Are You Part of the Retirement Tsunami? Where Will You Retire?

By on June 24, 2009 in News, Retirement

If you have been working for the federal government for the decades that span your career, your geographic location has probably been determined largely by the job Uncle Sam is paying you to perform. Perhaps you live in the Washington, DC area for a job that gives you a higher income with more responsibility while you are secretly yearning to live in the mountains, at the beach or in a small town away from the hustle of a big city.

If you are part of the retirement tsunami that we read about as baby boomers get ready to leave government service–presumably by the hundreds of thousands–you have a number of options. When you retire, or when you are planning to retire, you can think about how you want to live the rest of your life. If moving to the shore or to a location with a different climate will make you happy, the freedom you have in retirement will enable you to choose a geographic location based on your own situation and preferences.

And, if you are a financially responsible individual, you will do a thorough financial check-up of  your ability to live comfortably after you retire. Will you be able to afford living the lifestyle you want in a location that reflects your personal preferences?

You may conclude you cannot live the lifestyle you want. If so, here is an option you may not have considered for your retirement: Living outside of the United States.

There can be a number of reasons to consider living abroad in your retirement years. Typical reasons for living outside of our own country:

  • a mild climate
  • lower taxes
  • lower cost of living
  • lower medical costs
  • culture change
  • new challenges and experiences
  • education and new perspective.

It is possible to live abroad with standards of living comparable to those in the United States. If you choose a country where the local currency is based on American dollars and the average wages are lower than in the U.S., you stand to benefit.

Also, depending on the country you choose, you may pay lower taxes as you will not be a resident of an American state and you may not have to pay taxes in the new country of your residence. A word of warning: Governments, including our own, take taxes seriously. Make sure you understand any tax obligations you may have before moving. As a federal retiree, you will not avoid paying American income taxes.

Americans who are considering living abroad often look at countries in Central and South America. Americans living in countries like Mexico, Costa Rica, Venezuela, Ecuador and Uruguay say they can live very comfortably on income of less than $2000 a month or much less depending on your location and your personal preferences.

Some countries are now actively encouraging Americans, Europeans and Canadians to consider moving to their country. Panama, for example, will not charge property taxes for 20 years on new residents who are building or purchasing a house. You can also qualify for substantial discounts on medicine, doctor’s visits, entertainment and closing costs on the purchase of property.

Having said that, retiring abroad can be an adventure which means there are going to be many differences–some of which you will not be anticipating. If you are a person who does not like change, you should not seriously consider moving abroad.

First, there are likely to be many cultural differences. Americans, for example, expect a person to keep an appointment and to be on time. You may find that life is slower, more relaxed, and appointments for services and repairs are not taken as seriously in some countries. Or, if you are upset because it takes you a week or so to get a phone installed, getting a phone in your new location may make a week look like a dream come true.

And, before buying any property or making any major investments in a foreign country, you would be wise to thoroughly check out local requirements and consider using a local attorney who is familiar with the laws that may impact a foreigner purchasing property. The real estate laws and regulations you are used to dealing with may not be relevant in another country.

Second, for those who have traveled and found that English is widely accepted and spoken in the spots you have traveled, keep in mind that living in a country or town where English is not the native language is much different that meeting a friendly server or hotel clerk that is used to dealing with Americans. If you are going to live in a country where English is not the common language, you will want to plan accordingly.

Third, visiting a location for a day or a week is not the same as living there. If you are seriously considering retiring to an overseas location, go and stay there for several months or a period of time that will enable you to evaluate if you will really like it.

Fourth, consider your health and your insurance options. Each country is different. You may be able to participate in local insurance programs and some countries or locations have better medical facilities than others. You may be able to purchase health insurance at a lower cost than you will pay in the United States but some people will keep their American insurance–at least until they are sure they are satisfied with the options they have in another country.

Fifth, research your options carefully. There are thousands of internet sites extolling the virtues of living in locations around the world. Some of these sites are as reliable as a used car sales ad with their only purpose to encourage to send money and invest in property or “opportunities” that will leave you wiser and poorer and without the product or service you anticipated.

As a federal retiree, you will have an assured income that will give you a number of options. Moving overseas is not for everyone. But, for those with a sense of adventure, you may have many options to live a more comfortable life than you may have previously considered possible.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

7 Replies

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  1. LongTimeFed says:

    2 1/2 years and I hit 80% of salary. I’m outta here. Then I’ll be doing long-term home exchanges all over Europe and Australia.

  2. Retired in Greece says:

    Good advise for would be retirees that think they would like retire abroad. Having been one of them (I retired 10 years ago to a Greek island) I like to offer some additional advise and one very serious advise should anyone out there decide to retire abroad.

    The serious advise is DO NOT GIVE UP YOUR GOVERNMENT HEALTH INSURANSE. When the time comes to retire chose a plan that covers you overseas (there are 6 or 7 of them) even though you may think that the overseas plans are cheaper. When you are abroad and you need medical help, pay up, collect all receipts and send them to your insuranse plan. In addition if you think you can get better care in the US, with the Gov’t Health plan you still have the option.

    The other issues that Americans retired abroad may face are:

    –Prejudice/ Anti americanism. Yes it’s true Europeans at least, do not like Americans. I get digs daily even from old friends…yet they like everything Americam dress, music, movies etc.

    — Be aware that political systems are not like those of US. They can change over night and usually not for the better.

    — Currency fluctuations. In my case I saw the value of the “almighty” dollar crush almost 50% since 2004. It has come back a little but not much.

    — Trips to the US are becoming more difficult and more expensive. Difficult because the long distance and duration of flights and as we grow older the travel gets more arduous. The more expensive goes with inflation on one side fixed income on the other.

    — Mr Smiths advise to visit and stay awhile before you decide to retire to a foreign land is a good one and must be heeded and I may add that you should retire to a country that you have somekind of connection. Don’t just chose a country because it sound romantic.

  3. John Stryker says:

    County, Western Massachusetts

    Beautiful tree
    covered mountains, Tanglewood Music Center, Jacob’s Pillow Dance Center, Low
    crime, NO state tax on Federal retirement income

    Canoeing, kayaking,
    sailing, fishing, hunting, hiking, trail walking, all the winter sports, sledding,
    skiing, ice skating, ice fishing, Green springs and summers, colorful autumns
    and white winters (where everyone knows how to keep the roads snow and ice
    free; and how to drive in it, if necessary)

    Close to
    New York City (2 ½ hour), Boston (2 ¼ hours) Albany, NY (45 min) and Montréal Canada
    (4 ½ hours)

    Great colleges
    and universities and good flight connections to any where you want to go. (Even
    Miami or Phoenix, if the mood strikes you.)

    Proud, Retired, New England Yankee

  4. rkp says:

    After 30 years working all over the place for the Gov my wife will retire in 2014.   We plan to retire in Western New York in the summer and Orlando Fl in the winter.  Looking forward to being able to retire and start our new life together.

  5. Tomd63 says:

    Best Places to Retire, Live and Invest Overseas - International living is one of the best sources that I have found when it comes to becoming an expat.