How to Retire Overseas
What You Need to Consider
by Volker Poelzl
With many options to retire abroad, you should choose a location affordable and best for you.
Over the past few months I have received several emails from readers asking me about retirement overseas. One reader recently asked me:
“We are curious about any options we might have to retire somewhere else, including outside of America. Do you know of any countries where we might be able to retire without citizenship?”
In fact, there are many countries, where you can retire without first obtaining citizenship. Many countries around the world have opened their doors to retirees and offer a number of programs to make it easy for retirees to settle in their country. Several countries also offer ancestral visas leading to citizenship, such as Italy and Ireland. If one of your parents was born in that country, you could claim citizenship, but this is not a requirement to legally settle there.
But here is the catch: In order to qualify for a retirement visa most countries require proof of significant independent or retirement income from your home country, and foreign retirees are not allowed to work or engage in any gainful activity. In short, your entitlement to retire and obtain residency in a foreign country is almost exclusively based on your retirement or investment income. Each country has different laws, and there may be additional immigration requirements, such as a health exam and a criminal background check.
Citizens of the European Union can reside legally and retire in any of the member countries, regardless of retirement income, but citizens from North America don’t have the same advantage when retiring abroad. However, there are a few countries that offer preferential treatment for American retirees and make it relatively easy to obtain a residency permit. Mexico and Central American countries such as Costa Rica and Panama are well-known retirement destinations for U.S. citizens with fairly easy immigration procedures. But most countries around the world apply the same visa requirements for foreign retirees, regardless of their country of origin. The application process usually requires a written statement from a financial institution showing that you have regular monthly retirement income or investment income. For most countries, the amount is at least US$2,000 per month per person, more in wealthy countries, and less in developing nations.
Although where you will be able to retire legally depends a lot on your retirement income or wealth, there are other options besides retiring abroad permanently. Instead of selling your home and moving overseas permanently, you might also want to consider buying or renting a small home overseas and spending part of the year abroad in a country with affordable real estate and a low cost of living. This way you do not need a permanent residency or retirement visa, since you are staying for only part of the year as a tourist. This is a very popular option in Europe, where many retirees from northern countries spend part of the year at their retirement homes in southern Europe. This way they don't need to go through the red tape of getting a retirement visa and they don’t entirely sever their ties with their home country and community.
Although financial considerations are very important, they should not be the only factor to decide which country to choose. Retiring in a foreign country often comes with a significant change in culture and way of life, and I suggest only considering countries for which you have a cultural affinity. Retiring in Central America can be very affordable, but unless you like Latin culture, hot and humid weather, and speak some Spanish, the adjustment comes as quite a challenge. Before considering a country for retirement, it is important to spend some time there to find out if you really like it. In addition to cultural differences, also keep in mind the level of development, quality of life, bureaucracy, safety and stability, as well as all legal requirements you need to meet in order to qualify for a retirement visa.
For more information about living abroad in many countries, visit our Living Abroad by Country section and check out the "Expatriate Websites and Resources" website links for the country of your interest.
Volker Poelzl is a Living Abroad Contributing Editor for TransitionsAbroad.com. He has traveled in over 40 countries worldwide and has lived in ten of them for study, research and work.