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When you think about retiring, you imagine really getting away from it all. Maybe you want to move to a breezy cottage near the ocean, or someplace where it is warm all the time and you can pick coconuts in your back yard. Maybe you want to retire to a lovely villa within striking distance of the great museums of Europe. Probably you are looking for a place where your money will go further.
If you are considering retiring abroad, you are not alone. Hundreds of thousands of Americans already have made the move, and more are likely to follow, as Baby Boomers begin to retire in large numbers. Many Boomers are seasoned travelers who are not intimidated by living in a foreign country, and who may have found their dream retirement destination in their travels.
Probably the single biggest reason people choose to retire abroad is because it can be cheaper than retiring in the United States. Some experts estimate that there are more than 100,000 U.S. retirees living in Mexico, and many of them made the move because their retirement nest egg could support a much more comfortable lifestyle there than at home.
Not only are basic expenses like housing and food often lower abroad, but lifestyles in general may be less lavish. You may not feel pressured to get a big screen plasma TV, for example, when no one you know has one. One note of caution, though: Life may be cheaper, but be sure to include in your budget the cost of travel back to the United States.
Of course, the strength or weakness of the dollar can change your financial outlook considerably when you live abroad. When you are choosing a destination, make sure you could still afford to live there, even if the dollar weakens.
Another appeal of overseas retirement is the adventure factor. It is exotic and romantic to think about the two of you moving to a new country, with new experiences. It may seem like when you were first married, heading out together into the great unknown.
But the distance and the isolation can be one of the major drawbacks to retiring abroad. You will be farther away from your family and friends, from the people and things that are familiar to you. You may find a community of American expatriates abroad, of course, but it will be a different group than the people you are leaving behind. You probably will rely much more on each other if you retire abroad, so make sure your marriage can take so much togetherness.
You can return to visit, but every time you come back to the U.S., you will have all the added hassles of international travel. You also may be at the mercy of time zones and foreign communication services, and that may make you feel more disconnected from the people back home.
There are practical considerations as well. For example, what happens if you get sick? If you rely on Medicare for your insurance coverage, you might have to return to the United States for treatment. And if you seek health care in your new home, how do you find a doctor or hospital you can trust?
Language can be a problem, unless you move to an English-speaking country or are fluent in another language. Not being able to speak or read the language can make you feel more isolated and lonely, and it also can cause minor and major hassles in your day-to-day living.
There can be significant legal and tax issues to consider. Talk to your financial adviser, accountant or tax attorney. You may have to consult a professional who specializes in financial issues for Americans who live abroad. If you find that the tax treatment is unfavorable in one country, consider another country with more favorable tax laws. And don't forget your tax responsibilities in the United States. If you choose to keep your American citizenship, which most retiree expatriates do, you probably will still owe Uncle Sam on April 15.
If you are considering retiring abroad, start your research now. There are numerous books on the subject, and you can also do some research online. For example, www.escapeartist.com has tons of information on all aspects of living abroad, including first-person accounts and links to real estate in a wide variety of countries. There is a huge amount of information on this site, so you might want to make several visits. AARP also provides resources on living abroad.
Be sure to visit any countries you are considering. Stay for an extended period, if you can. Or visit in different seasons. Find a community of American expatriates – or an online community you can tap – and talk to them about what they like and dislike about their new home.
If you decide to make the move, go slowly. Most experts advise that you not sell your home and major possessions in the U.S. right away. Rent for a while, and give yourself a chance to decide if this really is what you want. If you are not happy, you can try another location or consider living abroad for part of the year and in the States for the other part.
And remember that, despite what Thomas Wolfe said, you can go home again.