For many seniors with a sense of adventure and an updated passport, the ideal retirement destination lies outside the U.S. Attracted by a lower cost of living, high-quality health care and an exotic locale, retirees are putting down roots across the border and around the globe.
While Central and South America’s low costs and proximity to the United States have long attracted expats, intrepid retirees also are pursuing the good life in places as far-flung as Malaysia, Thailand and the Philippines. Even Western Europe, once considered out of reach for most retirees, has become more affordable in the wake of the economic downturn.
Even if you’re convinced the expat lifestyle is for you, consult the experts before you venture outside the country. You can find a wealth of online resources at internationalliving.com, topretirements.com and expatinfodesk.com.
Once you’ve settled on a country, try it out. Rent a home or apartment before you buy. In many countries popular with expats, rental properties are plentiful and cheap. In Costa Rica, for example, you can rent a three-bedroom home for $500 a month. Renting also will permit you to get a realistic estimate of your personal cost of living before you make a long-term financial commitment.
You’ll also pay a premium for gas in most countries — sometimes, a big one. That’s not a problem for Daniel Prescher, 59, special projects editor for International Living (internationalliving.com), who lives in Cotacachi, Ecuador, with his wife, Suzan Haskins, 57. “We had a car for years and thought we couldn’t get by without one,” Prescher says. “Public transportation is so cheap, we sold it.”
Another option is to become a part-time expat. That alternative is popular with retirees who aren’t comfortable living year-round in a foreign country but want to take advantage of better weather and a lower cost of living for at least part of the year.
Keeping a bank account in the U.S. is a good idea, particularly if you return frequently to the States. However, expats who no longer have a U.S. address could run into bureaucratic difficulties. Some banks have closed expat accounts, citing Patriot Act provisions.
If you use a foreign bank account to pay bills and provide walking-around money, you’ll probably have to file an annual Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury. This form is mandatory if the total value of your foreign financial accounts exceeds $10,000 on any day during the calendar year. Failure to comply with this reporting requirement could trigger stiff penalties.Sandra Block is a senior associate editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to email@example.com. And for more on this and similar money topics, visit Kiplinger.com.