Moving Overseas in Retirement

Moving Overseas in Retirement

For most of us, the good ole U.S. of A. will always and forever be our home base. But for some, a permanent move outside the country might be something we seriously contemplate, for any number of reasons. There are a multitude of factors to carefully consider before packing the family silver.

Fish out of water

It's possible you've already lived OCONUS as part of a military assignment. But before making a long-term move, you need to ask yourself - and your family - if you're ready to embrace an entirely new culture, including a different language, unknown foods, and unfamiliar traditions.

The political, economic, and environmental structure will, no doubt, differ greatly from home. The United Kingdom's national health care system may sound appealing, but its sales tax may cause your blood pressure to spike. Are you ready to adapt to new transportation and communication systems? You might love taking the Shanghai Metro instead of driving your car everywhere.

Where in the world?

One of the main reasons people move abroad is they believe they can enjoy a lower cost of living. For instance, my friend in Costa Rica says it's not unusual to pay only $10 a day for a full-time housekeeper or gardener. But the trade-off could be living in an area with more crime or poverty or in less-developed conditions.  

Be wary of countries that regularly experience government unrest, extreme exchange rate volatility, or natural disasters, all which can negatively impact your daily life and your pocketbook.

The best way to determine if another country is the right fit for you is to spend as much time there as possible before you permanently pull up stakes. Rent a house or apartment in the locale you hope to live in, preferably for more than one season. Many stateside amenities we take for granted are hard to come by in other countries, even relatively affluent ones.

Of course, this option isn't always realistic, so reach out to other expatriates living in that country; they will provide valuable insight regarding the adjustments they struggled with when leaving the U.S. InterNations (, an international online community, is one of many sources that can connect you with expatriate communities around the world. Transitions Abroad, an online magazine, is also a good resource, with articles on topics such as finding a job in the Philippines or experiencing the real Vietnam.

Taking the first steps

If you decide to move, it's time to sharpen your pencil; the paperwork can be daunting. Visa, work permit, and driver's license requirements vary widely from country to country. The reason for your move (if you're starting a new business or retiring, for example) will dictate the type of documents you'll need and the prerequisites you must meet to live in that country. For example, to immigrate to Australia, you must pass a medical examination as well as a "proof of good character" test. You might even need to qualify to buy real estate.

Many foreign countries are infamous for their inefficient governments and slow-moving bureaucracies; start all your necessary paperwork early to allow for processing delays and errors. Reach out to the American embassy in your destination country; they are accustomed to helping prospective transplants cut through red tape. The State Department is a good resource, as well.

And don't forget your furry family members. While most countries will welcome your pet, they all have varying entry requirements, from proof of vaccines to lengthy quarantine periods. The International Pet and Animal Transportation Association ( ) can help you find a pet shipping expert to hold your hand (and your pet's paw) through the ordeal.

Getting your financial casa in order

It's also critical to understand how a move may impact your benefits. There is good news for veterans: the VA's website states, "Most VA benefits are payable regardless of your place of residence or nationality. The application process and receipt of benefits may differ somewhat."

Overseas medical coverage for eligible veterans is coordinated through the Foreign Medical Program. In most cases, authorization to receive reimbursed medical treatment should be obtained beforehand, so applying before your move is strongly encouraged.

For family members not covered by the VA system, TRICARE For Life coverage might be an option. Note that Medicare usually won't pay for health care received overseas, although a Medigap policy may pay some partial benefits.

A list of private health care insurance providers can be found on the Department of State's website. Before buying private insurance, thoroughly research your destination country's health care system; you may be able to pay into their government-sponsored plan and receive treatment at low or even no additional cost.

The treatment of taxes and bank accounts can be incredibly complex. The IRS taxes all of its citizens on their worldwide income, but the U.S. has tax treaties with many foreign governments that may reduce or eliminate taxes on certain types of income earned abroad, such as pension and interest income. In some cases, you may have to qualify as an expatriate to receive any tax benefit; in other cases, it can be as simple as claiming the deduction on your U.S. tax return. Refer to IRS Publication 54, a tax guide for U.S. citizens and resident aliens living abroad, for help. States may further complicate matters by not honoring federal tax treaties.

Social Security taxes can be particularly vexing. If you're working abroad, you will have to pay Social Security taxes in both countries unless the country you're residing in has an agreement with the United States known as a totalization agreement (find the list at ). You can't just choose which country's retirement system you'd prefer to pay into, and all contributions you make to your adopted country could be lost if you don't meet work duration requirements.

If you're still working, your employer might have a tax equalization arrangement for its employees that attempts to negate any reduction in your net income due to working abroad, but these agreements can be tricky. In addition, if you have money in foreign banks, you must adhere to certain reporting requirements of the U.S. Department of the Treasury, or penalties will be severe.

If you're overwhelmed, don't worry - there is help. Many companies, such as Greenback Expat Tax Services ( ), specialize in helping U.S. citizens with tax and financial reporting issues.

Proper planning and patience are the keys to success for a move abroad. Lean on your expatriate community for support. And when your local grocer looks dumbfounded when you ask in what aisle you can find the grits, just smile and reach for a crisp baguette, instead.


About the author : Vera Wilson is freelance writer based in North Carolina. She frequently writes on financial topics. Her last article for MOAA was Find Love at Any Age