• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Essential planning tips

Dreaming about retirement in another country is one thing. Moving there is another. Before committing, consider go on a scouting trip (or two, or three). But rather than staying in a hotel and taking guided tours, rent a home in a residential neighborhood. Buy groceries from the local grocery store, take public transit and visit a medical clinic.

You’ll also need to understand the visa requirements. For example, Portugal offers two types of visas for non-EU retirees: a D7 visa, designed for those with a regular stream of passive income (such as Social Security or a pension — there is a minimum requirement) and the Golden Visa for those who plan to make an investment (minimum €250,000) in the country. Both visas offer a pathway to permanent residence.

You’ll also want to look at the legal and tax implications of buying a home in a foreign country. For some retirees, it may make more financial sense to rent instead of buy. And, if it’s not working out — say our example Mariah decides she misses the U.S. — it’s easier to relocate if you’re renting.

Another consideration is language. In Portugal, there’s a large expat community (and a lot of tourists), so English is widely spoken. That won’t be the case in all countries. But, if Portugal is going to be Mariah’s new home — and if she truly wants to connect with locals — then she may want to invest the time in Portuguese language lessons.

Discover How a Simple Decision Today Could Lead to an Extra $1.3 Million in Retirement

Learn how you can set yourself up for a more prosperous future by exploring why so many people who work with financial advisors retire with more wealth.

Discover the full story and see how you could be on the path to an extra $1.3 million in retirement.

Read More

The costs of living abroad

Expats can retire to Portugal and live comfortably on about $3,000 a month, according to International Living, but this can depend on whether they rent or own, where they choose to live and what lifestyle they want to lead.

For example, living inland in a rural village is typically more affordable — and possibly more authentic — than living in an urban area or popular region.

“Property near the coast comes with a higher price tag and brings summer tourists, just like anywhere else in the world,” according to the International Living. And if you buy, rather than rent, then you’ll have to deal with additional expenses, including property taxes and maintenance.

Then there’s income tax, which follows you no matter where you move.

“If you are a U.S. citizen or resident alien, your worldwide income is generally subject to U.S. income tax, regardless of where you are living,” according to the Internal Revenue Service (IRS) tax guide for Americans living abroad.

That means Mariah will still have to file tax returns to the IRS after she moves to Portugal. And, if she qualifies as a Portuguese tax resident, she’ll also have to file a tax return there. There is a tax treaty between the U.S. and Portugal, however, navigating multi-jurisdictional tax and regulatory regimes can be complicated and may require the services of a tax professional familiar with these regimes to minimize potential double taxation.

Also, don’t expect Medicare to cover you while living abroad. Find out if the country has universal health care or if you’ll need private coverage. Portugal, for example, has public and private health care. If you plan to use public care, make sure you qualify as a visa holder.

Perhaps one of the biggest expenses of living abroad is the cost of travel. If Mariah flies back to the U.S. regularly to visit family, or for events such as weddings and funerals, she’ll need to work that into her retirement budget.

She may also want to hire a Portuguese immigration lawyer to help her with the residency process, but that’s an additional cost she’d need to budget for — though it could save her a lot of time (and headaches) in the long run.

Sponsored

Follow These Steps Once Your Portfolio Reaches $100K

If you've amassed a $100k+ portfolio, it's time to meet with a trusted advisor. Zoe Financial's elite network of fiduciary advisors offers personalized strategies to enhance your financial success. Experience exclusive investment opportunities and bespoke wealth management services. Trust Zoe Financial for unparalleled expertise and a commitment to your prosperity.

Vawn Himmelsbach Freelance Contributor

Vawn Himmelsbach is a journalist who has been covering tech, business and travel for more than two decades. Her work has been published in a variety of publications, including The Globe and Mail, Toronto Star, National Post, CBC News, ITbusiness, CAA Magazine, Zoomer, BOLD Magazine and Travelweek, among others.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.