Who among us hasn’t dreamed of escaping the corporate jungle, and whisking away to a warm, sunny paradise where the cost of living is dramatically lower and the piña coladas are plentiful? What’s more, thanks to the web, keeping in touch with family and friends — or just as importantly, binging on Netflix and following your favorite sports teams — is easy to do from pretty much anywhere. Good times.
Well, maybe. While many folks who retire abroad are happily living the dream, others are not having the time of their lives — and some have decided that it’s wise or necessary to head back home. Unfortunately, it’s often because they neglected to take the following into consideration before they packed up, sold their house, and flew out to enjoy their golden years:
- You’ll need access to quality healthcare.
It doesn’t matter if you’re as “healthy as a horse” and doctors come to you for fitness advice. As we age, our bodies start to break down. It typically happens gradually, and so isn’t something that people notice immediately — like one of those giant LED billboards from the Landmark Sign Company. When (not if) this happens, you’ll need access to quality health care — and of course, adequate insurance so that you aren’t stuck with a massive bill that blows your retirement nest egg.
- You’ll still have to file a US tax return.
US citizens or resident aliens living outside of the U.S. (or traveling outside of the U.S. for extended periods of time) are generally required to file and pay annual income tax returns, along with applicable estate tax returns and gift tax returns in the same manner as people residing in the U.S. This can get a bit complicated because the U.S. has tax treaties with several countries. Make sure that you get expert advice from a qualified tax specialist.
- Make sure you know the residency rules.
Some countries make it relatively easy to obtain permanent residency, while others make it difficult and exceedingly bureaucratic (if you thought that paperwork was burdensome in the U.S., you haven’t seen anything yet!). Ensure that you do your research and understand all of the residency rules, which typically involve providing proof of savings and/or annual income (e.g. investments, pension, etc.).
- Security and safety might be an issue.
Without being an alarmist, the fact remains that in some countries around the world — or certain cities and areas within countries — foreign retirees are a target for thieves and even kidnappers. Getting caught in fake accidents and sketchy business deals are also risks. Again, you need to do your homework here.
- A change of culture can be unsettling.
Many people who retire abroad — or even travel abroad — anticipate big changes such as language, food and weather, but they don’t expect countless smaller changes that are embedded in the new culture. For example, in Thailand it is very frowned upon to raise one’s voice at a restaurant server even if they are doing a terrible job. Or in Panama, it is not considered proper manners to directly say no to something, which can cause confusion and frustration for some foreigners. The only way to deal with this is to have an open mind, and be willing to roll with the flow. Having a good sense of humor also comes in very handy!
Rachel Slifka is a freelance writer and human resources professional. She is passionate about helping fellow millennials find success with their finances and careers. Read more by checking out her website at RachelSlifka.com.