Cynthia and Ian are retired Americans who live in Bandol, a small Mediterranean town in southern France. A typical day includes breakfast in the sunshine, a hike or game of tennis, socializing with friends and enjoying a bottle of wine with dinner. “We belong to [the club] Bandol Loisirs et Culture,” Cynthia says, “which offers many cultural activities, including bridge, hiking, cooking, computer help and much more.”
For Cynthia, Ian and thousands of other Americans, retiring overseas can have big advantages — adventure, a chance to make interesting friends and often a lower cost of living and a smaller US tax bite. (If you live overseas for 330 or more days in any 12-month period, you may not have to pay taxes on the first $91,500 of your income in 2010.)
Every year, thousands of Americans try retiring overseas — only to return home when it doesn’t work out. But if opening a new chapter in your life sounds appealing, you can make it work if you do it right…
Jane, a former attorney, moved to Belize about six years ago. She regrets not looking more deeply into the beautiful, English-speaking Central American country before moving there. “On the surface,” she says, “it looked like home.” But she soon missed the changing seasons, old friends and certain things that Americans take for granted, such as a readily available variety of fresh fruits and vegetables and paved roads.
The cardinal rule: No matter how inviting a country looks on your first or second trip, make several more visits — preferably at different times of the year — before putting it on your short list for retirement.
When you’re in the country, talk with members of the American community. (Most US consulates provide the names of expatriate organizations.) When you speak with members, ask what problems they’ve encountered… and how they solved them or could have avoided them.
Example: Dealing with bureaucracy is often difficult in foreign countries, and many expats will tell you that they should have hired an attorney to handle red tape, such as registering a deed. To find an attorney experienced in helping Americans, ask for recommendations from members of the expat community.
Also ask about expenses that might not be obvious at first. For example, in Costa Rica — a popular retirement destination — eating out is cheaper than in the US. But what looks like an incredible bargain on the menu isn’t so great when you get the bill — with 23% in taxes and tip added.
Also look into government-sponsored retiree programs that many countries — particularly in Latin America — have adopted to attract residents from wealthier countries. In many cases, to be eligible, you aren’t required to be retired but only to prove that you have a minimum monthly income, usually $500 to $2,000, depending on the country.
Retiree programs have big benefits. In Panama, for instance, members get 20% off medical bills, 25% off domestic air travel and up to 50% off movies and other entertainment. For more information, contact the country’s embassy in the US.
Americans retiring abroad often buy the first attractive and affordable real estate that they see — a house in a charming village or an ocean-view apartment. All too often, however, they discover a major flaw in their decision. The house, for instance, may have structural problems, or the apartment could be too many miles from public transportation.
Best strategy: Rent before you purchase. Live for six months to a year in an area you like so you can sample the lifestyle and talk with the local residents about transportation and other important features. You’ll also have an opportunity to ask Americans in the area to recommend a trustworthy real estate agent or construction company if you choose to build your own residence.
Caren is an American in San Miguel de Allende, Mexico, who wishes that she had contracted with a more honest builder. The first one she hired cheated her out of $30,000.
Maybe you’ll even choose to keep renting instead of buying property. There’s nothing wrong with that, especially in countries where political stability is uncertain and renting is inexpensive.
Example: Nicaragua, where you can rent a nice two-bedroom apartment in a good area for as little as $400 a month.
Douglas has lived in Spain for 33 years. “I speak Spanish conversationally. But it isn’t absolutely necessary… most of your friends will speak English anyway.”
Fluency in a country’s language is a shortcut to enjoying its culture, making friends and dealing with a wide range of people — from plumbers to tax collectors. Still, some retirees get along fine without speaking the language very well. They socialize with other English speakers, phone friends back home and watch English-language television, which is now available throughout much of the world.
If you’re learning a language for the first time or need a brush-up course, it often makes sense to take lessons while you’re renting and considering buying.
Although Medicare doesn’t pay for health care outside the US and its territories — except for certain limited services in Canada and Mexico — medical facilities are excellent and inexpensive in many other countries, especially those in Europe. In Latin America, most large cities have good-to-excellent health-care facilities with prices that are one-tenth to one-third of what you would pay in the US.
Living abroad doesn’t disqualify you from Medicare benefits, so many overseas retirees who aren’t satisfied with the local health care go back to the US for periodic checkups as well as for any emergencies that may occur. Some also buy international medical insurance, though it is expensive — about $2,000 to $3,500 a month for a 68-year-old couple living in most Latin American or European countries.
Far from home with lots of idle time, it’s easy to fall into a lifestyle where you drink and eat too much and become inactive.
Answer: Retire in an area where you can easily keep up with pursuits you enjoy. If you owned a business in the US, consider starting a company in the retirement country. Thanks to the Internet, many Americans set up Web-based businesses, such as consulting. Other expats operate small hotels.
Before opening a business overseas, talk with successful Americans in the country. Find out how they solved start-up problems, and ask them to recommend an attorney with a track record of helping Americans set up companies.
Volunteer work is another way to stay active while also helping locals and broadening your understanding of the country. Major international volunteer organizations include Cross-Cultural Solutions (800-380-4777, www.crossculturalsolutions.org), Habitat for Humanity (800-422-4828, www.habitat.org/ivp) and the International Executive Service Corps (202-589-2600, www.iesc.org).
Source: Barry Golson, coauthor with Thia Golson of Retirement Without Borders and author of Gringos in Paradise: An American Couple Builds Their Retirement Dream House in a Seaside Village in Mexico (both Scribner). He is based in New York City and is the editor of ForbesTraveler.com.
