.S. in 2021 will need about $300,000 saved (after tax) to cover healthcare expenses during retirement.
  • High assisted living costs. You may never need it, but if you do, the median cost for community and assisted living facilities in the U.S. is $4,300 per month, according to the Cost of Care Survey by Genworth.
  • Routine. Although considered a plus by many, staying in a routine may limit your opportunities to learn and enjoy new experiences.
  • Established connections and social networks

  • Family and friends

  • Stability and convenience

  • Comfort zone

  • High cost of living

  • High healthcare costs

  • High assisted living costs

  • Could get stuck in a routine

Retire Abroad

Moving out of the country is undoubtedly an adventure, but it can be more or less so, depending on your destination. From quiet beaches in Vietnam to hip cities in South America, you can choose a place that matches your comfort level in terms of modern conveniences, access, climate, activities, cuisine, healthcare, culture, and customs.

Advantages of Retiring Abroad

  • New experiences. Experts link new experiences to healthy aging—they provide physical, cognitive, and social benefits.
  • Realize your dreams. You can fulfill your dreams to travel, pick up a new sport, or enjoy a hobby.
  • Lower cost of living. It’s possible to retire abroad comfortably for a fraction of the cost of staying in the U.S. That helps if your budget is limited. (Don't worry about your Social Security, though. That follows you almost anywhere. Same with Civil Service benefits.)
  • Access to affordable healthcare. You can find public healthcare systems that provide good healthcare at a reasonable cost. Private coverage is available in many countries for significantly less than comparable plans stateside. Traditional Medicare does not cover healthcare overseas, although some Medicare Advantage plans do have options for expats.
  • Retiree incentives. Many countries offer incentives to retirees, such as Panama’s Pensionado program, which is open to retirees who meet modest minimum income standards and offers discounts on everything from restaurant meals to movies.
  • Weather. Pick your paradise, whether it’s a warm, sunny beach or a tropical rainforest.

Disadvantages of Retiring Abroad

  • You're a long way from home. Depending on where you go, a long, expensive flight could be between you and your friends and family.
  • Long-stay visas. Some countries welcome foreign retirees and offer an easy path to residency, but others offer no retirement visa schemes. Wealth opens doors to many countries through the availability of so-called "golden visa" programs.
  • Double taxation. The U.S. taxes its citizens' incomes no matter where they live. Depending on where you retire, you could end up paying taxes on your income both in the U.S. and abroad. Most countries avoid double taxation on ex-pats, but you still may have to file returns with both.
  • Language and cultural differences. Are you up for learning a new language and immersing yourself in a new culture?
  • Instability. Not all countries enjoy the same level of political and economic stability that the U.S. does.
  • Daily challenges. The goods, services, and conveniences you are used to may not be readily available—or available at all.
  • The reality of vacation versus living. Your piece of paradise could be a great place to visit, but not so great for full-time living.
  • Support. You might be among strangers if something goes wrong.
  • New experiences and better climate

  • Lower cost of living

  • Access to affordable healthcare

  • Retiree programs

  • Long way from friends and family

  • Language, cultural, political, and economic differences

  • Potential for double taxation

  • Challenges of securing the proper visa

The Bottom Line: Stay or Go?

Many retirees would never consider moving abroad, and others know for sure it's what they want to do. If that's you, be sure to start planning early since it can take months, a year, or even longer to get your paperwork and logistics in order.

If you're a retiree or near-retiree who's on the fence, you face a tough decision that will require some soul searching and research—and maybe a trip abroad (or several) to test the waters before you make any decisions.

Article Sources
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  1. Fidelity. "Plan for Rising Healthcare Costs."

  2. Global Coalition on Aging. "Destination Healthy Aging: The Physical, Cognitive and Social Benefits of Travel."

  3. FedWeek. "Retiree Benefits When Living Out of the Country."

  4. AARP. "Collecting Social Security Abroad."

  5. Internal Revenue Service. "Taxpayers Living Abroad."

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