Tips and Traps When Retiring Overseas

Have you considered retiring to a foreign country but worried that logistical headaches and difficulties assimilating could get the better of you?

To help guide the decision-making, we tapped into the experience of our Morningstar.com reader base, asking posters in the Investing During Retirement forum of Morningstar.com's Discuss boards to comment on the benefits and drawbacks of retiring overseas and share guidance for those contemplating such a move.

Of course, experiences varied widely by geographic locale, so much so that poster Chang concluded, "I think it is impossible to make any generalizations about Americans living or retiring abroad. The only one with which I agree is that you need a certain sense of adventure."

Nonetheless, readers shared valuable insights on important matters, such as finding health care and making friends, as well as relatively smaller issues such as the price of creature comforts like paper towels.

To read the complete thread or share your own insights about retiring abroad, click here.

'Another Darn Rainbow'
The thread included many insights and pieces of advice from enthusiastic expats.

VGMontana has found a new home in Baja and never looked back. "Ican't say enough good things about Baja Mexico. The best thing I ever did was build a house there."

Hellosunshine, enthused about the natural beauty of adopted home Costa Rica, writing, "It's frigging gorgeous here--assuming you like perpetual spring, cloud forests, another 'darn' rainbow, waterfalls, and roaring rivers. Flowers here are like shells to the beach."

Another of the chief benefits discussed was the ability to get by on fewer assets, at least in certain geographies.

Chief K wrote, "If [you retire in] a place where your money goes further than most, that can make for a very pleasant boost to your standard of living."

Retired55, who lives in China, concurred. "There is no question that expat life can be less expensive. My choice to move here was not based on finance, but certainly there are benefits. Most things here are less expensive than the US." This expat went on to provide some specific examples, including $350 monthly rent for a large two-bedroom apartment, $30 monthly medical expenses, and housecleaning (including windows!) for $20 a month.

However, the same geographies that feature an affordable lifestyle often feature a staggering level of income inequality. Chief K warned, "If you can live like a king with maid, cook, gardener for XXX dollars a month, that may mean you are living surrounded by local people who are living like peasants… Living on an island of plenty surrounded by a sea of poverty would make me seasick."

MassMatt noted that even in geographies that are cheaper overall, certain goods or services may be more expensive. "Don't assume everything will be less expensive, or even available. In Mexico, for example, food and labor costs are low but many things like paper goods (including books) are more expensive. Many appliances are either unavailable or much more expensive."

And some locations are more costly than the U.S., as shipmad concluded. "[I]n those places I would love, such as Switzerland, Austria, and Scandinavia, I couldn't afford to maintain anywhere near my current standard of living."

Ditto for anyone who has their sights set on the U.K., wrote Kittydog2. "I lived in the U.K. until 2009. Housing is indeed expensive. I lived in Suffolk (very thatched cottage-ish). Expect to pay about $2K for a very basic place with council tax and utilities (and you do get killed with heating bills). And Suffolk is a 'bargain.'"

'Medical Care Is a Major Challenge'
Among the most frequently cited deterrents against relocating were concerns about obtaining good-quality medical care at a reasonable cost. Medicare is not generally available to those living overseas.

Cpwcpw advised, "Think through your present and future medical needs (and costs) very carefully...care and support for chronic problems can be particularly difficult to obtain."

MassMatt concurred, "Medical care is a major challenge. You may need to travel back to the U.S. periodically for meds or medical care."

AviOren noted that having to say no to Medicare--and the rich benefits it provides--has proved a major disincentive to going back to Israel. "I wished that I could go back to my birth country (Israel) and live there the rest of my life. I immigrated to the U.S. at age of 26, and after 5 years became a U.S. citizen (dual citizenship). But at my present age of 82, the medical care aspect prohibits me of moving overseas. My Medicare insurance, which is not available overseas, is worth, on the average, about half a million dollars. Then, replacing my current dozen or so physicians would be another problem."

But some expats noted that the medical care in their adopted country is as good as, and in some cases less expensive, than U.S.-provided care.

JimS wrote, "Retiring in Hong Kong (not done for financial reasons) was even better than I had hoped--mainly because of my good health, and also Hong Kong's British-style health service."

Of medical care in Thailand, Kittydog2 wrote, "Medical care (in tourist-friendly hospitals) is about 20-40% of U.S. prices. It's less if you go local. You can buy anything you want at the pharmacy, from valium to antibiotics for about ten cents a pill. It's all blister packed in Dubai, so it's not bootleg medicine. Decent health insurance is available."

'I Did It the Hard Way'
Even enthusiastic expats noted that living overseas can pose logistical challenges. MJKaus supplied this all-purpose guidance: "Know the immigration and tax formalities and the implications on your situation. Local legal counsel may be worth it. Analyze the impact on your estate plan."

For Retired55, who lives in China, obtaining a visa has been a headache. "It has become more difficult to keep extending my visa. Some countries may encourage retirement in their country and give incentives and make visa regulations simple. China does not subscribe to this way of thinking. If it continues to become more difficult and more expensive, I may consider options."

Cpwcpw noted the importance of understanding administrative and legal restrictions. This poster advised thinking through the following: "How will you obtain living quarters? Are there citizenship restrictions regarding who can live where? If buying, will you need a bank loan? Can you get one?" In a separate comment, Cpwcpw further advised, "I would suggest you consider hiring a local who specializes in doing all the administrative stuff with the government/banks/housing authorities as a service for expats…. I did it the hard way, and found it rather enlightening, but tedious."

Sgriswold shared this experience: "We considered retiring in Mexico. Many places we liked were near the coast. However, Mexico had (has?) some very interesting laws regarding ownership of real estate within easy reach of the coast. There were ways of getting around this, but they were convoluted and seemed to have a lot of risk. If you plan to buy a home, be sure of the real estate laws that govern ownership of real estate by foreigners. We still visit Mexico but rent."

Of Costa Rica, Hellosunshine advised, "Real estate purchases are for the most part cash."

Expat posters also shared tips for managing financial assets while outside the U.S.

Retired55 wrote, "I have always maintained my financial accounts in the US. I do have bank accounts here, but just for holding funds from the US. Everything can be done online."

MJKaus advised, "Maintain a strong relationship with a large bank or other financial institution that has international presence."

Obtaining a driver's license, and driving in general, were other recurrent discussion points.

FidlStix wrote that the hassle of driving has deterred him and his spouse from relocating to a spot they otherwise like. "[Among the] potentially offputting things: the traffic in the cities. In our candidate country, it's just this side of bedlam, even compared to places like Chicago or Los Angeles. Even the newer cars sport lots of dents and dings."

'It Wasn't Like This Back in Dallas'
Readers also discussed the importance of cultural assimilation and social interaction when moving abroad.

Sgriswold observed, "My parents tried this for five years then moved back to the U.S. town they were from. My analysis of why they moved back is that they found it very difficult to make and maintain new friendships and develop a meaningful social life. If one retires to a place with a large expat US population that could be avoided. But if you move to a place because it is charming and you like the countryside, you may sacrifice a meaningful social life and participation as a part of the community. These are things we take for granted until they are no longer there."

For Dancingrain, moving away from family is hard to fathom. "Is seeing the children and grandchildren on a regular basis not a big factor when one decides whether to live abroad? I am not retired but I would think I want to be close to the kids during retirement years."

Ridg0008 raises the very good point that moving away from family can impose problems on your loved ones. "[I]t can be a major hardship on family back in the U.S. if they have to drop everything and travel to your place because you are facing a crisis."

Although issues like moving away from family and friends aren't readily resolved, several posters note that enmeshing yourself with the local scene is essential to a successful expat experience, and that means learning the native tongue if it's not English.

MJKaus counseled total immersion, "Learn and speak the local language. Read the local paper. Watch TV in the local language."

Chang agreed: "Learning the language can go a long way to smooth your path in the new locale. It's amazing how far a few words will get you. I once ordered an eggplant salad in Arabic in Abu Dhabi and the waiter could not stop telling me that my Arabic was the finest he had ever heard."

But FidlStix advised to be prepared in case your language skills don't transport perfectly. "Even if you've learned the rudiments of the prevailing language before going, you're likely to find the local argot or patois spoken at your target location is quite different from what you're learning. Expect to endure some bumps and bruises learning the local vernacular."

And Retired55 noted, "Learning a new language is not a minor task, especially when older."

Staying open to the culture and daily life of an adopted country is also invaluable, according to the seasoned expats who posted in the thread.

MassMatt advised, "Be conscious that this is a different country, with both the pluses and minuses this offers. Life will likely be very different than what you were used to; if you embrace the pluses and accept or make the best of some minuses you will have a better chance of being happy."

Retired55 concurred, speaking from experience. "I spent the first couple years resisting cultural differences and it made things very difficult. Once I became more accepting, and stopped thinking that I knew a better way, life became easier. I think this is true even in your own country."

For a successful expat experience, Lilawheel advised, "[I t]ry to see the humanity in everyone wherever I go, and ask for the same in return."

But Cpwcpw noted that not everyone has the proper mindset--or personality--to be happy overseas. "Frankly, it has been my experience that Americans make for lousy expats....for every one that fits in, there are ten telling me 'it wasn't like this back in Dallas.' So be very careful, you've got to know what you're getting into."

One frequently offered piece of advice was to spend some serious time in that location--not just as a tourist, but as a local--before pulling up stakes in the U.S.

Chief K counseled, "Before retiring to another country/culture, try living there long enough to see how the local people--who don't reside in a gated estate--live."

MassMatt agreed that living as a local resident rather than a tourist can make for a very different experience. "I second the idea of living there on a trial basis long term as a test, with the same standard (or lower) than you think you can afford long-term. Living in a house and dealing with shopping/cleaning etc will be VERY different than a hotel or B+B."

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