The Pros and Cons You Shouldn’t Ignore

After decades of working and saving diligently, retiring on a beach in the Amalfi Coast or the French Riviera may sound like a dream—sunny weather, more affordable medical expenses, and new cultural experiences may be appealing if you’re approaching retirement. 

A 2024 Monmouth survey found that 17% of Americans aged 55 and older wanted to move out of the country, up from just 4% in 1974. While retiring abroad can come with a lot of upsides, it’s important to do your homework on the topic before making the leap. 

“This is potentially a very complicated decision [for retirees],” said Peter Palion, a certified financial planner (CFP), who’s had clients who have retired abroad. “You don’t want to move everything and then discover that you forgot to consider taxes, insurance, or anything else.”

Planning for Retirement Abroad

Living in another country can involve becoming accustomed to a new culture, language, and cuisine. It also typically means navigating new immigration rules, health insurance, and tax laws. Therefore, it’s important to choose where you live very carefully.

Some countries offer retirement visas, which are travel documents that allow retirees to live in foreign countries for a specific period of time. Even if a country does not offer retirement visas, you may still be able to live there, but there may be certain requirements you must meet. 

“To my knowledge, there’s no country in the world where you can simply walk in there and stay for as long as you wish,” said Palion. “You have to apply [for a visa] and demonstrate a certain amount of financial resources.”

For example, to retire in Mexico, you would need to apply for a permanent resident visa and then potentially provide documentation showing that your monthly income is above a certain threshold.

You’ll want to look closely at a country’s requirements to make sure you (or a spouse) is eligible to move there for an extended period of time. After figuring out whether it’s possible to actually retire in another country, you’ll want to carefully weigh all the pros and cons of living abroad.

Pros of Retiring Abroad 

It May Be More Affordable Than Living in the U.S.

If you’ve worked in the U.S., that money may stretch a lot further if you retire in another country. This is, in part, because average annual wages in the U.S. exceed average annual wages in countries like Portugal, Italy, and Spain, so the cost of living in these countries is often more affordable for Americans.

Additionally, the exchange rate can play an important role in affordability. When the dollar is strong, retirees may be able to get more bang for their buck.

Save on Healthcare Costs

The U.S. has some of the highest per-person healthcare costs in the world—over $13,000 per person in 2023. Compare that to countries like France, where the average is just over $7,000.

Plus, depending on which country you choose to settle down in, you could receive better-quality healthcare there than you would in the U.S. According to the Peterson-KFF Health System tracker, a tracker developed in collaboration between two non-profit organizations, peer countries beat the U.S. on a variety of indicators of healthcare quality.

“[Health insurance] is on a country-by-country basis. In certain places, as soon as you become some level of resident or citizen, they’ll cover you, and other places will not,” said Scooter Thomas, a CFP and financial advisor at Savant Wealth. “Some places will cover you if you pay into the system.”

You’ll want to check the eligibility requirements for any national health insurance programs beforehand—otherwise, you may have to purchase a private health insurance plan that covers care you receive while abroad.

Most retirees won’t have the advantage of relying on Medicare if they retire abroad, as Medicare doesn’t typically cover healthcare services in other countries.

Offers New Possible Adventures

Although retiring in another country can come with a new host of logistical challenges, it may be worth it for some retirees. Whether you’ve always wanted to hike the French Alps or ride in a gondola in Venice, living abroad can allow you to explore and have new experiences. 

“[Living abroad] can be a great adventure for retirement—to see new places, to taste new cuisines and experience new things…It can be quite exciting,” said Palion. 

Cons of Retiring Abroad 

Taxes Can Be More Complicated

If you retain your U.S. citizenship when you move abroad, you may still be on the hook for paying U.S. taxes. However, there are some countries that have international income tax treaties with the U.S., which can help reduce double taxation. 

These treaties allow U.S. citizens who are residents of certain foreign countries to pay a reduced tax rate. Some treaties also include exemptions from income taxes for certain types of income.

“What a lot of people don’t think about is that you have to pay taxes in America, and you still have to pay taxes there. Depending on what the tax treaty looks like, there’s a pretty big chance that you’re paying a higher percentage [abroad] by a long shot than you would pay just in the United States,” said Thomas.

It’s important to get the help of an expert, like an attorney, a CFP, or a certified public accountant (CPA), who has specialized knowledge of the specific countries you want to retire in. 

“I always recommend that clients speak with CPAs and attorneys who are knowledgeable about this topic… This obviously goes above and beyond the expertise of your typical CPA or tax attorney,” said Palion.

You May Be Far Away From Friends and Family

While living in a foreign country can be exciting, it can also be isolating and lonely for some retirees, especially if you’re far away from many of your family members and friends. 

A recent study, which compared a group of Dutch retirees who lived abroad and a group who stayed in their home country, found that retirement migrants reported being “socially lonelier” than non-migrants. In the study, “social loneliness” referred to feeling a lack of community.

Therefore, people may benefit from thinking about how they’ll establish a new community or create friendships when they retire abroad. Retirees may have to be proactive about joining local or community groups and establishing relationships with those around them, such as neighbors. 

The Bottom Line

Retiring abroad can deliver on its promise of lower living costs, more affordable healthcare, and exciting experiences—but it’s not a decision to make lightly. You’ll need to navigate visa requirements, healthcare eligibility, and international tax rules, all while thinking through the personal impact of living far from home.

With the right preparation and expert advice, retiring overseas can be deeply rewarding. Just make sure to do your homework first.