According to the annual Global Retirement Index released by International Living, the lower cost of housing and healthcare are among the top reasons Americans retire abroad. However, taking a leap into the life of an ex-pat requires extensive planning and research.
Check Residency Laws
Though immigration and residency laws vary from country to country, most overseas destinations require a Residency Visa and have the same basic requirements:
- Proof that you have a valid passport and healthcare insurance.
- Proof that your income meets a minimum amount set by each country.
- Proof that you have a place to live when you relocate.
Review the Department of State’s country information for more details on obtaining a visa to live in a certain country.
“Though many foreign countries have national healthcare systems, as an ex-pat, you’ll likely be subject to eligibility requirements.”
Research Healthcare Options
Since each health insurance plan under FEHB is different, it’s important to check Section 7 of your plan’s brochure to find out what’s covered if you move overseas. However, if you’re currently enrolled in one of FEHB’s HMO plans, you won’t be covered if you live in a foreign country. If you have traditional Medicare, it will not cover healthcare costs overseas but some Medicare Advantage plans may offer options for ex-pats.
Though many foreign countries have national healthcare systems, as an ex-pat, you’ll likely be subject to eligibility requirements. Private healthcare coverage is also available in many countries at significantly more affordable premiums than similar plans in the states.
Social Security & FERS Pension
According to the Social Security Administration, over half a million people live outside the U.S. and receive some kind of Social Security benefit, including retired and disabled workers. Your monthly Social Security benefit and FERS/CSRS (annuity) pension can be conveniently direct-deposited into overseas bank accounts. However, there may be additional fees depending on the type of account.
Financial Issues To Consider
Uncle Sam taxes your income no matter where in the world you may live. In fact, depending on where you retire abroad, you may end up paying income taxes in both countries. For more information, review the IRS’s tax information for residents and U.S. citizens living abroad.
Generally, retirement accounts like your Thrift Savings Plan (TSP) and 401(k)s can be managed and maintained from anywhere. However, different countries may have certain regulations on withdrawals. Also research whether or not your trust, will and powers of attorney are legally enforceable in the country you’ve chosen.
You can ask an FRC® trained advisor to help you connect with tax and legal professionals who have experience helping ex-pats who retire overseas.
