When it comes to planning your golden years, one question that might come up is whether you should retire abroad or stay at home in the U.S. Each route has advantages and disadvantages that you should consider before making any decisions.
Retirement planning raises many questions: When can I retire? How much should I save? Will I continue to work or volunteer? What will I do to stay active? One thing that can significantly influence the outcome of these questions is where you plan to retire—either at home in the U.S. or somewhere abroad.
- Retirement offers individuals the chance to either settle down, or else become more adventurous and see the world. Each has its pros and cons.
- Retiring here in the United States offers a familiar lifestyle and economic and healthcare systems in a range of cities or geographies, 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 also be more tricky to navigate retirement income and healthcare.
Retire in the U.S.
The majority of retirees either stay in their existing homes or make in-state moves. Very few older adults leave their state or relocate out of the country. 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, hairdressers, 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 you could find in many parts of the world.
- Rising healthcare costs: While the standard of care is excellent, healthcare costs are enormous. Estimates show that a 65-year-old couple retiring in the U.S. in 2019 will need about $390,000 to cover healthcare expenses during retirement.
- Routine: Although considered a plus by many, staying in a routine substantially limits your opportunity to learn and enjoy new experiences.
Moving out of the country is undoubtedly an adventure, and 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 to healthy aging—they provide physical, cognitive, and social benefits.
- Realize dreams: You will fulfill your dreams to travel, pick up a new sport, or enjoy a particular hobby.
- Lower cost of living: It’s possible to retire abroad comfortably for a fraction of the cost of retiring in the U.S.
- Access to affordable healthcare: You may 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.
- 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.
- Weather: Pick your paradise, whether it’s a warm, sunny beach or a tropical rainforest.
Disadvantages of Retiring Abroad
- Distance: Depending on where you go, a long, expensive flight could be between you and your friends and family.
- Double taxation: Again, depending on where you retire, you could end up paying taxes on your income both in the U.S. and abroad.
- 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.
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. For these people, deciding where to live in retirement is simple.
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 to test the waters before you make any decisions.