Thinking of retiring abroad but unsure about it? How to take a country for a ‘test drive.’
7 min read
Retiring abroad is becoming an increasingly popular option for many older Americans. And why not? You have the opportunity to significantly lower your cost of living, choose your ideal weather and have a grand adventure.
It’s one thing to imagine how wonderful it all will be. But actually going through the process of making it happen? Maybe not so much.
Are you ready to dismantle your entire life at home and start anew in another country with a different culture, language, currency and, well, pretty much everything?
Even if the answer is yes, is your partner on board or on the fence? Then there is the question of how to make sure your healthcare needs are met.
With all these uncertainties, many would-be expats develop a terminal case of the what-ifs.
- What if I miss my friends and family too much?
- What if it’s not safe?
- What if I overlook something important?
And the most dreaded one of all: What if this whole idea turns out to be a terrible and costly mistake?
Try before you buy
Retiring abroad doesn’t have to be an all-or-nothing proposition. Even if you love the way a new car looks, before making a commitment to purchase, you’re going to take it for a test drive to make sure you like the way it feels on the road, as well. So why not experience expat life with a short-term trial run before making a final decision?
There are advantages to this strategy. Relocating to another country is a lot more complicated than a local or even interstate move. Committing only a few months to “try before you buy” removes the upfront pressure of investing substantial time and money.
On an extended visit, you actually live in your possible new location long enough to evaluate whether whatever concerns you have are valid — and to discover, with boots on the ground, if you and expat life are a good match.
You’re not on vacation
We advise prospective expats to avoid what we call “vacation mentality” when considering possible destinations to live abroad. The minor annoyances you minimize for a week or two in a place you otherwise enjoy can expand into full-scale headaches over a period of years.
Mentally start with a blank slate and envision everything your ideal new home will have. Write them all down in priority order, then begin your research to find places that check the most boxes.
Once you have zeroed in on your top choice, decide how much time you want to spend there. A tourist visa granted upon arrival in most popular countries will allow the possibility of at least a 90-day stay. Nearby Mexico, Costa Rica and Panama allow visits of up to 180 days.
If Europe is on your radar, within that three-month period you will be able to freely move among any of the 29 Schengen countries by simply showing your passport at the border.
What you’ll need to consider
Spending months in another country involves a lot more preparation than buying a plane ticket and packing a suitcase. Follow these tips to make sure you have all your bases covered before you turn off the lights and lock the door.
Passport
Do you know when your passport expires? Didn’t think so.
If it’s due to expire within the next year, go ahead and get it renewed now. Why? It currently takes four to six weeks (expedited service is available for an additional $60) for passports to be processed, and who knows how long mail delivery will take? Plus, most countries require validity of three to six months at the time of entering their borders (while these countries have a six-month requirement).
Accommodations
A standard hotel room will be too confining for a long-term stay. But if you are worried about the cost of larger quarters, we have great news. Airbnb has a dedicated website for bookings of 30 days and more that offers substantial discounts (sometimes greater than 50%) compared with nightly rates.
If the place you want to visit is in a tourist area and your schedule is flexible, save even more money by planning your overseas adventure during what is known as “shoulder season.” These are the months between high and low travel seasons — when the crowds are gone, weather is still ideal and prices are lower.
See: Airbnb wants to be an ‘anything’ app. The debate for investors hinges on this.
Health insurance
Nothing can derail your semiretirement trip faster than suffering an accident, illness or injury in a foreign country. These types of calamities can also drain your bank account if you’ve failed to purchase travel insurance before leaving home.
Many private insurers do not provide coverage outside U.S. borders, nor does traditional Medicare (if you have a Medicare Advantage plan, you may have emergency coverage abroad). We have used Squaremouth for travel insurance; the company offers a wide variety of options, and customer service is excellent.
Finances
Many places abroad take credit and debit cards, and you will find ATMs everywhere, so there is no need to bring lots of cash on your trip. Be sure to use a card that doesn’t add a 1% to 3% foreign-transaction fee every time it leaves your wallet. Chase Sapphire Preferred is a great credit card for travel, and Charles Schwab offers a checking account that charges no ATM fees and automatically reimburses anything that banks charge.
Before departure, remember to let your bank and credit-card company know that you will be out of the country. Otherwise, you may be unpleasantly surprised when the first transaction you make in a foreign country freezes your account until you verify your card was not stolen.
Permanent semiretirement abroad
That first extended trip out of the country will most likely either confirm your doubts about becoming an expat or reinforce your decision to pull the trigger. But there’s another possible scenario: You could discover that, despite having a positive experience, it just isn’t going to work for you full-time.
Even this dilemma doesn’t have to be all or nothing. As contradictory as it sounds, consider ways to semiretire abroad permanently.
Family and friends dilemma solved
Many older adults who think about moving out of the country fret about being far from their grandchildren. Why not divide the time at home and away to best fit your individual circumstances? For instance, you could consider spending important holidays and part of the summer-vacation months with family.
Reduced expenses when you live abroad for extended periods of time give you the financial flexibility to travel more frequently and visit family and friends for longer stays.
Snowbirding abroad
Folks in northern states typically head to warmer parts of the country, like Florida and Arizona, to escape frigid winters. Why not travel a few hours farther south and snowbird abroad in even better weather?
And who says you have to return to the same place year after year? Fire up that imagination and go see the world.
Check out a new destination every year, or choose a location that allows you to explore other countries or regions. By setting up “base camp” in Portugal or Spain you have access to all of Europe via an extensive rail network and inexpensive flights. And from Buenos Aires you can explore Mendoza, Patagonia and Iguazú Falls.
Making money as a permanent, part-time expat
Low real-estate prices in some places abroad can make property ownership in another country a wise investment — especially in popular tourist areas, or ones that have a terrific year-round climate.
Why not buy an overseas oceanfront condo unit or a flat in an historic city, and rent it out when you aren’t there? Or you could rent your property at home through Airbnb or Vrbo while you are away.
It’s quite possible to fund your travel experiences and earn money no matter where you are living.
Retiring abroad is a great option for many older Americans who face a precarious financial future. We know this firsthand because 15 years ago we found ourselves in that exact position. We summoned the courage to take a leap of faith and have since enjoyed our best life in Cuenca, Ecuador.
Fear of the unknown is a powerful force that keeps many people stuck right where they are, even when where they are isn’t that great. If you find the idea of moving to another country intriguing, consider at least touching your toe in the water by semiretiring abroad for a few months before taking the plunge.
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