Sorry, Florida, but Iberia beckons.
Many Americans are choosing to retire abroad these days because of the lower cost of living. Portugal, for example, has become an extremely popular destination for Americans seeking to enjoy their golden years while simultaneously stretching their IRAs.
Before unloading their belongings and leaving for Lisbon or another foreign destination, however, there are a lot more things retirees need to consider than just the exchange rate, the cuisine and the climate. Having the right global medical insurance policy, for example, is just one of the many items that financial advisors need to address.
InvestmentNews caught up with Joe Cronin, president of International Citizens Insurance, to find out what retirees need to know before settling down for good outside the U.S., as well as what they often learn — the hard way — once they get there.
InvestmentNews: What are the best countries for Americans looking to retire abroad? What makes them so attractive?
Joe Cronin: There are countries in Central and South America, as well as Asia, that offer an attractive combination of a lower cost of living, affordable homes, extraordinary landscapes and culture to explore, and access to good medical care. Costa Rica, Ecuador, Nicaragua and Thailand are good examples of countries that can offer all of the above. Some people are surprised to hear that Portugal is another great place to retire because it’s in Europe, but the cost of living there is significantly lower than in the U.S. and the coastline, cuisine and culture are very alluring.
IN: In which country will your retirement dollars go the furthest?
JC: You can buy a beautiful home and enjoy a lower cost of living in Mexico, Panama, Colombia and Costa Rica. Thailand and Malaysia also offer luxury tropical living for a fraction of the cost of moving to Florida. Much of the joy of living abroad is getting to explore new places, and when you move to these countries you’ll be able to use the money you’re saving on cost of living to travel.
IN: How do you pick the right health insurance policy for foreign retirement?
JC: There are many factors to consider when choosing the right global health insurance policy. Medicare does not typically cover medical treatment you receive outside of the U.S, so it’s important to make sure you pick a plan that allows you to maintain the same level of care you’re accustomed to in the U.S.
When reviewing policies, confirm that you have the ability to choose your hospital or medical facility, that routine doctor visits and testing are covered, and you have 24-hour emergency assistance. Take a close look at the prescription benefits as well and make sure your medications are available in that country. Don’t forget about dental and vision too. Those are services you’ll increasingly need as you age.
IN: What are the tax implications of retiring overseas?
JC: Just because you’re moving abroad doesn’t mean you’re done with filing U.S. tax returns. When you withdraw from a 401(k) or a U.S. pension from abroad, it will be taxed as income. While it’s possible to transfer your retirement funds to a foreign bank account, it could be a huge headache and you’re still limited with how much you can withdraw each year without being penalized. On the flip side, there are countries that have tax treaties with the U.S. and you may pay a lower tax rate or no tax at all on withdrawals.
IN: What are the biggest misconceptions about retiring abroad?
JC: Many people also think they can move to a country with socialized medicine and they won’t need to have medical insurance because it will all be covered for them. It’s never that simple. You will still need global health insurance, and if you plan to travel a lot in your retirement you should purchase additional travel insurance with medical coverage.
Another misconception is some people think that if you retire abroad, you forfeit your Social Security, but that is not the case. You can still collect it so long as you’re not living in a country where there is a U.S. sanction.
Take advantage of the spike in the COLA, says Social Security guru Mary Beth Franklin
Source : https://www.investmentnews.com/top-things-advisors-need-to-tell-their-clients-about-retiring-abroad-236660
https://newjinmedia.com/top-things-advisors-need-to-tell-their-clients-about-retiring-abroad/
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