By Jeff Harris
What do you think about when someone mentions the Cayman Islands? Do you think of the pristine white sandy beaches? The clear blue water? Fresh seafood? Snorkeling? While these may be on the top of most people’s mind, some may even consider it a great place to retire.
After just spending vacation in the Cayman Islands – relaxing on the beach with a rum drink in my hand, gazing across the clear blue water – I couldn’t help but began to imagine where I’ll be when I retire. This may be a few decades down the road, but it never hurts to start planning for the future.
As I thought of all the places to retire, I wondered if doing so in a foreign country would ever be possible. I’ve always imagined myself retiring here at home but was surprised to find out that retiring abroad is not only possible but sometimes very practical.
Top Ten Places
Investopedia proposes the top 10 places to retire abroad are:
- Costa Rica
Some of the countries listed above may come as a shock to you, however, the list was created by International Living using a scoring system based on the following criteria:
- ease of buying and owning property and the value of property investments
- cost of renting
- benefits and discounts on things such as health care and entertainment
- visa and residency requirements
- cost of living
- fitting in and how easy it is to make friends
- entertainment and amenities
- healthy living
- development and infrastructure
- stability of the country’s political situation
After scoring each country, they are ranked according to the highest cumulative average. Based on the list, we can see a majority falls in Central American and South American locations.
Your Dollar Stretches Further
The opportunity to retire abroad provides the chance to see more of the world as well as offer a lower cost of living to stretch your dollars. Maybe not a huge surprise, but Grand Cayman didn’t make the list, most likely due to their currency being more expensive than the US dollar. But looking at the list makes me want to explore other countries like Costa Rica, Ecuador and Mexico as some of their beaches are globally ranked.
Your cost of living can go down substantially. Places like Ecuador average a 70 percent lower rent rate, and day-to-day consumer costs can go down as well, like 24 percent in Costa Rica. Amenities and entertainment may not be exactly the same as here at home but can be comparable if you look in the right place.
Healthcare in the United States continues to increase and may be more affordable abroad. If you are expecting high medical bills during your retirement, you should consider moving to a country like Mexico or France which are known for their affordable healthcare.
The Tax Question
Taxes are a major concern in retirement. During your retirement, you will still have to file a tax return in the US as well as a tax return in the country where you reside. Talk with your advisor or other tax expert to see if you qualify for the Foreign Earned Income Tax Exclusion and the Foreign Tax Credit.
Planning for tax implications isn’t something you want to be surprised by on your retirement journey.
Lastly, it’s essential to have online access to all your assets. These include bank accounts, investments, and other financial institutions that hold your accounts. Having online access will allow you to stay connected and be able to manage your accounts while you are enjoying your new life in paradise.
What Works Best for You?
While some dream of retiring on a beach or a lake or a farm – even a cruise ship, one thing to keep in mind is everyone’s retirement plans are different. There are several critical factors you have to consider. Here are four helpful questions to start with:
- What is the average cost of living abroad?
- What is the average cost of medical care abroad?
- Will I still have to pay income tax in the United States if I move abroad?
- How do I manage my money from abroad?
Retiring abroad is no small undertaking, but the adventure, memories and lower cost-of-living can make being an expat retiree worth it. While you’re considering these questions, download our free guide Back 2 Basics on improving financial well-being and helping you plan for the future. That sandy white beach in retirement may be closer than you think.