Overseas Adventures: Why Retiring Outside the U.S. Is On The Rise | TreeceFi | Treece Financial Group Inc.

Robert Wroblewski |
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As someone who works with businesses and individuals on their financial planning options, I often hear the question: "Can I afford to retire?"

Then there are the adventurers who ask “What about retiring abroad?”

There has been a dramatic increase in clients asking this question due to the recent U.S. Presidential election results. Some people don't know where to start or understand what they need to make their wishes a reality.

It’s not just about sunsets and sangria. From taxes to Social Security, here’s a primer on what you need to consider if you’re considering a move abroad

Dollars and Dreams: Crunching the Numbers

According to the Social Security Administration, the number of retired workers receiving Social Security benefits overseas increased from 320,000 in 2009 to 450,000 in 2022.

The ranks of all adults who would like to make a move are growing, too. 34% of Americans who responded to a recent Monmouth University poll expressed interest in settling outside the U.S. That is roughly triple the percentage from 50 years ago.

Many Americans are exploring options like moving to Portugal, drawn by its affordable cost of living, rich culture, and relatively straightforward residency process through the D7 Temporary Resident Permit.

Others consider living in Panama City, Panama, attracted by the Pensionado Visa that offers indefinite residency, discounts, and a low-tax environment.

Some aspire to reside permanently in the Philippines, enjoying its welcoming retiree community and renewable temporary resident visas through the Special Resident Retiree’s Visa.

Don’t let tax laws and red tape ruin your adventure. Before making the leap, it's crucial to understand these key financial factors:

  • Travel Health Insurance: Research international coverage options to meet medical needs abroad.
  • Social Security Benefits: Yes, you can live abroad and collect Social Security Disability benefits, but understand the implications.
  • Foreign Income Tax: Generally, the first $105,900 (2023) of foreign-earned income is tax-free in the USA, but consult the IRS or a tax professional for specifics.
  • Remote Work: Consider the logistics and tax implications of working remotely from another country.
  • Retirement Savings: Assess whether you have enough to retire comfortably at 40 or any age, factoring in expenses, savings, and income sources.

Visa VIP: Easy Entry, Stress-Free Retirement

Want to live abroad without the hassle? These countries roll out the red carpet for retirees with user-friendly visa options and perks that make relocating a breeze.

  • Panama: Pensionado Visa requires a $1,000 monthly income and offers discounts, low taxes, and indefinite residency.
  • Portugal: D7 Temporary Resident Permit demands €1,200 (approximately $1,290 as of this writing) monthly passive income, offering temporary residency and a path to citizenship.
  • Philippines: Special Resident Retiree’s Visa (SRRV) requires a $20,000 bank deposit or $800 monthly pension, allowing indefinite stay.

Money Moves: Planning for the Expat Life

Consult financial advocates specializing in expat planning to navigate complex tax laws, optimize retirement income, and identify the best overseas residency options.

Your retirement plan shouldn’t end at the airport. To ensure a smooth transition, consider:

  • Maintaining a U.S. address for banking, tax, and other purposes.
  • Understanding tax obligations and filing requirements like Foreign Bank Account Reports (FBARs).
  • Enrolling in Medicare Part A and considering Part B.

Retiring abroad can offer adventure, lower costs, and personal fulfillment. With careful planning, expat life can be rewarding and sustainable. Don't let uncertainty hold you back. Explore options, seek expert guidance, and discover the possibilities awaiting you in retirement.

Want advice on planning and paying for a foreign retirement relocation? Team Treece is here to help. Get in touch!