Dear MarketWatch,
I am 51 and would like to retire by 55. I will only have about $125,000 in retirement accounts plus another $35,000 in non-retirement accounts. I plan on moving out of the U.S. as I have a house that’s fully paid for overseas. After living there a year, I will get residency in the country, which includes essentially free national healthcare.
We would maintain an international health-insurance plan that includes evacuation to the U.S. for anything major. My wife is older than I am and will start her Social Security when we retire. Her monthly amount would be more than double our monthly living expenses. I intend to take Social Security later than age 62. In addition, we will have two to three years of living expenses in cash when we retire.
We will be quite happy living there with less stress, etc. Are we crazy?
Related: We’re in our 70s with a chronic illness. We have $300,000 in 6-month CDs, and $100,000 in cash. Are we on the right track?
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear Reader,
You don’t sound crazy. In fact, you sound quite prepared.
You would both have two to three years’ worth of living expenses in cash when you retire, which will allow your investments to continue to grow over time, and also hold you over in the event of any emergencies. It is also positive that you’ve considered your healthcare needs and options, considering how expensive that can be (and how confusing it can be when you’re not in your hometown).
Many retirees choose to move overseas for a variety of reasons — change of pace and scenery, proximity to relatives, cost of living, and so on. If you already have a house there, you’re in good shape.
I’ll just mention a few necessary tasks to keep in mind as you prepare for this move.
Aside from planning for how much you’ll receive in Social Security, be clear about where you will house that income. Retirees who live abroad should carefully consider what bank they will work with, so that the money is easily accessible. Social Security benefits are paid electronically through direct deposit, and retirees abroad can find an institution that has an international direct deposit agreement with the U.S., according to USA.gov. Here’s a list of the countries and territories that accept these direct deposits.
Just be sure to check in with the Social Security Administration from time to time. The agency will send questionnaires every year or two to determine your eligibility, according to USA.gov, and if you don’t respond, they may cease benefits.
As for your investment accounts, it might be easier if you keep a U.S. address on file. If that’s not possible, talk to the financial institutions where your retirement and non-retirement investment accounts are held so that you understand what you might need to do to avoid any problems regarding withdrawals, and taxation.
Also see: ‘We stay in two-star hotels’: We’re 70 and have $1.8 million, but my husband insists on living cheap. Don’t we have enough?
Keeping U.S.-based finances in order could be to your advantage, including maintaining your U.S. credit cards, according to Kathleen Peddicord and Lief Simon, the authors of “Live and Invest Overseas.” Peddicord and Simon write extensively about retiring and living abroad on their site. Opening a credit card overseas could be complicated, they say, and might come with lower limits than you’re used to in the U.S.
Some countries have residency requirements, such as making an investment of a minimum amount of money, having a set amount of savings, or getting a job to remain in the country. Your home may be the investment you need to acquire that residency, but it’s also important to understand the renewal rules, if any, so that you don’t find yourself with a headache a year or two after you make the move.
Since you have time between now and when you intend to retire, try living there on and off for the next few years. Take trips during non-touristy seasons, and when you’re there, visit spots only locals would go, including grocery stores, pharmacies, maybe even a medical facility or a dentist’s office. If you haven’t yet, try to spark some relationships with people living nearby, so that you have a small community to rely on when you’re living there full-time. The ideal scenario is feeling completely comfortable and at home by the time you finally pack up your bags for good.
Readers: Do you have suggestions for this reader? Add them in the comments below.
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
