Countries That Offer a Comfortable Retirement for U.S. Expats
For many Americans, retirement is a time of exploration and adventure. Whether it’s the allure of new cultures, a lower cost of living, a more relaxed lifestyle or simply a change in scenery, an increasing number of Americans are looking to settle abroad in retirement. If you’ve always dreamed of retiring overseas, consider these five retirement destinations, which each have unique benefits for Americans retiring abroad.
1. Costa Rica
With its stunning beaches, lush rainforests and affordable cost of living, Costa Rica constantly ranks among the best places for U.S. expats to retire. The benefits of retiring in Costa Rica include:
- An affordable cost of living – Costa Rica generally offers a lower cost of living than many areas in the United States. Housing, groceries, transportation and healthcare costs can be significantly lower, which allows retirees to stretch their retirement savings over a longer period of time.
- Healthcare – Costa Rica is known for its excellent and affordable healthcare system. The country offers both public and private healthcare options, which can be particularly appealing to retirees who are worried about healthcare costs in the United States.
- Ease of residency – Costa Rica offers multiple residency options that can provide potential benefits, such as tax exemptions, to retirees. Its “golden visa” program makes it easy to obtain residency by purchasing a home in the country.
- Established expat communities – You won’t be a trailblazer if you choose to retire in Costa Rica, as the country has established expat communities across regions.
- A territorial tax system – The Costa Rican tax system is based on the principle of territoriality, meaning income received from outside the country is not taxed by the country. Only income earned within the boundaries of Costa Rica is subject to local tax assessment.
2. Portugal
Similar to Costa Rica, Portugal offers a low cost of living for American retirees. Additional benefits of retiring in the country include:
- High-quality healthcare – Portugal’s healthcare system offers both public and private options that are well regarded across the world. As an added benefit, many medical professionals speak English.
- Ease of residency – Portugal offers flexible options for people to obtain long-term stay visas for retirement or remote work. These visas also offer a path to full citizenship after five years.In the past, Portugal’s “golden visa” program had offered a straightforward path to residency for foreigners who make qualifying investments in the country. However, effective as of October 7, 2023, it’s no longer possible to invest in real estate or a real estate-related fund to qualify for a “golden visa.”
- Safety – Portugal is considered one of the safest countries in Europe.
- Access to Europe – Portugal’s location in Europe makes it the ideal home base from which to explore other countries.
NOTE: Starting January 1, 2024, Portugal’s Non-Habitual Resident (NHR) tax regime is proposed to end for new entrants. However, current NHR status holders will keep their benefits, which are valid for ten years. The measures of the proposal are pending discussion by Portuguese parliament and are subject to change. Please contact us for updates.
3. France
Some areas of France are very affordable, and the country offers great access to other parts of Europe. France also offers the following benefits for retirees:
- Diverse expat communities – Many parts of France have established expat communities, which can provide a sense of belonging and support as well as an opportunity to connect with other retirees from around the world.
- Great Food – Any discussion of France must include its food, including world-renowned cuisine, local markets and fine dining. Retirees can enjoy an abundance of fresh produce, gourmet cheeses and pastries.
- Public transportation – France has an efficient transportation system, making it easy to travel across the country and to other countries in Europe without the need for a car.
- Healthcare – France has an excellent healthcare system that’s consistently ranked as one of the best in the world.
- Retirement account distributions – A main benefit as a U.S. expat retiring in France is that once you establish residency, distributions from U.S. retirement accounts are only taxable in the United States. This is especially beneficial when it comes to Roth IRA distributions, as France allows American expats to preserve the tax-free status of after-tax accounts. In contrast, most other foreign countries require expats to pay taxes on Roth distributions.
4. Mexico
Like the other destinations noted above, Mexico offers a lower cost of living and access to modern and affordable healthcare. Retiring in Mexico also offers the following benefits:
- Proximity to the United States – Mexico’s close proximity to the United States makes travel between the countries both easy and affordable. This can be especially important for U.S. expats with family still living in the United States.
- Retirement visas – Mexico offers a temporary resident visa, which can be a straightforward option for retirees hoping to live in the country for an extended period of time.
- Warm climate – Mexico offers a warm, tropical climate, which can be appealing to retirees.
- Expat communities – Areas such as Puerto Vallarta, San Miguel de Allende and Playa del Carmen offer vibrant expat communities that provide a support network and a chance to get to know expat retirees from around the world.
5. Spain
Spain offers access to well-regarded, comprehensive healthcare at a reasonable cost, as well as the following benefits.
- Diverse climate – The climate in Spain ranges from the mild winters and warm summers of the Mediterranean coast to the cooler climate of the northern regions to the warmer Canary Islands. Retirees can find a home in the climate of their choice.
- Mediterranean lifestyle – Spain is known for its relaxed Mediterranean lifestyle, which emphasizes leisure, socializing and exploring outdoor experiences.
- Thriving expat communities – Spain is home to large expat communities, particularly in coastal areas as well as in cities such as Barcelona, Madrid and Valencia.
- History and culture – Spain is known for its festivals, traditions and historic sites, offering retirees lots to enjoy.
Just a quick reminder — regardless of where you choose to retire, as long as you continue to maintain your U.S. citizenship, you’ll be required to file a U.S. tax return. There are multiple complexities associated with filing taxes as a U.S. expat, so it’s wise to consult with a tax advisor who has experience working with expat clients in your current country of residence.
If your retirement plans include living overseas, it’s important to fully understand the potential financial ramifications of your move. At Creative Planning International, we specialize in helping U.S. expats and cross-border families maximize their wealth and avoid costly mistakes. We understand the complex interactions of multi-jurisdictional tax and regulatory regimes and help clients develop operationally and financially efficient retirement and wealth management strategies. Because we serve in a fiduciary capacity, you can be confident we’re acting solely in your best interests.
For more information, request a meeting with a member of our team.
This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.
