For many U.S. citizens, retiring abroad offers the perfect mix of adventure and practicality. The idea of moving to a picturesque overseas village, enjoying a more relaxed pace of life, or simply experiencing a new culture is incredibly appealing. Beyond these lifestyle perks, the financial benefits are often the biggest draw. Many other countries boast free healthcare systems, lower costs of living, and even tax incentives for retirees.
It’s no wonder that a growing number of older adults are retiring abroad. According to the Social Security Administration (SSA), over 760,000 beneficiaries abroad receive $7.5 billion in Social Security benefits each year. While not all of these are retirees—the SSA also provides benefits to disabled workers and surviving dependents—it still conveys a sense of the trend.
Still, there’s more to retiring abroad than a lower cost of living and scenic landscapes. The transition also comes with challenges, from cultural differences to bureaucratic red tape.
Retiring abroad: Is it right for you?
Deciding to retire abroad is a big step. From practical matters to emotional considerations, there’s a lot to weigh. Let’s take a closer look at both the potential perks and pitfalls so you can decide if this adventurous new chapter is truly the best fit for your retirement goals.
Perks of retiring overseas
- Lower cost of living: Many countries offer a much lower cost of living than the U.S., which can stretch your retirement savings further. That means you might live more comfortably or enjoy a better lifestyle for less.
- Better healthcare: Some countries have excellent healthcare systems, and many offer care for much less than what you’d pay in the U.S.—sometimes even for free.
- New adventures and culture: Retiring abroad opens the door to new experiences—whether it’s exploring a new city, trying local foods, or learning about a new culture.
- Relaxed pace of life: If you're tired of the hustle and bustle, many destinations offer a slower pace that lets you truly unwind.
Potential drawbacks to consider
- Bureaucratic hurdles: Moving to a new country often means dealing with paperwork, visas, and other red tape. It can be stressful and time-consuming.
- Cultural adjustment: While it’s exciting to explore new cultures, adjusting to a different way of life can be challenging. Language barriers and new social norms might take time to get used to.
- Distance from family and friends: Being far away from your loved ones can feel isolating, especially if you’re used to seeing them regularly.
- Financial complexity: Currency differences, international taxes, and managing your finances from abroad can complicate things. It’s important to have a solid plan in place.
What happens to your finances and benefits when you retire abroad?
There's one major bridge you’ll need to cross before packing your belongings to retire abroad: understanding how your finances and benefits will be impacted.
Social Security benefits
“Social Security benefits don’t stop just because you’ve moved,” says Andrew Gosselin, a certified public accountant (CPA) and senior contributor at Coupon Mister. However, some countries may impose restrictions, so research the rules in your chosen destination.
Typically, direct deposit is the easiest way to receive payments. “The Social Security Administration makes it pretty straightforward,” Gosselin says. “You’ll get your payments directly deposited into a bank account, whether it’s in the U.S. or abroad, as long as the country allows it.
Taxes
Retiring abroad doesn’t exempt you from U.S. taxes. The U.S. taxes its citizens on worldwide income, meaning you’ll still need to file a return, even if you’re living overseas. You can use provisions like the Foreign earned income exclusion and Foreign Tax Credit to reduce your tax burden.
Read this next: U.S. Taxes Living Abroad: What Expats Need to Know
Exploring your options: 5 of the best places to retire abroad from the U.S.
Finding good places to retire abroad really depends on what you prioritize—be it proximity to home, a familiar language, or a specific lifestyle. Take a look at some of the options we’ve put together.
1. Portugal
A rising star among American retirees, Portugal is praised for its sunny weather, friendly locals, and affordable living. It also offers a retirement-friendly D7 visa for non-EU citizens, which grants residency if you can prove sufficient income. The healthcare system is free of cost and considered one of the best in the world, and many retirees gravitate toward Lisbon, Porto, or the Algarve.
2. Spain
Spain combines a relaxed Mediterranean lifestyle with a relatively low cost of living. Retirees often flock to regions like Valencia or Madrid for the weather, food, and vibrant culture. A non-lucrative visa is available for those who can meet income requirements, though you’ll need to buy private health insurance.
3. Costa Rica
Costa Rica’s laid-back lifestyle and natural beauty make it a top choice for retirees. The Pensionado visa is particularly appealing—it requires proof of a monthly pension of at least $1,000. The country also has a well-regarded healthcare system, with both public and private options.
4. New Zealand
For adventurous retirees, New Zealand offers stunning landscapes, a safe environment, and an English-speaking culture. While the cost of living is higher than some other destinations, the country’s lifestyle makes up for it. Retirees can apply for the Temporary Retirement Visitor Visa, though it requires significant financial resources.
5. Mexico
Just a short flight from the U.S., Mexico is a retiree favorite thanks to its warm climate, low cost of living, and proximity to family in the states. Popular expat hubs like San Miguel de Allende and Puerto Vallarta offer a mix of comfort and affordability. Mexico’s Temporary Resident Visa is accessible for retirees with steady income or savings.
Preparing for your retirement abroad
Now that you've explored some of the best places to consider for retirement abroad, it's time to think about the next steps in making it all a reality. Retiring overseas comes with its share of planning—whether it’s understanding visas, adjusting to a new culture, or figuring out your finances. A little preparation goes a long way, so take the time to research, get expert advice, and consider making a visit to really get a feel for the place.