Rising Numbers: Americans Retiring Overseas
The Social Security Administration (SSA) recently stated that the number of Americans drawing their benefits from overseas grew from 413,000 to 760,000 in the last three years. However, even that substantial growth is an underestimate as many retirees deposit their funds in US banks but draw the cash overseas, and these withdrawals are not visible to the SSA. While less precise, the State Department estimates that 9 million Americans live abroad, and experts suggest that 5 million of these retirees retire abroad, or 12% of the nation’s 45 million retirees.
Economic Factors Driving Retirement Abroad
Baby boomers increasingly understand the advantages of living outside the United States. The current economic woe paired with rising energy and living costs at home, while returns on investments and asset values fall, are all furthering the trend. Inflation, in particular, is making many people look favourably at the cost of living overseas. With COVID receding, the number of emigrants is escalating even more aggressively.
Top Destinations for American who wishes to retire abroad
The first driver frequently comes down to finances. An income that may be comfortable or even tight in the United States can often give a lifestyle considered luxurious overseas. In destinations like the Caribbean, some Mediterranean countries, or those in Southeast Asia, the cost of living is significantly less. We will take one popular location from each area – Grenada, Portugal, Malaysia and Thailand – to examine this with more precision. Additionally, Panama stands out as an attractive option in Central America, where the cost of living is relatively low compared to many Western countries.
For instance, a single person can live comfortably in Panama for around $1,000 per month, which includes rent and utilities. This affordability, combined with a vibrant culture and modern amenities, makes Panama a compelling choice for those seeking a budget-friendly lifestyle abroad.
According to mylifeelsewhere.com, a website monitoring the cost of living globally, a one-bedroom apartment in a city in Portugal is 57% cheaper than in an American city, costing a little over $500 per month. In Grenada, it is 60% less and in Thailand 80%. Essentially, for half the price paid in America, it is possible to have a larger and more luxurious apartment with a view, pool or even a gym.
Cost of Living Comparisons: U.S. vs. Popular Retirement Locations
| Country | Overall Cost |
|---|---|
| Cost of living in USA | 100% |
| Cost of living in Portugal | -34% |
| Cost of living in Grenada | -21% |
| Cost of living in Thailand | -43% |
| Cost of living in Panama | -52% |
| Cost of living in Malaysia | -71.6% |
Healthcare Options for those who plan to retire abroad
Apart from housing and living expenses, another major consideration for those over 60 who wish to retire abroad is healthcare. Although Medicare pays certain costs for those aged 65 or over, it does not cover such things as most dental work or long-term care and can come with other out-of-pocket expenses. All three countries mentioned above have good healthcare systems, but the costs are often dramatically lower. In Thailand, for example, an appointment at one of the country’s top hospitals is around USD 25, and a dental crown is about USD 200 compared with thousands in the U.S.A. Long-term nursing care can be as little as one-sixth the cost in the United States.
Lifestyle and Leisure Activities in Retirement Destinations
In addition to the fact that it is quite stimulating to be living somewhere new, many of the most popular countries for American retirees are notable for their scenery, beaches, and year-round sunshine. Travel is very popular with this age group; the Caribbean, Mediterranean, and Southeast Asia all offer a dozen or more cultures and places to explore within a three-hour flight making it less expensive and quicker to visit.Additionally,, entertainment possibilities are often much broader than in any one location in the U.S.A., with everything from water sports to hiking; golf to art; wineries; shopping; and restaurants—again often at 30% or more less than Stateside.
Tax Advantages of Retiring in Foreign Countries
Many of these countries also provide more favorable tax regimes making financial management easier. In some cases this includes no tax on income sourced overseas; no wealth tax; and no inheritance tax.
Safety Considerations for Retiring Abroad
Lastly safety is a critical issue for many especially for those who are older. The U.S. State Department has an up-to-date rating in this respect for every country in the world from 1 which is “Normal” to 4 where it recommends “Do Not Travel.” All the countries we have discussed thus far have a score of 1.
The more in-depth and independent Global Peace Index ranks countries across 23 parameters for safety; America is in the middle at 126th. The relatively small Caribbean Island states are not included; however Thailand is considerably safer than the United States at 103rd while Portugal at 6th is one of the safest countries in the world. There are exceptions but in most main countries for retirees personal security is similar to or better than in the United States.
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