Expat Seniors:
American Retirement Abroad

Expat seniors

Top countries for retiring abroad, and tips before you go

By Andrea Coombes, CBS.MarketWatch.com
Last Update: 12:12 AM ET July 18, 2003

Part 3 of a three-part series. See also Part 1: Years of Living Dangerously and Part 2: Longevity Maintenance

SAN FRANCISCO (CBS.MW) -- Retiring to an exotic locale where empty beaches stretch endlessly and a trip for provisions is an adventure isn't just a fantasy for many Americans.

About four million U.S. citizens live abroad, a large but un-tallied number of them retirees. Some countries are especially attractive to older Americans, such as Mexico and Costa Rica. For instance, about 90 percent of the 30,000 Americans living in Costa Rica are retirees, said author John Howells.

"The vast majority of North Americans choose to go to Mexico because it's so close and inexpensive," said Howells, who's written several books on retiring abroad.
 
The popularity of the two countries is nourished by their proximity to the U.S., which makes family visits easier, and by governments eager to draw retirees and their disposable income.
 
In addition, living in these countries is cheap by American standards, though some warn that shouldn't be the only consideration for going.

"If it's strictly for money, it doesn't work. That gets old," said Sue Weiss, who left the Silicon Valley with her husband, Joel Smith, for a small town near Guadalajara, Mexico, two years ago.

"If you don't speak Spanish, and Americans rarely do, you need a support group, someone to talk to about 'Are the Cardinals going to win the Series?'" Howells said. "People go crazy, unless they love to become part of the culture and it's not very often that happens. Unless you have a lot of people already there, you're not going to have people coming in."

Europe on my mind 

After Mexico and Costa Rica, European countries top the list of favorite retiree locales: The United Kingdom, in part because it lacks a language barrier, and Spain, Portugal, France and Italy are all popular, though American expatriates there are outnumbered by their European counterparts, experts said.

The weak dollar now makes most European countries less desirable to retirees, but some say it's still possible to live frugally in Europe.

"If you're not traveling and staying in expensive chain hotels and renting a car and all that, you can live inexpensively," said Rosanne Knorr, author of "The Grown-Up's Guide to Retiring Abroad."

"If you don't live in one of the hot spots and just live your life, it's quite frequently less expensive than (here), and the food is better, at least in France," said Knorr, who spent five years living in France with her husband, before his serious illness forced their return.

Other English-speaking countries -- Canada, New Zealand and Australia -- are not popular, Howells said, because 90-day visas are strictly enforced and those countries' governments don't make it easy for expatriates to move there.

Taste test

Before committing to spend the rest of your life in a place you don't know, take a trip there, experts said. Living abroad doesn't make sense for everybody, particularly in countries where the infrastructure is not what Americans are used to.

"Rent for a while," Howells said. "Visit everywhere you can and talk to people. Get different opinions. It's not for everyone. (Some people) get very upset when things don't go their way and things aren't the way they are in Omaha, Nebraska. They don't stay very long."

In Mexico and Costa Rica, for instance, "some of the roads will have potholes," Howells said. Plus, "you can't expect to have someone come right over to fix the plumbing. 'Manana' doesn't mean tomorrow, it means sometime in the future, if ever. Some people get distraught about that."

While you're assessing the climate and local amenities, also talk to other expatriates living there to make sure they're people you'd like to have as neighbors, Howells said.

"Sample various communities and make a final choice based on the other expatriates who are living there, and not necessarily which area has the best view or the cooler evenings," Howells said.

Also, becoming an expatriate doesn't have to mean leaving the U.S. forever. Income permitting, many retirees keep their stateside house, buy a second home in their country of choice, and split their time between the two, Knorr said.

The ins-and-outs 

Moving abroad isn't as complicated as many people think, experts said, but there are some considerations to make before you take the plunge.

Health care. Medicare does not cover U.S. citizens outside of this country, so expatriate retirees should consider buying insurance in the other country (some countries allow foreign residents to buy into their universal health plan). Or, consider buying the international health insurance offered by some insurers. Also, some expatriates continue to rely on their Medicare for their serious illnesses, returning to the U.S. when the need arises, though many find the health care in the host country to be equal, and often better, than here, Howells, Knorr and Weiss each said independently.

Laws and taxes. Review the visa rules for any country you intend to visit or move to at the U.S. State Department Web site. As for taxes, U.S. citizens owe tax on income earned in other countries, though the federal government does have tax treaties with other countries that reduce or eliminate what's owed. (Of course, taxes are still due on income earned on assets held in the U.S.) But tax rules will vary widely based on an individual's situation and the country. "Talk to an international tax attorney before you make any major decisions," Knorr said. She also recommended researching inheritance laws before purchasing property, as some countries, unlike the U.S., require a portion of assets go to children when one spouse dies, leaving the surviving spouse with less than may be expected.

Real estate. Don't always expect to use financing to purchase a home in a foreign country, as cash is often required. Also, Weiss recommends expatriates work with a licensed real-estate agency to avoid being scammed into buying properties that are government-restricted. Mexico, for instance, has designated some areas as land that cannot be sold.

The complexities are worth it, some say. "It was the highlight of our life together," said Knorr, whose husband passed away recently. "The ambiance was much slower and relaxing. John took up art, I wrote, we rode bikes all over the vineyards," and traveled by car to Spain, Portugal and other countries.

"Everybody should try it once," she said. "They can always come home."

For more information, try the following sites: EscapeArtist.com, ExpatExchange.com, ExpatExpert.com, American Citizens Abroad, and the State Department's Tips for Americans Living Abroad.

Source:  http://www.marketwatch.com/News/Story/Story.aspx?guid={EFB27D52-F229-4E18-81C9-97F0D6A2C939 }

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