Climate and cost of living are the two main drivers in retirement relocation, whether within the United States or extended stays over the border. With record levels of baby boomer business owners retiring with what is left of their retirement portfolios, the attraction of foreign shores adds a new and exciting dimension after the business years. There are several other important items retirees need to consider when planning an expat retirement.
- Income Tax Matters. One publication to become familiar with is the IRS Tax Guide for living abroad (Publication 54). Living overseas adds the new dimension of paying taxes to your adopted home's government and to the IRS. Many countries have tax agreements with the US to minimize double taxation issues. Having an accountant who understands the nuances of international taxation will improve your ability to quickly handle tax matters to your best interest. Since retirees are no longer in business, they can not get a business cash advance to help them meet their tax obligations.
- Currency Differences. In order to determine how the fluctuations in the dollar will affect your planned cost of living benefits, check to see if the native currency is tied to the dollar, the euro or possibly its own mix of currencies and commodities. Countries that tie their currency to the dollar tend to continue to offer their benefits. Also if using your credit card to make foreign purchases, check to see which ones charge the lowest conversion fees. Some credit unions' debit cards carry no fees and translate the currency amount directly. Just like planning for inflation in if retiring stateside, adding a currency fluctuation buffer in your budget is a sound planning step.
- Medical Care and Insurance. Medicare only takes care of retired business owners residing in the US. While checking out the level of care in overseas healthcare facilities, investigate the additional health insurance policies available for your adopted country. Examine your homeowners insurance policy as well. Many policies only remain in effect if the home is owner-occupied. If you are planning to rent your home, even for a part of the year, you may need to change your insurance coverage.
- Access to Retirement Funds. Find out how you are going to access your retirement funds. Different retirement plans may have longer or shorter steps for receiving your retirement funds. Also, if you plan to have the Social Security Administration (SSA) send your social security payments to your expat location, make sure the country is on the SSA approved list. Generally, as long as it is a popular US retiree hot spot and not a former Soviet Union country or Cuba, North Korea, Vietnam or Cambodia, you should not have a problem.