Most affordable countries for American expats living abroad

Just want to get away, and then never come back? As many as 9 million American expats — short for “expatriates” — are living abroad. Yahoo Finance senior reporter Rachelle Akuffo breaks down the criteria for Internations Expat Insider Survey’s ranking, which takes happiness, career prospects, and costs of living into consideration, and the top five most hospitable countries for Americans seeking to transition overseas.

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This post was written by Luke Carberry Mogan.

Video Transcript

If you go traveling around the world, you are sure to run into fellow Americans wherever you are.

According to the Association of American residents abroad, anywhere from 5.4 to 9 million.

Us citizens are currently living outside of the United States.

But where are the expats thriving the most our own?

Rochelle Leo joins us with more spicy.

Rochelle.

OK. What’s going on here?

I mean, you, you’ve gotta keep your options open and of course, summer travel has us all comparing the cost of living as we see an increasingly strong us dollar year to date, stretching further overseas than it does at home due to inflation plus and what’s shaping up to be a tumultuous election year.

This is typically when people claim that they’re going to relocate.

Fy I, if you think Canada is your next best, best option, you might want to sit tight.

Now, Indonesians an expat inside are ranked the best and worst countries for expats.

So for the best you have Panama sitting at number one, followed by Mexico, Indonesia, Spain and Colombia.

Interestingly from the bottom five, Canada, Germany, Finland, Turkey and Kuwait.

Now, when you think of the factors.

This study looks at all sorts of things, including your personal finances, your quality of life, your career prospects, your ease of settling in and of course, your general happiness.

So, so when you’re doing some of those comparisons, just keep in mind the countries where you’ll actually thrive the we the best.

Yeah, I went to Spain last year.

I was pretty happy but I didn’t move there.

Not just yet.

At least we’ll see the jury is still out on that one.

What about the financial realities of relocating overseas?

And that’s something that people do tend to underplay.

But I’ve broken down the top five financial considerations that people should keep in mind foreign earned income exclusion.

That’s Feie and foreign tax credit, income reporting requirements, social security and Medicare benefits, retirement accounts and of course currency fluctuations.

So I’m gonna walk you through some of these according to the IRS Feie and the foreign tax credit, that means that us citizens can exclude up to a certain amount of foreign earned income and avoid that double taxation, avoid being taxed in both countries.

And this is why allowing a tax credit for taxes paid to foreign governments.

Next, you have income reporting requirements just because you live overseas.

You are not exempt.

Us citizens must still report their worldwide income to the IRS and file their annual tax returns no matter where they live.

And there are also some additional forms required depending on whether your income passes a certain threshold.

Next, your Social Security and Medicare benefits that you work so hard for.

Well, the Social Security administration says you can receive at least your social security benefits abroad.

But when it comes to Medicare, that typically does not cover healthcare services outside of the US.

Now, of course, your retirement accounts, that’s a lot of retirees.

That’s what they plan to do, they plan to live overseas.

But things about your Ira account and your 401k s check with your brokerage account and your brokerage firm because typically some asset management services become limited to a administrative or ministerial use.

So for an example, representatives at Fidelity, if you look in the small print there, they don’t engage in discussions about asset allocation, income planning or portfolio composition or let you open or contribute to new 521 savings plan accounts, health savings accounts once you relocate.

And of course, the all important currency fluctuation is also a key consideration.

I mean, imagine you’re purchasing power fluctuating if you’re in a country that does have a volatile currency that makes it harder to plan financially.

So put all the pieces together before you decide to, you know, pick up sticks and move to Spain Brad.

Thank you so much.

Certainly will do.

And I’ve got a lot of research to do before that happens.

Michelle Coo, thanks so much.