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Retirees flock to these countries for unmatched benefits – is yours on the list?

Retirees flock to these countries for unmatched benefits – is yours on the list?

Top 10 Most Popular Countries for US Expats
country Number of US expats
1 Mexico 799,248
2 Canada 273,226
3 United Kingdom 170,771
4 Germany 152,639
5 Australia 116,620
6 Israel 76,794
7 South Korea 68,050
8 France 61,668
9 Japan 58,340
10 Spain 57,112
The data is from 2020, comes from the UN International Migrant Stock and is the most current data available. Puerto Rico was also a popular location for US expatriates, accepting 159,515 US citizens in 2020, but was excluded as a US territory from this list of foreign countries.

Cost of living in the 10 most popular countries for expats

There are many financial factors you need to consider when determining your retirement goal. Key economic determinants include:

  • Real estate prices
  • Healthcare costs
  • Income tax
  • Property tax

The Organization for Economic Co-operation and Development (OECD) has collected the average financial impact of each factor listed above in countries around the world. The OECD country selection includes the ten most popular countries among US expats. This data can help you make important financial comparisons across countries to help you decide where to retire.

Real estate prices

When it comes to housing costs – the average price of the apartment itself, not including additional utilities or maintenance costs – most of the top countries have average prices below the US among US expats. Canada is the only country in the group with above-average real estate prices.

Canada has the highest average home prices among the top 10 countries among U.S. expats, but its home prices are less than 2% higher than average U.S. home prices. Meanwhile, South Korea, the seventh most popular country among U.S. expats, has the lowest average home prices, nearly 30% less than U.S. home prices

When applying for a visa, the minimum investment in real estate is a common factor. So if you want to apply for a visa, deciding whether or not to acquire residency is an important financial decision.

Healthcare costs

Healthcare in the US is very expensive compared to the top 10 countries among expats, and healthcare costs are a common concern for retirees who may need more care as they age.

Of the 10 countries selected, Israel is the only one with more expensive health care than the United States, but only just. Of all ten countries, Mexico has the lowest average healthcare costs, 60% lower than US healthcare costs

Medicare will not accompany you outside the United States if you choose to live long-term in a foreign country. Therefore, healthcare costs are a common problem for retirees living abroad.

The OECD Health Price Index takes into account the price of health goods and services and the quantity of health care, but does not take into account the quality of health care and system organization.

All of the countries on this list of 10 offer universal health care except Mexico, and for U.S. citizens, navigating a new health and health insurance system can be a complicated task.

If you have specific health needs, be sure to research whether your future retirement goals have the specific resources you need.

Income taxes

Income tax is an important consideration for U.S. citizens who receive income from tax-deferred retirement plans, such as. B. traditional 401(k)s, 403(b)s, traditional IRAs and retirement plans.

In the USA, the income tax rate is 12.5% ​​of GDP. Mexico has the lowest personal income tax rate (3.75%) among the top 10 countries among US expats, with less than a third of the United States’ income taxes. Canada has a similar income tax rate as the United States

Some visa applications require a minimum income for residency. Research the visa requirements for the country you are moving to to ensure you are financially able to live there.

Good news for retirees: Social Security payments will remain in place for U.S. residents and U.S. residents who choose to live in one of the top 10 most popular countries among U.S. expats. For some individuals with significant foreign income, U.S. Social Security benefits are taxed as income, and this rule applies regardless of the beneficiary’s domestic or foreign residency.

Depending on country-specific foreign social security policies, your social security payments may also be taxed as foreign income in your country of residence because foreign social security is taxed in the United States

If you are a U.S. citizen and plan to work part-time abroad in retirement, be aware that you may have to pay Social Security taxes in the U.S. and your country of residence.

Some countries have totalization agreements with the U.S. that allow workers to pay Social Security taxes once instead of twice. Of the 10 countries listed in this article, all except Mexico and Israel have totalization agreements with the United States

If you plan to retire in another country, be sure to check the Social Security Administration website to see if you are eligible for Social Security payments there. If you decide to work in another country in retirement, check the Social Security Administration’s website to find out whether your Social Security benefits are subject to double taxation.

Additionally, if you are a U.S. resident but not a U.S. citizen, the guidelines for receiving Social Security benefits outside the U.S. may vary depending on marital status, age, time in the country, or other factors. You should check the Social Security Administration’s specifications for your situation.

Property taxes

Compared to GDP, the average US property tax rate is 2.9%. The countries most popular with US expats include Israel and the United Kingdom, which have the highest property taxes at 4% of GDP. Meanwhile, Germany and Mexico have the two lowest property taxes, with tax rates of 1.1% and 0.3% of their GDP, respectively.

As with property prices, property taxes are also an important financial factor when moving abroad.

Additionally, purchasing property above a certain minimum amount can help you get a visa on certain applications, so property tax can be an important factor if you’re retiring abroad. For example, if you make a real estate investment in Spain of more than €500,000 and have a return on investment of at least five years, you can obtain a residence permit in Spain.

Reasons to retire in another country

The most common reasons for retiring abroad include:

Money

According to a survey by the Employee Benefits Research Institute, only 18% of workers are very confident that their retirement savings will be sufficient. Current retirees were more optimistic; Still, only 27% said they were very confident they would have enough money to live on in retirement.

The countries on this list have significantly cheaper costs of living than the United States. American expats may find they can further stretch their retirement budget in another country.

Travel

Travel is a top priority for many retirees. Sixty percent of respondents to a survey by the Transamerica Center for Retirement Studies said traveling was their biggest dream in retirement. More respondents cited travel than any other priority listed.

Depending on your destination, moving abroad can also make traveling to other countries easier. The Spain Visa by Investment program, for example, entitles you to travel to countries in the EU or the Schengen area.

policy

The number of Americans saying they want to leave the country has tripled since 1974, according to a Monmouth University study. Party affiliation appears to be a factor: 41% of independents say they want to move abroad, while 35% of Democrats and 22% of Republicans say the same.

However, it is even more difficult to try something new and start over in a new country if you are tied to your location by work, school or a young family. Retirement could be an opportunity for those who have long dreamed of making another country their home.

Frequently Asked Questions (FAQs)

What is the best place to retire abroad?

As of 2020, Mexico is the most common place of residence abroad for people from the United States. Mexico’s real estate prices are 21% lower than average home prices in the United States, and Mexico’s healthcare costs are 60.1% lower than the United States. Mexico’s personal income tax, as a share of GDP, is half the global average, and property tax as a share of GDP is less than a sixth of the global average. Mexico also allows U.S. citizens to stay in the country for up to 180 days without a visa, and the country’s proximity to the U.S. can make it a convenient destination for retirees whose family still lives in the U.S

Where can I retire outside the United States?

Where you retire is up to you, but some countries are more convenient, affordable, and friendly to U.S. citizens than others. The U.S. Department of State website regularly updates country-specific visa requirements and travel advisories for those interested in moving to specific countries. Additionally, it is helpful to note that the ten most popular countries among US expats are, in order of most to least popular: Mexico, Canada, United Kingdom, Germany, Australia, Israel, South Korea, France, Japan, and Spain. Many of these countries offer below-average costs of living.

Which countries do not tax US Social Security benefits?

For some individuals with significant foreign income, U.S. Social Security benefits are taxed as income in the U.S., regardless of whether the beneficiary resides inside or outside the country. Depending on country-specific foreign social security policies, your payments may also be taxed as foreign income in your country of residence because foreign social security is taxed in the United States Outside this group, some other countries have no income tax and therefore do not tax U.S. Social Security benefits.

The conclusion

In addition to fulfilling their life aspirations, retirees can also choose to live abroad to reduce the cost of living. If you plan to retire abroad, be sure to consider property prices, healthcare costs and tax burdens when choosing your retirement destination. In addition, there are specific social security, visa and tax regulations for each country. Knowing these regulations will help you choose the country that best suits your needs and financial situation.

Beyond financial considerations, retiring abroad is a huge undertaking, and extensive research is key to planning a successful and sustainable retirement. You may also face language barriers and cultural differences. By considering cultural and social as well as financial factors, you can make a holistic decision that will best support your retirement.