How in the world does one go about retiring overseas? The idea is less outside-the-box than it used to be, but the thought of taking your retirement global can still seem intimidating. How do you get started?
Take out a piece of paper and a pen and write down everything that's important to you in the context of an overseas retirement haven. Consider all aspects of your life, big and small. Here are some examples of what your list of retire overseas personal priorities could include:
1. Cost of living. If you’ll be retiring on a fixed monthly income, the cost of living wherever you are considering living in retirement is a critical priority.
2. Weather. After the cost of living, weather is perhaps the second most common motivating force behind a move overseas in retirement. Identify your ideal climate, whatever that is, and retire to a place where you can enjoy that weather year-round.
3. Infrastructure. This may or may not be important to you, depending on how you plan to spend your time in retirement. Your infrastructure needs might be significant if you plan to continue day-trading your stock portfolio or launch a small Internet-based business to provide additional cash flow to support your retirement lifestyle. Your personal infrastructure requirements could also be more modest, limited to being able to keep in touch with family and friends back home. It’s possible to retire overseas to a place with first world-standard infrastructure. However, this will not be available everywhere you might consider relocating.
4. Health care. Consider whether you would be comfortable seeking care from a doctor who doesn't speak English. If you have an ongoing health concern you might need to stay within, say, a half-hour's drive of an international-standard hospital.
5. International-standard schools. For most retirees, this is not a concern. However, some early retirees are still raising school-aged children, or perhaps grandchildren. This is not a reason to abandon your dream of retiring sooner rather than later, and is certainly not a reason to give up on the idea of retiring overseas. If you have school-aged children you may want to limit your search for an overseas retirement haven to a center of population, ideally a capital city. Top choices could include Panama City, Panama; San Jose, Costa Rica; or Montevideo, Uruguay.
6. Recreational activities. Check out whether potential retirement spots provide all the amenities you need to enjoy your hobbies, perhaps including surfing, boating, fishing, diving, international-standard golf courses, restaurants, theaters, first-run movies, shopping malls, bridge clubs and tennis teams.
7. A labor pool. If you would like to supplement your retirement budget with cash flow from a small business, you may need access to an educated and English-speaking labor pool.
8. International banks and ATMs. These kinds of practical conveniences are available on every corner in many places around the world, but not everywhere.
9. A taste of home. Aunt Jemima, Betty Crocker and other name brands you know on the grocery store shelves are not available everywhere. It’s possible to retire overseas to a place where you could shop in big grocery stores that would be hard to distinguish from wherever you shopped back home. In other places, your weekly shop would be at a local market with butchered cows and pigs hanging, unrefrigerated, in the open air.
10. The view. If you could see anything from your bedroom window every morning, what would you like it to be? Think about whether you want to retire near the city, beach or mountains.
11. Fellow English-speakers. Consider whether your foreign language skills are good enough to be among people who don’t speak English.
12. Accessibility. If you plan to travel regularly in retirement, either back home to visit family or far and wide to take full advantage of the freedom this stage of life can afford, consider the distance to the nearest international airport before deciding where to base yourself.
13. Restrictions on foreign ownership of property. This could be a concern for people who intend to purchase a home of their own rather than renting.
14. Taxes. You don’t want to make your choice for where to retire overseas based on taxes, but you don’t want to ignore their effect on your budget and cost of living either. Take a look at the sales tax, property tax, transfer tax, income tax, rental income tax, capital gains tax and import tax for your personal and household goods.
15. Public transportation. Consider how you will get around and whether you will need to invest in owning a car.
16. The exchange rate. The rate of exchange between the local currency and the one in which your retirement income is denominated could have a big impact on your retirement finances.
17. Rate of local inflation. You can’t predict what it will be in the future, but it’s a good idea to take steps to protect yourself from inflation.
18. Requirements for obtaining foreign residency. If you plan to retire to a particular destination full time, find out what you need to do to establish residency as a retiree. Some countries even offer special perks to attract retirees from overseas.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 28 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring and investing overseas in her free e-letter. Her newest book, How To Buy Real Estate Overseas, published by Wiley & Sons, is the culmination of decades of personal experience living and investing around the world.