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How to Prepare for Retirement Overseas

Kathleen Peddicord

Relocating overseas

Moving overseas for retirement is an exciting opportunity to reinvent your life, and also offers opportunities to reduce the cost of retirement. But it's a good idea to make sure another country will meet all of your retirement needs before moving there. Here are 10 ways to get ready for a move overseas in retirement:

Lower your cost of living.

One of the greatest advantages of retiring overseas can be a dramatically reduced cost of living. If your retirement budget is modest, your best options for enjoying a rich, full and comfortable retirement, and even a few luxuries you can't afford in the U.S., are likely to be overseas.

Rent first.

If you're considering retiring in a new country, it's usually wise to rent a place to live at first. This will give you a chance to try the area on for size before committing and move on easily if the country or part of town doesn't meet your needs and preferences.

Test out the amenities.

Appropriate medical care and transportation options are a necessity for retirement. Also, check out whether potential retirement spots provide all the amenities you need to enjoy your hobbies, perhaps including surfing, boating, fishing, diving, international-standard golf courses, restaurants, theaters, first-run movies, shopping malls, bridge clubs and tennis teams.

Purchase health insurance.

You typically can't use Medicare benefits in a foreign country. A local insurance policy in the country where you relocate can be inexpensive, but coverage is sometimes limited to particular regions or facilities. An international insurance policy is more expensive, but it offers more geographic flexibility. Some people even opt out of insurance altogether and keep an emergency fund sufficient to cover the costs of even catastrophic care.

Look for good weather.

Identify your ideal climate, whatever that is, and retire to a place where you can enjoy that weather year-round. Also think about what scenery you would like to see from your bedroom window every morning, perhaps including the city, beach or mountains.

Learn the language.

Some people don't feel comfortable retiring in a place that doesn't have fellow English-speakers. Consider whether your foreign language skills are good enough to be among people who don't speak English, and how willing you are to learn a new language.

Consider the transportation options.

If you plan to travel regularly in retirement, either back home to visit family or far and wide to take full advantage of the freedom this stage of life can afford, consider the distance to the nearest international airport before deciding where to base yourself. Also, look for places with public transportation options, and consider how you will get around and whether you will need to invest in owning a car.

Examine the exchange rate.

The rate of exchange between the local currency and the one in which your retirement income is denominated could have a big impact on your retirement finances, and changes in the exchange rate could affect your spending power. While you can't predict what it will be in the future, it's a good idea to take steps to protect yourself from inflation.

Get tax breaks for retirees.

Some countries roll out the welcome mat for foreign retirees, offering sometimes significant tax breaks, in-country discounts and other perks to resident retirees. Belize, Ecuador, Nicaragua and Panama are among the countries that offer a program of special benefits in an effort to attract foreign retirees.

Reinvent your life.

Retiring overseas means leaving behind your old life back home to start a new one, often in a different culture. You will need to strike a balance between adopting the customs of your new and exotic location overseas and keeping in touch with family and friends back in the U.S.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 28 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring and investing overseas in her free e-letter. Her newest book, How To Buy Real Estate Overseas, published by Wiley & Sons, is the culmination of decades of personal experience living and investing around the world.

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