Difference between revisions of "Retiring abroad"
Revision as of 22:57, 15 July 2013
This article is a travel topic
It is moderately common for people to retire in countries other than their home. There are two main reasons. One is climate; people from colder places flock to the Mediterranean, the Caribbean, Southeast Asia and the South Seas, while others choose a dry desert climate because that is easier on asthmatic lungs or arthritic joints. The other major reason is saving money; a pension that is just a pittance in a relatively wealthy country may be enough to live well in a lower-income country, and a substantial pension or a few good investments might let you live in luxury. In particular, lower health care costs may be an issue; see medical tourism.
There are various other reasons as well. Some might retire abroad out of an urge to see the world, perhaps using Bariloche as a base for roaming around South America, Penang for Asia, or Barcelona for Europe. Others might choose a retirement spot to suit their interests — perhaps Queensland for the diving, Austria for the skiing, or Peru for the Inca archaeology. Still others might choose to retire abroad as a way of keeping active in their later years, perhaps learning a new language, exploring a region, or taking up a new hobby.
There are also many people who have emigrated but return to their original country to retire. In Chinese, they are called "sea turtles", after a species that swims long distances to lay eggs on the beach where it hatched. These people may have the best of both worlds. Consider, for example, a Chinese retiring in China after many years in the UK. Unlike other visitors, he will have no trouble with visas or the language and probably not much difficulty adapting to the culture. Unlike other Chinese, though, he will have a British pension, which will typically be larger than a Chinese one. He may also have a British passport, in which case travel outside China will be much easier.
This article covers moving abroad to retire. There are other ways to manage retirement, not covered here:
Some retired people maintain two homes, perhaps spending summers near family and friends and winters somewhere warmer, while others live mostly in their home country but travel a lot in winter. Seasonal migration works for birds; why not for people? It is also possible for retirees to live in a mobile home or on a boat; this lets you see more places and also gives you the option of migrating with the seasons. With enough money, it is possible to retire as a passenger on cruise ships, coming ashore only occasionally to change ships or to visit friends and family.
It is also fairly common for people who are not actually retired to live abroad. Arguably, this makes for a more interesting life and it can certainly save money. One way to do this is to work abroad, but it also works well for people who live off investments or who earn money elsewhere, for example by running an Internet business or doing really long-range telecommuting. The classic example is Arthur C Clarke (author of 2001: A Space Odyssey, among other things), living in Sri Lanka while collecting book and film royalties in hard currency.
The book, The Four-Hour Work Week introduces "lifestyle design" techniques, including the notion of taking a series of "mini-retirements" spread out through a career rather than waiting for one big retirement late in life.
If you reject the food, ignore the customs, fear the religion and avoid the people, you might better stay home. — James Michener
Settling down in an exotic foreign country is definitely not for everyone; there are many things to consider. For some, moving abroad was the best thing they ever did, while for others it was a complete disaster.
When choosing a destination, consider the cost and convenience of travel in both directions. Being too far from friends and family is the single largest reason for people who have retired abroad to give it up and return home. In particular, some people find being thousands of miles from their grandchildren very difficult.
An Englishman in Spain or an American in Mexico, for example, can easily get home now and then and might reasonably invite friends and family to visit. In Pago Pago, both will be more difficult. Note, however, that long distances are not necessarily prohibitive; anywhere with good airline connections may be okay. For example, an American in Paris or a European in Thailand is a long way from home, but many flights are available and some are quite cheap. See our articles on discount airlines and the "get in" sections of country articles for details.
Culture shock can be a major problem. Exotic places and people can be fascinating, but they can also be most irritatingly foreign. Doing some exploration before moving in helps, but there may still be cases of "It's a nice place to visit, but I wouldn't want to live there." For most people, it will be more sensible to take things slowly, rather than diving straight into a partly unknown culture. For example, instead of selling your home to move abroad, you might rent it out while you discover how a new country suits you. If all goes well, then a few years later you can sell the place back home; if not, you can return home or explore other destinations.
Language can be a problem. In particular, tonal languages such as Chinese and Thai are often difficult for Westerners. Other languages, especially European languages, may be less difficult for an English speaker, but acquiring any language requires significant effort. Often, there are language schools available, see language tourism. There are popular retirement destinations where English is the main language, such as Bermuda and Belize. In others, such as Malaysia, Malta, Gibraltar or the Philippines, English is widely spoken but there are also other languages which you may need to learn. See also our talk article.
Look into the laws at potential destinations, especially if you have interests that are illegal in some jurisdictions. Homosexuality, smoking dope and using rent-a-hottie services are all perfectly legal in some places but will get you in quite deep trouble elsewhere. Even drinking is illegal in some Muslim countries, and in some states in India. Anyone who asks "Can I bring my guns?" will find the laws of many countries quite uncongenial. Things like vehicles, electrical devices or medicines may be hard to import because they are not certified safe under local standards, even if they are certified in the home country. Some countries have strict laws affecting some forms of speech; for example, in Thailand you could be arrested for insulting the monarchy. Some visas forbid activities such as becoming involved in local politics or doing missionary work.
Also consider any local difficulties with transportation or services. Remote or less developed areas may be cheap and interesting, but roads can be awful, electricity unreliable or available only a few hours a day, and Internet or telephone service problematic. Also, few people in such areas speak English. Having no hospital within easy reach is risky at any age, and this becomes more important after retirement age. Most retirees seek some sort of balance, modern enough to have reasonable services but still exotic and interesting.
Many people choose a major city or a "tourist town" as their destination; these areas tend to have good services, and the language problem is often less pressing there. Often there is enough of a foreigners' community that you can have a reasonable social life within it. However, such areas are usually relatively expensive and may be less interesting, noisier, more polluted, or more crime-ridden than other areas. Also, some of the tourist towns attract people of a particular type; for a particular place it might be any budget level from backpacker to jet set, and any interest from surfing to sex tourism. A retiree may feel rather out of place in a town full of such people; in the worst case, he or she might find the tourists thoroughly obnoxious. This is one more thing to check when considering locations.
Finally, of course, there are an assortment of risks from tropical diseases to earthquakes and typhoons, through to crime, corrupt governments, and political unrest. These can generally be avoided, or at least managed, but it takes quite a bit of research, exploration and planning.
An investment in knowledge pays the best interest. — Benjamin Franklin
The Wikitravel articles on countries, regions and cities provide a good starting point. For some destinations, see also tips for travel in developing countries. We provide links below to government sites with visa information.
A web search on the country or city name plus "expat" (short for expatriate, someone living outside their own country) will often turn up sites with local information. The best of these are very good indeed, a prime information source. However, it takes some sifting to extract the good information; some are basically promotional sites for various businesses, loaded with biased information, and even the good ones may have some clueless or crackpot participants. It's also good to be aware of when the person writing visited the location. No matter how good the information may be, if they haven't visited since the 1980s, it may be outdated and no longer reliable. This is particularly common in travel writings from developing countries where things are constantly changing.
Magazines and web sites such as Best Places In The World To Retire, International Living, Escape Artist, Transitions Abroad and Expat Exchange cover expat life in general, while Retired Expat and Retire Asia are more specifically about retirement. There is even a dating site called Retiring Singles in case you want a travel partner. More general magazines also have material: Business Week has an article on what they consider the ten best retirement destinations, Forbes has a survey of expat-friendly countries and Newsweek an article on the best countries to live in. Mercer rates cities worldwide by quality of living and as "eco cities". The Guardian has an article on which cities are most expensive for expatriates. Other resources, such as iExpats provide expats with a wealth of global financial investment news, information about their pensions, and more.
There are also government sources for country information. The US State Department has "background notes" for many countries, and the Canadian government provides "country insights". These are mainly oriented to international business and trade. The destination country's embassy in your home country or your home country's embassy at the destination may also be helpful.
You can get some idea about a country by looking at statistics and indexes, perhaps starting with Wikipedia summaries such as per capita GDP and average household income as cost indicators. Follow their links to the data sources for more detail. Indicators for safety levels include Wikipedia's page for murder rate and the Global Peace Index. Other numbers of interest include the Democracy Index, the Corruption Perceptions Index, the Press Freedom Index and the Gini index for the degree of inequality of income in a society. However, none of these numbers can serve as more than a rough guide; the phenomena they attempt to measure are far too complex for any easy summary. Also, there may be large differences from region to region within a country.
HumanSecurityIndex.org, can be considered a global rating and ranking of well-being indicators for 232 countries and territories. It contains data on Economic Fabric (income per capita, income equality, etc.), Environmental Fabric (disaster vulnerability, sanitation, etc.), and Social Fabric (education and information, health, peacefulness, corruption, etc.). A spreadsheet downloadable from the HumanSecurityIndex.org enables you to rank countries by any of those indicators, to help you to compare and "shop" candidate countries. Additional information, including links to original data sources, are posted for those wanting more information on any particular topic.
The US Geological Survey provides information on various hazards — earthquakes, volcanoes, tsunamis, landslides, and floods. They also have earthquake information worldwide. Another source for similar information is About.com. The US National Hurricane Center has much information on tropical storms near the US and some data on storms worldwide. The World Bank has information on air and water pollution. See tropical diseases for information on health risks.
If you want detailed business-oriented information and are willing to pay for it, the Economist has reports and forecasts. Business people should also talk to their nation's trade missions; part of their job is to assist businesses doing international trade.
Of course nothing beats actually visiting your possible retirement destinations; research may narrow it down to a short list, but then you need to take a good look at the candidates. Some people spend several holidays in the years before retirement, or some time after retirement, travelling around to check out possible longer-term destinations. If the budget allows, a round-the-world flight might be a fine holiday and a way to look at many possibilities.
If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success. — John D. Rockefeller
A short-term stay in most places requires only an easily-obtained tourist visa; for many countries and many passports, this can be obtained at the airport or other entry point on arrival. However, to live long-term in almost any country, almost any foreigner will require a visa. See our country guides for information on visa requirements at various destinations. Follow links there for government sites with authoritative information, or consult an embassy or consulate.
There are special cases where getting a visa may be easier, though there will still be some paperwork. A citizen of one country in an international group such as the European Union or ASEAN can fairly easily go to another country in that group so, for example, a Scotsman can retire in Greece, or a Singaporean in Bali, more easily than others can. Also, some countries have overseas possessions where their citizens can go quite freely. For example, a Briton can go to Gibraltar or the British Virgin Islands, an American to American Samoa, the U.S. Virgin Islands or Puerto Rico, or a Frenchman to French Polynesia without much difficulty.
Several countries offer a retirement visa. These all require at least evidence of adequate funds, a health check, and a police check that shows no criminal record. See the individual countries' immigration department web-sites for details:
A few countries — Malaysia and the Philippines, for example — have a variant of the retirement visa for people who require nursing home care. This takes more money, but still perhaps less than such care at home. There is still a health check; people with contagious diseases are excluded.
For many of these visas, there are additional requirements. Some countries require either an investment or that you deposit a substantial sum in a local bank. Some require either that you join their national health insurance program or that you have your own health insurance. Some require other insurance, such as liability insurance or life insurance. Some countries may have a substantial annual fee for the visa.
Some retirement visas allow you to work, though you also need enough pension or assets to get the visa. Some limit or prohibit employment in the destination country, and some prohibit employment entirely; even an Internet business is disallowed.
For almost any country, a web search on "retirement visa" (or "pensionado" for Spanish-speaking countries) plus the country name will turn up much information, mainly travel agents offering a visa service. Some countries require that you go through a government-approved agent. Where it is not required, using an agent will be more expensive than applying yourself, but it may be considerably more convenient and the cost is often reasonable. If you choose to use an agent, it helps to know the rates and requirements from the government site (links above) so you can avoid any excessive charges.
Many countries have an investor's visa. If you are about to enjoy a well-funded retirement, you can put a lump of money into a local business and thereby gain the privilege of living in the country. We list some examples here, but if you have a few million dollars (invest some, and buy a house), you can go almost anywhere; most countries have some form of investor visa.
For several countries, a pure investment visa requires a large amount of money but an entrepreneur visa — for someone who intends to start and manage a business in the country — requires much less. However, there are generally additional requirements, such as having relevant experience and providing a detailed and plausible business plan.
For some countries, language requirements are waived for investors. For example, for nearly all classes of visa Canada requires that an immigrant speak English or French. However, there is no such requirement for an investor.
For some countries, investment is almost the only way to get in long-term. For example, Chinese permanent residence requires one of four things: investment, four years in a high-level job in China, five years married to a Chinese, or "great and outstanding contributions to China".
It is possible to be semi-retired but take a job abroad, mainly as a way of getting a working visa. This might let you go to countries which do not offer a retirement visa. The most common job for this is teaching English. There are possibilities for consulting jobs if you have the right skills, see working abroad. There are also quite a few volunteer posts; someone with a good pension can afford to work for low pay.
Another way to live abroad is to get a student visa; see studying abroad. Depending on destination, one might profitably spend a few months or years on language study. Anyone with an interest in the history or archaeology of a particular area might also find studying near the primary sources for their field interesting.
If you really like travelling and have fairly generous budget, it is even possible to retire by moving around with a series of tourist visas. This is expensive; you live in hotels and eat in restaurants a lot, and your transport costs are high. Even if you choose a low-cost region and backpacker-class facilities, the bills mount up. However, some people actually do this, wandering about Southeast Asia or the Caribbean with the occasional trip elsewhere. Others do something similar using cruise ships for both transport and accommodation.
Retirement: It's nice to get out of the rat race, but you have to learn to get along with less cheese. ~Gene Perret
To live abroad, you probably need multiple bank accounts, at least one back home and one in the destination. Ideally, both banks should be chosen partly because they have plenty of international branches; it does you little good, for example, to have a bank account that you cannot draw on in your new home. As a general rule, the major banks are better for this than smaller regional banks, but there are exceptions in both directions. HSBC (originally Hong Kong Shanghai Bank, but the headquarters now are in London) advertise themselves as "the world's local bank" and are a popular choice for expatriates because they have many international branches and some services specifically designed for expats.
There can be complications. Some countries — Thailand, China and India, for example — have legal restrictions on exchange of foreign currency or on import and export of the local currency.
Pensions can also have complications. Private or corporate pension plans will generally just pay you, wherever you may be. However, conditions for government pensions may depend on how long you have lived in the paying country and where you live when you apply. Generally the most important consideration is how long you lived there between ages 18 and 65; you get a full pension if you lived there for all that time. If not, each country has a different formula for calculating how much of a reduced pension you will get. Some governments also place restrictions on payment of pensions to non-residents; whether you can collect a government pension at all may depend on where you live.
In planning a budget, remember that even in a low-cost country, costs of exotic foreign foods and other luxury goods may be high. If you really want to go out for a good steak or a nice glass of a single malt, for example, it will very likely cost at least as much in Bangkok as in London or New York, and will certainly be harder to find. In Back-of-beyond-istan, neither steaks nor good whiskey are likely to be available; the only pseudo-Western choice might be expensive low quality coffee or hamburgers. Doing your own cooking or employing a cook helps, but some ingredients may be hard to find or expensive. Clothing can also be a problem, especially if you are a different size or shape than the locals. For example, some Westerners in Asia cannot buy shoes or brassieres where they live; Asian tailors are great, but there are things they cannot do and the local stores may not have the right sizes.
You also need to budget for shipping costs and for travel costs for visiting home or seeing the region. You may need communications services like high-speed Internet, satellite TV, perhaps satellite phone. Also budget for things you may need from abroad, such as English books and CDs or DVDs, maple syrup or Marmite. Ordering such things abroad raises other questions: how reliable is the postal service, and will Customs officials apply censorship?
Major credit cards — Master Card, Visa and American Express — are widely accepted around the world, as are traveller's cheques from major vendors — American Express or Thomas Cook. However, there are local variations; see country articles for details. Also, if you are moving large amounts or doing many transactions, it pays to check the costs. You might get five different combinations of exchange rate and service charges moving money in five ways — exchanging cash, exchanging a traveller's cheque, doing an electronic funds transfer, using a credit card, and doing an ATM withdrawal of local currency with a foreign card. Which is most advantageous will vary depending on where you are and which bank you use. See also our article on money.
More generally, be aware of and somewhat cautious about exchange rates. For example, the Canadian dollar has risen by over 25% against the US dollar in the last decade, and back in the 70s it fell just as fast. Such changes no doubt had large effects on retirees from either country living in the other. Some currencies fluctuate by larger amounts and more quickly than that. Your planning, either simply for retirement or for investment, needs to take account of this risk. Also note that some retirement visas require you to exchange a fixed amount monthly at government-approved banks, that in some countries the official rate is government controlled, and that such rates are almost never to the traveller's advantage.
This is a question too difficult for a mathematician. It should be asked of a philosopher. — Albert Einstein, about filling out his income tax form, 1944
In most cases, people on retirement visas enjoy a tax exemption in the destination country. Investors, however, are generally not exempt and must plan accordingly.
Taxation by the home country may be an issue. American citizens and resident aliens are required to file and are taxable by the US on worldwide income even if living abroad. The rules are complex and there have been significant changes in 2012.
Other countries generally do not tax on worldwide income, but most will apply tax if you have an income in that country. For example, take a Canadian who has $20,000 a year of income from renting out his home in Canada, but lives elsewhere. If he lives in a country such as the US which has a tax agreement with Canada, then the Canadian government takes a flat 15% of the Canadian income, $3000 in this case. When he does his US tax return, he reports the $20,000 as income and deducts the $3000 from the US tax due as tax already paid. If he lives in a country which has no tax agreement with Canada, then the Canadian government takes a flat 25%. As for most taxation, enforcement on these can be draconian; should an expat fail to pay these taxes, his agent in Canada becomes legally liable for the entire amount and both the expat's and the agent's bank accounts can be seized.
Depending on a whole complex of factors, it may be advantageous to have some of your money in a tax haven, which need not be either your home country or the one you live in. For example, an Englishman living in Thailand might have a Channel Islands account, and the Canadian in the example above might consider selling the house and investing the proceeds through a Hong Kong stockbroker. On the other hand, he might be better off mortgaging the house, since the interest would be a deductible expense for the taxation, and doing something clever with the proceeds.
For anyone with significant assets, getting professional advice on such matters is likely to be well worth the cost.
Buy land; they've stopped making it. — Mark Twain
In some countries, there are legal restrictions on foreigners buying property. For example, in Thailand, a foreigner cannot own land but can own a condominium.
When choosing a place, you may need to allow space for whatever visitors you expect and to consider getting furniture that gives you flexibility in accommodating visitors, such as a couch that folds out into a bed. Or perhaps just choose a place with a good hotel nearby.
In some of the retirement visa deals, buying property gets you off the hook on the cash deposit. For example, for a Philippines visa you must put $10,000 in a Philippines bank and leave it there as long as you stay, unless you buy property. However, if you spend $50,000 or more on real estate that complies with government rules (not a place that is still under construction, for example), you get the deposit back.
In planning a move, allow for shipping costs and consider which things might be better bought at the destination than shipped. As a general rule, furniture and appliances are better bought on site than shipped. This reduces shipping costs, avoids difficulties with different electrical systems, and often means you have a warranty that applies where you are. However, there are plenty of exceptions; you need to work out which of the exceptions apply to you.
If you have items of any sort which are small, high-quality and useful — say kitchen pots and knives — by all means bring those; replacing them is likely to be uneconomical, and if you are used to good tools then using lesser ones can be unpleasant. Larger items are a tougher call — a fine sound system may be worth bringing even if the speakers weigh a ton and the voltage is wrong, but again it may not be. If you have good art or craft items — say paintings or carpets — consider bringing them along; they will make the new place feel much more like home. On the other hand, also consider giving them to family and friends who you know will appreciate them.
Books are heavy so transporting them can be a problem but bringing at least some of them is essential for many travellers, especially when planning for a long-term stay. If you are sending a freight shipment for household goods, then including books in that will be the cheapest way to transport them. If you are travelling light and want to bring books, the post office may be far cheaper than airline excess baggage charges; some countries' post offices (Canada, for example) have a special cheap rate for mailing books. In particular, cookbooks may be of great value if you either cook yourself or want to train a cook you hire at the destination. Of course there are also many cookbooks and recipe collections online. For traditional American dishes see the Whitehouse Cookbook, published in 1887 and written by the presidential chef of the time.
Also consider import duties, which can be prohibitive in some cases. For example, Singapore is a duty-free port for most things so bringing most electronic items there makes little sense. However, their duty on automobiles is 31%; coming on top of shipping costs this means bringing a car there is probably impractical. Other places have high duties on electronics so you might want to bring those, or stop in Singapore or Hong Kong to buy them en route.
Many countries have an exemption so that there is no duty for personal household goods for someone moving there. For example, someone going to Thailand on a retirement visa can bring in personal goods duty-free within the 6 months of issuance of the visa, and a Canadian returning home after a year or more abroad, or an immigrant to Canada, can bring goods for personal use duty-free. Some countries, such as Malaysia, even allow a retiree to import a car duty free.
I think you might dispense with half your doctors if you would only consult Dr. Sun more. — Henry Ward Beecher
Health concerns are important, especially with advancing age. Availability and cost of good care are a factor in choosing a destination.
You may need vaccinations or other precautions such as anti-malarial medication. Consult a doctor with expertise in travel medicine, or visit a travel medicine clinic, well before your planned departure.
Bring your medical records; your doctor at the destination may need them.
Health insurance, preferably a policy that covers evacuation in an emergency, should be part of your plan and budget. In some countries, people on a retirement visa are eligible for, or even required to enroll in, the destination country's health insurance scheme. This may be useful, but you might need other insurance as well. In particular, the local scheme may not cover evacuation or an emergency that crops up while you are outside that country.
Note that if you live abroad, you may no longer be covered by your home country's health insurance system and coverage may not be restored immediately if you return. For example, for the Canadian province of Ontario, you must be resident for three months before you can apply for coverage. Without other insurance, a sick person might be unable to go home because he could neither afford to pay for treatment himself nor survive three months without it.
Because of the changes in the healthcare system in the United States, many Americans are investigating the cost of medical care in other countries. Panama, for instance, has attracted retirees because of its affordable out of pocket expenses for its first rate bi-lingual doctors and hospitals. Seniors who have obtained their residence visas, also get additional "Jubiliado" discounts of between 15-20% for medical, dental, pharmacy, opticians, laboratory and hospital expenses - and this includes cosmetic surgery procedures.
The Net interprets censorship as damage and routes around it — John Gilmore
Communications become vitally important when you live overseas. Low-quality communications systems are a problem in some areas, and censorship is a major difficulty in others.
Consider having a backup communication system to use if other things fail. For example, an earthquake taking out an undersea cable, or a government in a panic about some unrest in the country, might block both phone and Internet connections. If that is a risk where you are going and communications are critical for your life or business, be prepared. Depending on your exact situation, it might be enough to have a short wave radio or satellite TV to get international news broadcasts. Others might need two-way communication as with a ham radio setup or a satellite phone. On the other hand, some may be fine with nothing at all.
If your retirement plans include a vehicle, perhaps an SUV or a sailboat, consider equipping it with a communications system that can double as backup for your home system.