Deciding to retire
Who hasn't fantasized about retiring
to a cottage in the Scottish Highlands, a hacienda in Mexico or
a thatched-covered hut in Fiji? Retiring abroad may sound heavenly,
but to pull it off requires down-to-earth planning.
Retiring abroad can help you maximize your nest egg,
if you choose a country with a low cost of living. Roseanne Knorr,
author of The
Grown Up's Guide to Retiring Abroad, also reports that U.S.
citizens abroad tend to spend less.
"You're not keeping up with the Joneses,"
says Knorr. "You're not worried about the latest car. If a
couple is living in a small town in France, they may only need one
car, not two."
Traveling becomes easier, too. Knorr divides her time
between Florida and France. When in France, she can hop in her car,
visit Switzerland or Italy and be back à la maison in time
But spending your golden years outside of the United
States also puts you at the mercy of local exchange rates. That's
great while the dollar is strong. But if it dives, so does your
And you're a long way from home, a reality that can
cause problems if something goes wrong. Health care, for example,
can be a big headache. Knorr's husband recently came down with a
serious medical problem and since he's on Medicare, he has to be
treated in the United States to receive coverage.
The complications are worth it, however, for those
with wanderlust or a spirit of adventure. "If you have a feeling
in your gut that you want to go and have an adventure, then you
know it's right for you," says Knorr.
Not comfortable just going with your gut feeling?
Here are six issues to contemplate before you renew your passport:
Look at your budget:
Whatever the currency, money considerations don't change. Whether
you're retiring in the United States or Uruguay, you and your spouse
need to know how much disposable income you'll have to help you
figure out where you can afford to live. You'll also need to include
money for trips to and from the United States and your retirement
Examine your priorities:
What type of climate are you after? What activities do you like,
and are they available in your list of possible countries to relocate
to? Do you care more about a low cost of living or health care?
What about safety? Are you prepared to be part of the next revolution
in your adopted land? It doesn't cost much to live in Indonesia,
but the political unrest there may remove it from your list.
Investigate tax ramifications:
Before you choose your retirement locale, see what taxes you may
have to pay in your new home. The United States has tax
treaties with more than 50 countries. Under these agreements,
U.S. citizens residing in foreign countries are taxed at a reduced
rate or are exempt
from U.S. income taxes on certain foreign earned income. Generally,
the treaties call for each country crediting the amount of tax paid
to the other country much the way some states allow residents to
deduct federal income tax paid.
Find out visa requirements:
Some countries welcome U.S. residents with open arms. Others, like
New Zealand or nearby Canada, won't let you take up full-time residency
so you can't live there year-round.
Get to know the country:
Research carefully each place you're considering. Books, magazines
and Web sites abound that can help. Many of them regularly publish
articles listing the best places for retirees. AARP's member journal,
Modern Maturity, last year chose its top
15 places for a home away from home. John Muir Publications
puts out The
World's Top Retirement Havens, while Globe Pequot Press
produces a "Choose
Retirement" series that highlights various domestic and
foreign retirement spots.
Expatriate and living-abroad sites offer everything
from bulletin boards where you can get the lowdown from other Americans
about what it's like to live in a foreign country to available property
listings. Some popular sites include The
Association of Americans Resident Overseas, Living
Exchange and Expat
Go there temporarily: Think you've found where
you want to spend your retirement? Take a vacation there first.
Try to visit the country in all seasons so you can get a feel for
whether you'll be happy living there full-time.
Jenny C. McCune is a contributing
editor based in Montana.
-- Posted: Sept. 3, 2002