The last of the baby boomers are now in their 60s, with more than 4.1 million Americans turning 65 through next year. Despite all the "boomer" jokes, boomers have played a powerful role socially, economically, and politically.
Today, boomers are leading the way as they emigrate outside the U.S. to countries across the globe. Many have simply decided to enjoy retirement somewhere that makes more sense to them.
If you're considering retirement abroad, there's a lot to think about. In addition to figuring out which country best fits your ideal retirement, you also have financial concerns to manage. Here's a rundown of the financial moves you'll need to make before bidding adieu to the U.S.
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1. Learn about tax implications
Determine what your tax residency status will be in your new country and your tax obligations to that country, as well as the U.S. Part of this is understanding how the FATCA (Foreign Account Tax Compliance Act) works and how it impacts your reporting requirements.
2. Manage banking -- here and abroad
Keep at least one U.S. bank account open for Social Security, pension, and annuity deposits. It's a good idea to open a local bank account in your new country as well. Once that account is open, set up direct deposit to and from your U.S. bank account.
If you have more than one retirement account, consider consolidating them for easier RMD management. Finally, learn how currency fluctuations will impact your retirement income.
3. Maintain healthcare coverage
Few things are more important than adequate healthcare in retirement, so before you make the big move, investigate the local healthcare system and how much you can expect to spend. Medicare won't cover your healthcare needs in your new country, so you'll need to buy a policy. Once there, stay current with local immunization mandates and obtain electronic copies of your medical records to store in a secure cloud service.
4. Create a budget you can live with
Your budget should begin with calculating the cost of living in your new country, including housing, food, healthcare, and transportation. Account for the currency exchange rate and inflation rates in the new country. Build a buffer for unexpected expenses (such as higher costs of imported goods) and plan periodic trips back home. The more detailed your budget, the easier it should be to stick with it.
Finally, build a retirement fund with enough money to cover at least one year of expenses.
5. Purchase insurance
In addition to healthcare insurance, you'll need other coverage. Whether you're maintaining real estate in the U.S. or purchasing a home in your country of choice, make sure your homeowner's insurance is up-to-date and adequate. If you plan to drive in your destination country, learn about the type of insurance you need.
6. Review your estate plan
Work with an estate planner to learn if you need to update your will to reflect your move abroad, review beneficiary designations on all accounts, and find out if inheritance laws in your destination country will impact your estate planning.
You're not quite buying a new mule and outfitting a prairie schooner, but you're going on an adventure. Make sure to do everything you can while still stateside to make it a great experience.
