Suzanne McGee has lived in six countries on three continents, and understands the allure of wanting to jump on a plane, head south, and never turn back — especially when it looks like you might not be able to retire until you’re 125. Imagine! Living in some cheap place for $25,000-ish a year and never enduring another winter like this one again. I certainly spend every January swearing up and down I will do this some day soon.
But of course there are downsides, as she writes for the Guardian — cultural differences, complicated visas, leaving behind friends and family who you’ll have to pay a lot of money to go visit. Also these more practical challenges I hadn’t thought of:
It’s far too easy to run afoul of tax or estate planning rules when you retire abroad. For instance, some kinds of annuity income are tax-advantaged for US residents, and if you buy a property in, say, Mexico, you might be unwittingly forfeiting that advantage.
If you decide to work overseas, be aware that the IRS requires you to pay taxes on your worldwide income, even if you’re no longer a resident. As a general rule, it’s not a good idea to buy a property or write a will overseas without consulting an accountant or attorney in the United States who is familiar with the kind of cross-border issues you might encounter.
It’s also worth pondering what you’ll do when you reach your late 80s or your 90s, and hit the point where you need 24-hour nursing care. Is that available in the destination you’ve chosen, and how will you finance it? (Medicare doesn’t travel.)
No Medicare AND you have to pay income taxes? Rude.
Still I will maintain this life fantasy for as long as my psyche needs it, which is probably forever.