If Americans are serious about retiring abroad, they’d better get serious about planning for it.
As a larger, more diverse group of Americans looks to retire overseas, they may want to head the advice of wealth managers who have guided generations of clients towards far-off retirement destinations.
“They have to understand the countries they’re talking about moving to,” says Gilbert Addeo, chief operating officer of the Investment Placement Group, a San Diego-based broker-dealer. “Does it meet all of their personal needs? Is retiring there a reasonable goal?”
According to a recent report from the Social Security Administration, the number of Americans receiving benefits abroad increased from 400,000 to 550,000 between 2010 and 2015. In the same period, the number of Americans retiring abroad annually increased by 17 percent.
With the go-go baby boomer generation leaving the workforce at a rate of 10,000 per day, the number of retirees expatriating from the U.S. is likely to increase.
“There’s a growing percentage of people who are not equipped financially to retire in this country,” says Carina Diamond, managing director of S&G Wealth Management, a Cetera-affiliated firm in Cleveland. “Not only are they looking for better climate, they’re [also] looking for better costs.”
According to Diamond, active, outgoing seniors are expressing the most interest in expatriating for retirement.
Finances may be motivating the trend, as the cost of living in many retirement destinations, like Panama, Mexico, Costa Rica and Belize, is much less than that of the U.S.
Addeo says the strength of the U.S. dollar is driving some people abroad to maximize their nest egg.
Retirees may also leave the U.S. for countries with nationalized health care systems to enjoy a higher quality of care. That may explain the presence of the countries such as the United Kingdom, Canada, Japan and Germany on the Social Security Administration’s list.