Retiring Abroad FAQs
The term, expat, is short for expatriate. This term means someone who lives outside of the country in which they were born or in other words, someone who is living in a foreign land. You'll be able to find a myriad of expat groups in almost any country in the world.
There a couple of things to consider. In general, yes, you can retire in another country. In most cases, you will receive your social security and pension payments wherever you go. However, you may or may not be able to retire to the country you want because of residency requirements. Some countries are much more strict in who they allow to live long term. Other countries have retirement visas which make it easy for retirees to make their move. You need to do your research regarding the exact location you're looking to move.
A retirement visa is generally a visa that lets people live in a country for longer than if they were to travel there. With a retirement visa, you can't earn income in the country you're moving to and you must usually prove a minimum monthly income for you, your partner and any other family members coming with you.
You're talking about citizenship by descent or citizenship by ancestry. Yes, in some cases you can become a citizen of a particular country if you have parents, grandparents, great grandparents and even if you can only trace some type of ancestry. It completely depends on the country and what their laws are. You can find more information about this on our Citizenship by Descent blog.
It is estimated that around 9 million Americans are living abroad. So if you're an American thinking about making the move, you wouldn't be alone!
In most cases, yes. The United States bases taxes off of your citizenship, not residence. So American citizens are required to file a tax return for any income earned, regardless of where you earn it. If you are planning to retire abroad and want to earn some extra money in your new country, you should consult with a tax professional.
In most cases, yes! You are able to collect your payments (unless you're living in certain countries like North Korea or Cuba). So, if you haven't saved a lot for retirement, you may be able to find a place abroad that offers a lower cost of living that your social security check covers. For more detailed info, you can check out this Social Security Administration guide.
The answer shouldn't surprise you...it's Mexico. Mexico's close proximity, affordability and lovely weather and beaches make it a prime target for Americans looking to retire abroad.
There are many places in Europe where you can retire on a tight budget. A few things to consider are access to important amenities like hospitals and public transportation. If you want a list of the 10 most affordable places to live in Europe, check out this blog post.
Retiring in the United States FAQs
States that don't tax retirement income:
- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming
States that don't tax distributions from 401(k) plans, IRAs or pensions:
- Illinois, Mississipi and Pennsylvania
States that don't tax pensions (but do tax 401(k)s and IRAs)
- Alabama and Hawaii
There is so much more to consider when choosing which state provides the best overall tax outlook. Check out our list of the Most Tax Friendly States for Retirees in 2021.
Alaska usually sits at the top of the list. On top of not taxing retirement income, there is no state tax and no state sales tax. Wyoming is a close second. It has a 4% state sales tax rate but the property tax rate is lower. So it just depends on your lifestyle.
Not sure if you noticed but the two top states can get pretty cold. Brr! So if you're looking for something a bit warmer, check our our blog on the the Most Tax Friendly States for retirees in 2021!
If you don't see a question answered here...feel free to go over to our Contact Us page and send it to us. We'll add it to the list.