Retiring Abroad Is More Hype Than Reality

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For years we’ve been hearing about the advantages of retiring abroad: low taxes, low cost of living, great climate and exciting cultural attractions. It’s all true in certain countries. Yet there hasn’t exactly been a mass exodus of retirees from the U.S.

Things must be pretty good at home, the slow economy notwithstanding. Some 36 million Americans are retired and receiving Social Security benefits, according to the Social Security Administration. But just 548,000 monthly benefits checks go to folks outside the U.S. In other words, about 1.5% of us choose to call it quits in a foreign land.

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That’s hardly a groundswell, even though the number is on the rise. Overseas Social Security recipients numbered 396,000 in 2000. So we’ve seen an increase of 38% over a dozen years. And yet those Social Security checks generally are not going to low-cost havens that the media constantly talks about. Those include Costa Rica, Belize, Argentina, Nicaragua and Panama. Most of the checks are going to developed and more costly nations, including Canada, Japan, Germany and the U.K.

What gives? For starters, more retirees want to work at least part-time. So some out of the way retreat just doesn’t make sense. A Schwab survey of people in their 60s found that 34% do not plan to stop working. From the report:

“The study shows that people in their 60s are more likely to be working part-time and enjoying the flexibility of doing so, liking the people they work with, feeling they would be bored if they weren’t working, and not feeling ready to retire or simply not wanting to.”

Some 76% of middle-income Americans between the ages of 50 and 69 say they are sticking with their jobs because they want to, not because they must. Some 27% say this is the happiest time of their working career, and another 11% believe the best is yet to come. Nearly two-thirds believe they’ll have the resources they need to be comfortable in their later years, and most likely this means that they will not be seeking to downsize abroad.

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Meanwhile, retiring to a foreign country is no slam dunk. As the Wall Street Journal reports:

“Retiring to a foreign land can present a number of challenges, from opening a local bank account to avoiding being gouged for services. And while many countries, from Belize to South Africa, offer inducements to attract foreign retirees, making sure you’ve got health insurance can be a big problem. Moving abroad also means leaving behind family and friends, though Internet communications can shorten the distances. There can also be safety and security concerns.”

Put it all together and you find that the reality of retiring abroad may not live up to the hype, though for adventure seeking retirees who want to keep their costs down and don’t mind leaving friends behind it’s still worth a look. Make sure you ask the right questions first and investigate all your options.