Did You Know: Moving abroad isn’t the only way to save money. To learn more, read our guide to safe investments for seniors.
8 Affordable Retirement Countries for Americans
Studies show that more and more Americans are retiring abroad. The reasons are varied, from warmer climates to cheaper health care and favorable tax policies. Regardless of your rationale, retiring abroad can be a great option if you’re unafraid of adventure.
The following eight countries offer a combination of beautiful surroundings and financial advantages that make them great places for Americans to retire.
Did You Know: Moving abroad isn’t the only way to save money. To learn more, read our guide to safe investments for seniors.
Awarded the top spot for retirees in International Living’s Global Retirement Index, Panama is quickly becoming one of the most popular places to retire.
The cost of living in Panama is significantly lower than in the United States; the average monthly cost of a one-bedroom apartment ranges from roughly $435 to $745. Groceries are also inexpensive.
Health-care costs in Panama are generally lower than in many parts of the world, but the public health system is considered one of the best in Latin America. Many expats living in Panama take advantage of the public hospitals. Health insurance in Panama often costs around $100 per month.
Taxes for retirees in Panama are minimal, with no income or wealth taxes, no inheritance taxes, and no estate taxes. Expat retirees in Panama also only pay taxes on income earned in Panama, which excludes 401(k), pension, and other American sources of retirement income.
Expats interested in retiring to Panama must meet a few simple requirements for the Panama Pensionado Visa. Individuals must be at least 18 years of age and must prove their legal residency status in Panama. They must also have a valid passport from their home country, proof of financial stability, and an annual income of at least $1,000 per month.
With easy access to world-class health care, shopping, and entertainment, Malaysia is an ideal retirement destination for Americans. The nation has gorgeous weather, a dynamic culture, captivating beaches, and beautiful rainforests.
The cost of living in Malaysia is about 30 percent to 40 percent lower than in the U.S. A three-course meal in a nice restaurant is about $18 for two people, and groceries are inexpensive. You can get staples like bread for as low as 72 cents. Rent for a one-bedroom apartment is between $240 and $360 a month on average.
Taxation in Malaysia is also attractive for retirees, since there are no capital gains, inheritance, or estate taxes. Overall, Malaysia is an excellent option for American retirees looking for a retirement destination that offers a high quality of life at a reasonable cost.
Malaysia offers a retirement visa that does not require retirees to have a regular income.
Costa Rica offers a unique mix of culture, adventure, and relaxation, making it the perfect place to hang your hat and enjoy retirement. You'll find yourself surrounded by lush rainforests, dazzling beaches, and breathtaking volcanoes, all in an enthusiastic, welcoming community.
The cost of living in Costa Rica generally is much lower than in the United States, and it’s often more affordable than other popular retirement destinations such as Panama and Belize. Rent for a one-bedroom apartment is between $373 and $540 per month. Health-care costs are also relatively low, and expats can take advantage of the country's public health system
Tax implications for expatriates living in Costa Rica depend on their residency status, and they should seek appropriate tax advice.
Americans living in Costa Rica should know the following:
Expats who are not permanent residents of Costa Rica will be taxed on their Costa Rican income and their foreign-earned income, so careful tax planning is important for expats looking to retire in Costa Rica.
To obtain residency in Costa Rica, expats must apply for a Costa Rica pensioner visa.
Portugal is a country of discovery, from its astonishing beaches and charming villages to its world-renowned cuisine and friendly locals. It’s no wonder why so many expats choose to settle in Portugal.
The country’s cost of living is quite reasonable compared to other European countries. Portugal is home to some of the most affordable cities in Europe; the average monthly rent for a one-bedroom apartment in Lisbon is about $800.
Health care in Portugal is also relatively affordable, since the Portuguese government offers residents a free public health-care system. Many private health-care plans are also available for expats. Private insurance is around $60 a month.
Taxes in Portugal can be quite complex for expats, since the country has different tax rates and regulations for nonresidents. Some taxes may be higher for expats, but some tax benefits are available to people who have retired in the country.
If you’re considering retiring in Portugal, it’s recommended that you consult a qualified tax adviser to ensure they know all applicable taxes and regulations. Below are a few tax incentives for living in Portugal.
To retire in Portugal, U.S. citizens must obtain a visa through the Portuguese consulate, as well as a residence permit. Once a permit is obtained, expats must register with the local police and obtain a foreign resident card.
Many retirees find that they can enjoy an improved quality of life by relocating to Mexico, especially in terms of affordability. The country offers a variety of cultural, culinary, and recreational opportunities for retirees to explore and embrace.
The cost of living in Mexico is generally much lower than in the U.S. and health-care costs are substantially lower, making it a viable option for retirees with limited financial resources.
U.S. citizens are still required to pay U.S. taxes after moving to Mexico, but Mexico has signed a tax treaty with the U.S. so American citizens will not be double-taxed for income earned in Mexico. You’ll be considered a nonresident for tax purposes if you haven’t established a permanent residence in Mexico, more than 50 percent of your worldwide income doesn’t come through a Mexican source, and the core of your professional activities doesn’t take place in Mexico.
For U.S. citizens to reside in Mexico, they must obtain a temporary or permanent resident visa, which is processed through either a Mexican consulate or the Mexican National Institute of Migration. Applicants must prove they have sufficient financial resources to support themselves while living in Mexico. Once the visa is issued, individuals must register with the local immigration office and obtain a residente temporal/permanente card.
Are you looking for a place to retire that offers a vibrant culture, warm climate, and relatively low cost of living? Colombia may be the country for you! With its unique blend of Pacific and Caribbean culture, diverse landscape, and welcoming people, Colombia is one of the best destinations for U.S. citizens looking to retire.
The cost of living in Colombia is about 50 percent less than in the U.S. Health-care costs can also be substantially lower in Colombia, with basic medical care and medications costing up to 70 percent less than in the U.S.
If you live in Colombia for at least 183 days a year, you’ll pay taxes on income, wealth, and property, as well as a 10 percent capital gains tax. The tax rates in Colombia range from 0 percent to 39 percent, depending on income.
Residency requirements must be met to obtain legal residence in Colombia. To become a legal resident, applicants must demonstrate proof of income, provide a valid passport, and meet the minimum income requirements.
U.S. citizens must also submit evidence of their legal status in the U.S., such as a permanent resident card, valid U.S. visa, or U.S. passport.
Retiring to Spain is an exciting and rewarding prospect for U.S. citizens. With its rich cultural heritage, vibrant cities, and ravishing landscapes, Spain is an ideal destination for people seeking a peaceful and fulfilling retirement.
The cost of living is also lower than in many European countries, making Spain a great place to enjoy your golden years. A one-bedroom apartment will range between $637 and $783 monthly, bringing the cost of living to just under $1,500 a month.
Health-care costs in Spain are generally lower than in the U.S. and can be accessed through the public health-care system. U.S. citizens must register for health care as soon as they arrive in Spain.
Expat retirees in Spain can qualify for the public health-care system if they stay temporarily in Spain and have an EHIC card. If you plan to become a permanent resident of Spain and participate in public health care, you can register with the Spanish Social Security Department.
To register with Spanish Social Security, you must provide a valid passport or ID, a residency certificate, and proof that your address is registered at the local town hall.
If you don’t qualify for the public health system, you must purchase private health insurance. Private health insurance in Spain costs between $50 and $215 per month.
Tax implications for U.S. citizens retiring to Spain vary depending on the individual’s circumstances. U.S. citizens must report foreign income and assets to the IRS, and any foreign income may be subject to U.S. taxes.
In most cases, you’ll be required to file taxes in Spain and the U.S. If you don’t become a resident of Spain, you’ll be required to file taxes only on income earned in Spain. You must file tax forms for both countries to report income, property, and assets.
U.S. citizens wishing to retire to Spain must obtain a long-term residence visa, known as a visa de larga duración-autorización de residencia para extranjeros retirados.
Situated in the heart of the Mediterranean Sea, Malta is one of the most gorgeous places for Americans looking to move abroad.
The cost of living in Malta is very affordable, with one-bedroom apartments costing around $800 per month. Trips to the grocery store are also inexpensive, since items like bread cost only about 35 cents.
Income earned in Malta generally is subject to Maltese taxes, regardless of the individual’s residency status. As a result, Americans retiring in Malta will have to pay taxes on income earned in Malta.
The Maltese permanent residency authorization, available to any individual who wishes to reside in the country without engaging in gainful employment, provides an opportunity to establish permanent residence.
The archipelago can be an ideal retirement destination for people living in the United States who are receiving retirement income and don’t need to be employed to support themselves.
Retiring abroad can provide an excellent opportunity for U.S. citizens to explore a new destination while enjoying a comfortable lifestyle. Potential advantages of retiring abroad include a lower cost of living, improved access to health care, and a more relaxed lifestyle.
Retirees also may benefit from the local culture and enjoy exploring a new destination.
To ensure a successful retirement abroad, it’s essential to thoroughly research the destination, particularly its laws, taxes, and health-care system.
To learn more about stretching your retirement dollar, check out our helpful guides.
