5 Keys to Retire Overseas

August 28, 2010

To retire overseas and live on the beach on a fixed retirement income may sound enticing but how realistic is this form of retirement living? The concept of stretching your retirement savings by moving to a place with a lower cost of living seems to make sense but some of what you hear about retiring overseas may be misleading.

Retiring Overseas

Retiring abroad is viewed as a way of maintaining one’s social standing on a reduced income, or possibly even improving it. The stereotypical view of a retired western expat is one of an older person on a state pension who lives a decadent beachfront lifestyle amidst the relative poverty of the new country he or she has settled in. Typically these countries are located in Southeast Asia or Latin America.

Stretching Your Retirement Money?

The information you see on the internet and in bookstores on places to retire is going to play this image up as much as possible. You are going to be shown “sample budgets” of a “typical” couple living on less than US$1500 per month on the beach, with servants, a car, and living on a steady diet of meals in finer restaurants.  When you’re trying to decide where to retire, keep in mind many of these examples of this “new retirement” are exaggerations.

Retirement Living Abroad

The only real way to improve your standard of living dramatically on a small budget is to move to an impoverished country. Belize, Panama, Nicaragua are touted as the best places to retire for those with little savings but guaranteed incomes and a penchant for beachfront living.

What you aren’t being told is that you’re going to have pay for your own private health care, there’s a bit of paperwork you’ll have to fill out to qualify for a retirement visa, and these countries have high crime rates and often poor infrastructure. Poor infrastructure can mean anything from bad roads to intermittent electricity to run down hospitals.

Below is a brief retirement guide that I think you should follow in order to have a successful experience abroad in retirement. These guidelines are very broad, but if followed they can mean the difference between a miserable time overseas, and spending your retirement in peace and bliss:

1. Visit first. This might seem like common sense, but I don’t mean that you should merely visit your would-be retirement destination for a week during ideal weather. You should be intimately familiar with the country you plan to retire to.

This means being well aware of its weather regardless of the season. It means knowing what the country is like during growth and recession. Is it too humid in the summer? Is it politically stable after market crash? These are things you should know before you move.

2. Make sure your spouse/partner is on board. Which of you really wants to move overseas? In my experience living abroad, the happiest people are those who have a happy significant other. A couple is a team and there’s nothing more stressful than having your fellow team member not on board with something as significant as a move abroad.

A new environment combined with two people spending more time together because neither person works any longer can add to the strife. Learn to live with your significant other in retirement before making a move abroad.

3. Keep your home country’s health care. Many view moving abroad as a way to save on healthcare, particularly if you are American. It is true that health care in many countries, particularly in the developing world is comparatively inexpensive. However, to get this health care you generally have to have private health insurance and this health insurance is not guaranteed.

Your coverage can be dropped if you become too expensive, which is certainly an issue if you have a chronic illness and need long term hospitalization. By keeping your government backed healthcare going, you have the alternative of moving back home for treatment. Government backed health care, specifically Medicare, can’t be taken away no matter how expensive your treatment is. Private health care can and will be if your treatment gets too pricey.

4. Be passable with the local language. Again it seems like common sense but beyond making it easier to order from a menu, it allows you to save money routinely. The best offers are available to locals; in contrast the worst and most expensive offers are usually made to English speaking tourists.

Knowing the language will allow you to be aware of local rules and regulations which will help you avoid any legal entanglements and issues with local law enforcement.

5. Keep a home address. I’m not saying keep your old house, which may be too expensive to accomplish. I mean keep an old address for bills and to maintain a relationship with a bank. If you retire abroad you should keep the majority of your liquid assets in your home country rather than in your retirement destination. Why is this? Currency devaluations are a common occurrence overseas and local banks are rarely government insured.

One problem you may face is that many American banks don’t like it when their customers are living overseas and keeping a home address to give the facade that you are still living at home. Typically it is not illegal to maintain this illusion, but banks do not wish to be the victims of money laundered transfers. 

In this age of increased government scrutiny of overseas travel and international money transfers, banks may try to close accounts of people they believe are no longer living locally. This is certainly an enormous issue for any expat.

Retirement Planning

These five tips are really just the beginning of the planning you’ll need to do if you’d like to retire overseas. Unfortunately, no amount of preparation can account for every eventuality of retiring abroad. There will always be surprises, some good, some bad.

But a dollop of common sense combined with a well thought out plan can help you achieve what you want in your new overseas life. I hope these tips serve as a beginning of your plan!

About the author: Rick Todd writes at Expat Investing where he discusses such topics as whether retiring abroad is right for you and if you can afford to live abroad on social security alone.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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