Dear Market Watcher,
I am 51 years old and want to retire by 55 years old. I will only have about $125,000 in retirement accounts plus another $35,000 in non-retirement accounts. I'm planning to move out of the US because I have a fully paid house abroad. After living there for a year, I will obtain residency in the country, which includes essentially free national healthcare.
We will maintain an international health insurance plan that includes evacuation to the United States if anything major happens. My wife is older than me and will start taking Social Security when we retire. Its monthly amount will be more than double our monthly living expenses. I intend to take Social Security after age 62. Additionally, we will have two to three years of living expenses in cash when we retire.
We would be very happy to live there with less stress, etc. Are we crazy?
Related: We are in our seventies and suffer from a chronic illness. We have $300,000 in 6-month CDs, and $100,000 in cash. Are we on the right track?
Do you have a question about your retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear reader,
You don't look crazy. In fact, it sounds like you're quite prepared.
You will each have two to three years' worth of living expenses in cash upon retirement, which will allow your investments to continue to grow over time and will keep you covered in the event of any emergencies. It's also positive that you've taken into account your needs and healthcare options, considering how expensive it can be (and how confusing it can be when you're not in your hometown).
Many retirees choose to move abroad for a variety of reasons – change of pace and scenery, proximity to relatives, cost of living, etc. If you already have a home there, you're in good shape.
I will just mention some of the necessary tasks to keep in mind while preparing for this step.
Aside from planning how much you'll receive in Social Security, be clear about where you'll host that income. Retirees living abroad should carefully consider which bank they will work with, so that the funds can be easily accessed. 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 United States, according to USA.gov. Below is a list of countries and territories that accept these direct deposits.
Just be sure to check with the Social Security Administration from time to time. The agency will send out questionnaires every year or two to determine your eligibility, according to USA.gov, and if you don't respond, they may stop benefits.
As for your investment accounts, it may be easier if you keep your US address on file. If that's not possible, talk to the financial institutions where your retirement and non-retirement investment accounts are held so you understand what you may need to do to avoid any withdrawal and tax issues.
See also: “We stay in two-star hotels”: We are 70 years old and have $1.8 million, but my husband insists on living cheaply. Don't we have enough?
Maintaining the U.S. financial system can be to your advantage, including maintaining your American credit cards, according to Kathleen Peddicord and Leif Simon, authors of “Living and Investing Abroad.” Peddicord and Simon write extensively about retirement and living abroad on their site. Opening a credit card abroad can be complicated, they say, and may come with lower limits than you're used to in the United States
Some countries have residency requirements, such as investing a minimum amount of money, having a specific amount of savings, or having a job to stay in the country. Your home may be the investment you need to get that residency, but it's also important to understand the renovation rules, if any, so you don't find yourself suffering from a headache a year or two after you make the move.
Since you have time between now and the time you intend to retire, try to live there intermittently for the next few years. Take trips during the non-tourist seasons, and when you're there, visit places that only locals go, including grocery stores, pharmacies, and maybe even a medical facility or dentist's office. If you haven't done so yet, try to spark some connections with people who live near you, so that you have a small community to rely on when you live there full time. The ideal scenario is to feel completely comfortable and at home when you finally pack your bags for good.
Readers: Do you have suggestions for this reader? Add them in the comments below.
Do you have a question about your retirement savings? Email us at HelpMeRetire@marketwatch.com
