Appeal of Overseas Retirement Grows for Many

Social Security recorded a third more overseas recipients last decade and recession may spark trend.

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What do Japanese-American retirees know that we don't? Over the past decade, more and more Social Security payments are being forwarded to people in Japan. And while their nationalities are not disclosed, it's likely most are of Japanese ancestry. At the end of 2008, the most recent report on foreign recipients of Social Security payments recorded nearly 510,000 monthly payments were being made to persons outside the United States, up nearly a third from about 385,000 overseas recipients nine years earlier.

[See U.S. News's list of the Best Mutual Funds for 2010, and use our Mutual Fund Score to find the best investments for you.] That's not a huge surge over that time frame, although it's clearly larger than overall population gains. And to the extent it's being fueled by perceived problems in the United States, it will be interesting to track overseas relocations in the next few years. Americans have been hammered by the recession, and we are an unhappy lot these days. Consumer confidence is still really low. And our assessment of the state of the country continues to be very gloomy. Maybe the grass really is greener in some other countries.

That attitude was supported by a recent survey of online visitors to InternationalLiving.com. Admittedly, the site trumpets the virtues of living outside the U.S. So, many of the 500,000 site users it claims are already fans of an expatriate lifestyle. Still, more than 95 percent of 7,500 persons responded "Yes" when the site recently asked readers if they were more open to moving outside the United States than they were 12 months earlier.

Going back more than 30 years, regular Gallup Polls have asked people whether they are satisfied or dissatisfied with the way things are going in the United States. As recently as early 2002, more than 60 percent of the those asked this question said they were satisfied, and that reading actually hit an all-time peak of 70 percent in December 2001. That was the merriest Christmas we've had in many years. More typical satisfaction scores are in the 40s or 50s. The lowest scores in the first 30 years of the poll occurred in 1979 and 1992, when 12 percent and 14 percent satisfaction responses were recorded.

Beginning in late 2006 and early 2007, however, the country has sunk into a deep, deep funk. In early 2007, 35 percent of those surveyed by Gallup said they were satisfied with conditions in the U.S. The satisfaction numbers began slipping throughout that year and the next, hitting their all-time low of 7 percent in October of 2008. They recovered to the mid-30s in the middle of 2009 but have retreated since to the low 20s. If there is a recovery, it's not in people's sense that the U.S. is on any kind of a positive trajectory.

[See Best Affordable Places to Retire.] Most people who do retire outside the U.S. don't go far. Social Security reports that the two largest countries where it sends payments are Canada (nearly 105,000 recipients in late 2008, up 19 percent from late 1999) and Mexico (about 48,800 recipients, down 3 percent over the period).

Mexico's decline as a place for Social Security recipients was exceeded only by Italy, which registered a 13 percent drop. On the other end of the scale was Japan, which recorded an astounding seven-fold increase in Social Security recipients -- to 37,600 from only 5,000 -- and is now the third most common destination for foreign-bound payments.

Here are other countries rounding out the top 10 (with their current numbers and percent change over the past nine years):

Germany (37,100, up 54 percent).
Italy (33,000, down 13 percent).
United Kingdom (31,600, up 28 percent).
Greece (23,100, up 12 percent).
Philippines (21,800, up 21 percent).
Portugal (12,300, up 8 percent).
France (12,300, up 41 percent). [See How to Save Money by Retiring Abroad.]