For many seniors with a sense of adventure and an updated
passport, the ideal retirement destination lies outside the U.S.
Attracted by a lower cost of living, high-quality health care and
an exotic locale, retirees are putting down roots across the border
and around the globe. The Social Security Administration sent
benefit checks to more than 346,000 retirees living outside the
U.S. in 2011, the latest year for which figures are available.
That's up from about 307,000 in 2008.
While Central and South America's low costs and proximity to the
U.S. have long attracted expats, intrepid retirees are also
pursuing the good life in places as far-flung as Malaysia, Thailand
and the Philippines. Even Western Europe, once considered out of
reach for most retirees, has become more affordable in the wake of
the economic downturn.
Ed and Beaty Fomby, both 68, moved to Costa Rica from Crockett,
Tex., in 2011 and live comfortably on $2,500 a month. They built a
home overlooking Lake Arenal, a resort area in Costa Rica's
northern highlands, that cost them about $320,000, including
landscaping. A similar lakeside home in Texas would cost about
$750,000, Ed says.
Ed, a retired dentist, says the couple had saved enough for a
secure retirement, but moving to Costa Rica has enabled them to
enjoy a lifestyle they couldn't have afforded in the U.S. They have
a gardener and housekeeper who come once a week. The housekeeper
charges $14 for half a day; the gardener--who fills vases in their
home with fresh tropical flowers--charges $4.50 an hour. The Fombys
eat out frequently and travel around the country. "We don't
economize much at all," Ed says.
Even if you're convinced the expat lifestyle is for you, consult
the experts before you venture outside the U.S. You can find a
wealth of online resources at
. Also, take a look at our picks,
8 Great Places to Retire Abroad
Once you've settled on a country, try it out. Rent a home or
apartment before you buy. In many countries popular with expats,
rental properties are plentiful and cheap. In Costa Rica, for
example, you can rent a three-bedroom home for $500 a month.
Renting will also permit you to get a realistic estimate of your
personal cost of living before you make a long-term financial
commitment. Do you consider air conditioning a nonnegotiable
necessity? You'll pay more for it in South America, where
electricity is generally more expensive than it is in the U.S.
You'll also pay a premium for gas in most countries--sometimes,
a very big one. That's not a problem for Daniel Prescher, 59,
special projects editor for
, who lives in Cotacachi, Ecuador, with his wife, Suzan Haskins,
57. "We had a car for years and thought we couldn't get by without
one," Prescher says. "Public transportation is so cheap, we sold
Another option is to become a part-time expat. That alternative
is popular with retirees who aren't comfortable living year-round
in a foreign country but want to take advantage of better weather
and a lower cost of living for at least part of the year. "If you
can save money living abroad full-time, you can save money living
abroad part-time as well," Prescher says.
Anne-Marie Simons, 73, author of
Taking Root in Provence,
and her husband, Oscar Rodriguez-Rozic, 76, have lived in
Aix-en-Provence since 1998. They have kept costs down by living
like the French, shopping daily for fresh food at local markets and
walking instead of using their car for short trips around the city.
For longer trips, they use public transportation whenever they can,
taking advantage of discounts for seniors. The French health care
system provides outstanding care at a fraction of the cost of
health care in the U.S.
Simons and Rodriguez-Rozic live in an apartment they purchased
with the proceeds from the sale of their home in Washington, D.C.
While Aix-en-Provence is a relatively small city, it's home to a
world-class opera festival every summer and an annual literary
gathering, La Fête du Livre, that attracts dozens of renowned
authors. The rural villages in the south of France are beautiful,
but "my husband and I are both too urban to live year-round in the
countryside, no matter how beautiful it is," Simons says.
Living in France isn't cheap, but it's more affordable away from
the major cities. Culture is heavily subsidized in France, which
reduces the cost of museums, concerts and art exhibits. "We may not
live cheaper here than in the U.S., but we live better," Simons
Managing your money
Technology has made it much easier for expats to conduct routine
financial transactions. Retirees can arrange to have their Social
Security benefits and other income deposited directly into their
Gloria and Paul Yeatman, who retired to San Ramon, Costa Rica,
in 2009, have Gloria's pension, Paul's Social Security check and
checks from a rental house they own in Baltimore deposited in their
U.S. account. Once a month they write a check from that account to
their Costa Rica bank and use money in that account to cover their
expenses. Three years ago, they invested about $30,000 in a
certificate of deposit denominated in colons, which has paid
interest of between 11.25% and 12.5%. "Our savings, instead of
being depleted, have increased," says Gloria, 56.
Keeping a bank account in the U.S. is a good idea, particularly
if you return frequently to the States. However, expats who no
longer have a U.S. address could run into bureaucratic
difficulties. Some banks have closed expat accounts, citing Patriot
Act provisions designed to thwart financing of international
terrorists, according to American Citizens Abroad, an advocacy
group. Some expats get around this problem by maintaining a U.S.
mailing address, Prescher says. (For advice on how to deal with a
U.S. bank that refuses to open an account or closes one you already
have, go to
If you use a foreign bank account to pay bills and provide
walking-around money, you'll probably have to file an annual Report
of Foreign Bank and Financial Accounts (FBAR) with the U.S.
Treasury. This form is mandatory if the total value of your foreign
financial accounts exceeds $10,000 on any day during the calendar
year. Failure to comply with this reporting requirement could
trigger stiff penalties.
The requirement isn't limited to foreign bank and brokerage
accounts, says Christine Ballard, a certified public accountant in
the international tax division of Moss Adams LLP. It also extends
to some retirement-savings accounts, foreign life insurance with a
cash surrender value, foreign annuities, and foreign mutual funds
that are held directly (rather than through a brokerage
Other factors to consider:
Residency. While many countries are eager to welcome expats,
you'll need to comply with residency requirements. Some countries
require you to earn a specific amount of income every month to
qualify for residency; in others, owning property is sufficient.
For example, under Panama's pensionado program, seniors qualify for
residency as long as they receive regular pension income (Social
Security counts) of at least $1,000 a month.
Barriers to ownership. Mexico's low costs and proximity to the
U.S. make it a popular destination for retirees. However, the
Mexican constitution bars foreigners from directly owning property
within 62 miles of any border and within 31 miles of any coastline.
If you want to buy property in these areas, you must do it through
a trust that gives a bank title to the property.
Ken Bell, 62, has owned a condo in Baja's Rosarito Beach for
more than ten years through a bank trust and doesn't view it as a
problem. "I can rent it, I can sell it, I can do anything I want
with it," he says. "It's equal, in my view, to a family trust I had
in the U.S." Bell, a former senior staffer for the California state
legislature, says that Mexico's low cost of living enabled him to
retire in his fifties--something he would not have been able to do
Crime. Dedicated expats say reports of crime outside the U.S.
are often exaggerated. For example, International Living's
Prescher, who previously lived in Merida, the largest city in the
Yucatán peninsula, says drug violence in Mexico is limited to
isolated border areas. Still, American retirees may be targets for
crime, particularly in countries with a high poverty rate. For an
unvarnished view of the risks, check out the
Department's Retirement Abroad advisory
. The page also provides information about road conditions, natural
disasters and civil unrest.
Conveniences. Many retirees who move abroad embrace the slower
pace in their adopted country. In exchange for a more laid-back
lifestyle, though, you will probably have to give up some amenities
that U.S. residents take for granted. Internet is available in most
places, but it may be slower than it is in the U.S. Getting a phone
installed could take months.
In the U.S., "you can get anything you want, anytime, anywhere,
with the push of a button," Prescher says. "That's not true in the
rest of the world. There isn't a 7-Eleven or Walgreens on every