Questions to Ask Yourself as You Contemplate Retiring in a Foreign Country

Picking up and moving is not easy work.  Picking up and moving to a new country with unfamiliar cultures is even more difficult.

As we approached retirement, we knew exactly what we wanted.  We wanted an active lifestyle centered on learning and travel.  We wanted to downsize and escape the car-centered life we had in the U.S.  We dreamed of moving abroad.

Today we live in Valencia, Spain.  Despite a heaping double helping of doubts in the early months, things seem to be working out.

We’ve had time to process our good luck and the many mistakes we’ve made.  So we’re confident we can help when our friends ask us questions like: “What does it take to move to another country?  Can you share the top 5 or 10 steps?”

The truth is there are so many more than 5 or 10 essential steps to successful retirement in a foreign country.  More than we could cram into this overly long article.  We're only covering the questions you might want to consider as you begin to contemplate retiring overseas.

We think that a good First Step when contemplating retirement abroad is to give serious consideration to the questions we have for you in the following sections. They only cover the beginning of your process but they will get you thinking about the reality of life abroad rather than the romantic notions that timeshare marketers and real estate agents weave for you.

We were so anxious to begin the overseas phase of our lives that we jumped from working right into our international move.  We didn’t spend time getting used to being retired. Before we landed overseas, we never worked out how to spend so much time together or how to divvy up the chores, like which decisions have to be made jointly and which ones can be made independently.  It was like navigating a new relationship.

In hindsight, that made the already challenging early months here in Spain so much harder.  Wounded, we survived but neither of us would want to relive those months.  To know your goal and really know whether you want to embark on an international adventure, consider these questions first.

Why do you want to retire abroad?

Why do you want to move?

• What does retirement abroad mean to you? To your partner?
• Have you discussed your retirement dreams together?

How do you want to spend your time alone and together?

• Are you an experienced retiree or will you be a new retiree?
• What are your expectations for your day-to-day home life?
• What pursuits are important and meaningful to you?

What kind of home environment do you want?

• Small town?  Village?  Big City?
• Quiet?  Vibrant?
• Will you rent or purchase?

How do you see yourself forging new friendships?

• Are you extroverted enough to take the initiative in finding friends?
• Are you emotionally ready to go it alone in a strange culture until you forge those new bonds?

What will you do if things don’t work out the way you expect?

• Is your partnership healthy? Can you talk about serious matters?
• Will your physical or mental health history make any of this more difficult?
• When faced with obstacles, how do you normally respond?

Back in Salem, we thought we knew how we wanted to spend our days, we just didn’t know where.

Wouldn’t it be great to travel the world; then armed with first hand experiences, choose exactly where you want to settle down?   Well, our pre-move family included five senior pets -- our dog Lizzie and her four cats.  No extended research trips for us.

We became armchair travelers reading about the experience of other retirees instead.  Susan spent a winter reading about Panama, Ecuador, and Costa Rica.  As we read and considered, Latin America looked less and less promising.  The thought of being “Rich Americans” in a developing country didn’t appeal.

Once we shifted our focus from Latin America to Spain, we knew we were headed in the right direction.  Spain is a beautiful country with a complex history and mix of regional cultures. There are enough travel options to keep us occupied for years both within Spain and around the European Union.  And if we were going to learn a second language, why not learn a widely spoken one?   Spanish is the second most widely spoken language and easier than Chinese.

Where in the World Suits You?

And that’s the short version of how we ended up in Valencia.

Here are some questions you’ll want to ask yourself for each relocation destination you consider.

• Will I enjoy the culture and the language?
• Do I want to spend time learning the language?
  • Can I get along without learning the language?
  • How will I get along before I’m conversant?
• What kind of climate am I looking for?
• How will I get around?
  • Is the community walkable/bikeable?
  • Is public transportation readily available?
  • Do I want to have a car?
• If travel is important, can I easily get to international airports and train stations?
  • How often will I want to visit family and will it be affordable to do so?
• What activities are available? Is a rich environment of cultural and city activities important?
  • Are volunteer opportunities important?
  • Do I have specific hobbies such as music or sports that I want to grow?

Some countries are falling all over themselves to attract American retirees, offering easy immigration laws, retiree benefits, tax havens, and so forth.  On the other hand, many European countries have a time consuming and expensive immigration process.

Begin your research with the local Embassy website for the country of your choice.  So many people rely on hearsay or the experience of others and then scramble when they haven’t followed all the steps spelled out by the consulate. For example, there are nine Spanish consulates in the U.S. and each of them handle the visa application process a little differently.

Before you finalize your destination, investigate these key topics for your country of choice:

What are long-term resident visa requirements of your chosen country?

Pay attention to:

• Income requirements for a retirement visa
• Health care coverage purchase requirements for immigrants
• Cost of visa and visa preparation
• Duration of a temporary residence visa and how this ties to your time horizons.
• What kind of lead-time is needed to submit and receive an approved visa?
• Other requirements??

If you are a pet owner, can you bring your pets and what will it take to get them there?

• Are there any breed restrictions?
• What steps must you follow to bring pets into the country such as a quarantine or health certificate?
• How will you get your pets there? Drive, fly, ship?
• Is it easy to find pet friendly short-term accommodations and long-term rentals?

Everyone’s expectations and budgets for living overseas will be different. But the chances are you’ll have many of the same expense categories that you have at home in the U.S.  But there will be differences in how you’ll allocate your budget. For example, our health insurance here in Spain costs only a small fraction what we paid in the U.S. and petrol, water and electricity are much more costly.

How do your finances stack up?

The foreign exchange rate (FX) will have a profound effect on your disposable income. You might want to look at recent FX rates and historic trends over the past few years. When we were planning our move to Spain the euro was trading at about $1.09 on average and as low as $1.03. Wow, we were going to be comfortable at that exchange rate!

Then in our first several months the exchange rate had spiked to more than $1.25 or almost a thirteen percent erosion in our purchasing power. That’s a hard hit on anyone’s budget.

We found plenty of blogs and Facebook groups to give us insights about living in Spain (and the Spanish immigration process) during our exploration stage. I’d be willing to bet that every destination you might consider has similar resources.

What is the cost of living for your destination?

You can find good cost of living information at expatistan.com  but they only cover larger cities in most countries.

Investigate your tax obligations as a resident foreigner.

• Is there a tax treaty between the U.S. and your target country?
• How will your host country treat capital gains, social security benefits and distributions from your retirement accounts, pensions and annuities?
• Don’t forget that even when you are living abroad, you’re still liable for U.S. taxes too.

Will the health care services you want and need be available and affordable?

• Is private health insurance available and affordable?
• What health care do you need now?
• How do you plan to handle your relocation if you should become ill?

We didn’t put a list like this one together before we chose Spain for our overseas destination.  In fact, we probably couldn’t have put this list together before our first hand experiences.  Most days during the first six months, we wished someone had.

We spent our first several months struggling to come up with solutions to most of the questions we posed in the preceding paragraphs.  In fact, we're still wrestling with understanding our Spanish income tax obligations.

If you are still enthused about living abroad after seriously considering these reality-grounding questions, you’ll probably want to make an exploratory visit to your target country before finalizing your choice.