Dear MarketWatch,
I am 51 and would like to retire at 55. That leaves me with only about $125,000 in retirement accounts plus another $35,000 in non-retirement accounts. I am planning to move from the US as I have a fully paid for house abroad. After living there for a year, I will be granted residency in the country, which essentially includes free national healthcare.
We would maintain an international health insurance plan that includes evacuation to the US for anything important. My wife is older than me and will start her Social Security when we retire. Her monthly payment would be more than double our monthly living expenses. I plan to take Social Security later than age 62. Plus, we’ll have two to three years of living expenses in cash when we retire.
We will be very happy living there with less stress, etc. Are we crazy?
Related: We are in our seventies and have a chronic illness. We have $300,000 in six-month CDs and $100,000 in cash. Are we on the right track?
Do you have a question about your own pension savings? Email us at HelpMeRetire@marketwatch.com
Dear reader,
You don’t sound crazy. You actually sound quite prepared.
You would both have two to three years of living expenses in cash when you retire, allowing your investments to continue to grow over time and keeping you going in an emergency. It’s also positive that you’ve considered your healthcare needs and options, taking into account how expensive that can be (and how confusing it can be if you’re away from your hometown).
Many retirees choose to move abroad for a variety of reasons: change of pace and environment, proximity to family members, cost of living, and so on. If you already have a house there, you’re in good hands.
I’ll just mention a few necessary tasks to keep in mind as you prepare for this step.
In addition to planning how much you will receive in Social Security, you should also be clear about where you will house that income. Retirees living abroad should carefully consider which bank they will use 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 you will find a list of the countries and territories that accept these direct deposits.
Be sure to check with the Social Security Administration occasionally. 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 can cut off benefits.
As for your investment accounts, it may be easier if you maintain a US address. If that’s not possible, contact the financial institutions where your retirement and non-retirement investment accounts are held so you understand what you may need to do to avoid problems with withdrawals and taxes.
Also see: ‘We stay in two-star hotels’: We are 70 and have $1.8 million, but my husband insists on living cheaply. Don’t we have enough?
Keeping U.S. 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 on their site about retirement and living abroad. Opening a credit card abroad can be complicated, they say, and may come with lower limits than you’re used to in the US
Some countries have residency requirements, such as making a minimum investment, having a fixed amount of savings, or finding a job to stay in the country. Your home may be the investment you need to secure that residency, but it’s also important to understand any renewal rules so you don’t end up with a headache a year or two after you make the move.
Since you have time between now and when you plan to retire, try living there occasionally for the next few years. Take trips during the non-touristy seasons, and while you’re there, visit places where only locals go, such as grocery stores, pharmacies, maybe even a medical facility or dental office. If you haven’t already, try to build some relationships with people who live nearby so you have a little community you can rely on when you live there full-time. The ideal scenario is that you feel completely comfortable and at home by the time you finally pack your bags for good.
Readers: Do you have any suggestions for this reader? Add them in the comments below.
Do you have a question about your own pension savings? Email us at HelpMeRetire@marketwatch.com
