Do you dream of retiring in a foreign country? Maybe to enjoy the warm weather of Central America? Or perhaps to the Italian countryside for delectable food and wine?
Retirement is your time to live life on your terms. If you’ve always dreamed of living in a foreign country, you should certainly explore any opportunity to do so. However, retiring abroad brings a number of complexities and challenges you may not face if you retire in the U.S.
Before you pull up stakes and book the next flight overseas, make sure you’ve considered all the possible challenges you may face. Below are three questions to ask yourself as you plan your overseas retirement.
How will you stay connected to family and friends back home?
Advances in social media and other technology have made it easier than ever to stay connected with loved ones, even if you’re separated by a great distance. However, you probably will still want to see your family and friends in person, especially if you have children or grandchildren in the U.S.
Before you move overseas, consider the logistics of staying connected with your loved ones. Are flights affordable and readily available? Is customs easy to navigate? Will your young grandchildren be able to make the flight?
Also, consider how you may handle the adjustment. If you’re used to being around friends and family on a regular basis, you may find it difficult to be in a new country without loved ones around. Will you be able to adjust to seeing your friends and family only sporadically?
If you think the distance will be too difficult to navigate, either logistically or emotionally, you may consider living abroad for only part of the year. That way, you still get the overseas experience, but will also have much-needed time with family and friends.
How will you pay for health care?
Many retirees aren’t aware Medicare generally doesn’t cover the costs of overseas health care treatment. Since Medicare is a primary source of health care coverage for retirees, you may need to make alternate plans for paying your medical expenses.
One option is to purchase a private, supplemental policy once you arrive in your new country. These policies are widely available in many European, Central American and Caribbean countries. While you may have to pay out of pocket for premiums, a private policy will help you avoid significant out-of-pocket health care costs.
Also, you can use your HSA to pay for medical costs on a tax-free basis overseas as long as the treatment qualifies under IRS guidelines. If you’re still working and are planning to retire overseas, you may want to maximize your contributions to your HSA.
How will your currency convert?
Another big consideration is how your income will convert into the currency of your new home country. Your Social Security, pension and investment income are all likely to be paid in U.S. dollars. Depending on prevailing exchange rates, currency conversion could take a sizable chunk out of your payments.
Obviously, you can’t predict future exchange rates. However, you and your financial professional can look at past exchange rates to get an idea of how volatile the conversion process may be. You can then prepare your budget and your income estimates to consider any loss of funds due to exchange rates.
Retiring overseas may be your lifelong dream. Just be sure to consider all the factors so you can start your adventure without financial worry. For assistance, contact your financial professional. They can help you develop and implement your retirement road map.
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