“I have a client who moved their family to Bolivia. They were completely able to use the country’s social medicine,” Diamond says. “There are some pluses and minuses to that—they had to bring their own sheets and tea bags to the hospital, but the care itself was adequate.”
Japan experienced the largest growth of U.S. retirees in the studied 15-year time period. The inflow of retirees increased by 42 percent, due in part to the U.S. military presence in Japan.
Addeo adds that Americans may be looking to other countries because of the "allure of living in another destination."
“Some of these countries are starting to evolve and have the services that U.S. citizens are used to getting,” Addeo says. “As countries with year-round pleasant climates are beginning to settle down politically, they’re becoming more attractive. That’s definitely changing people’s position.”
Yet retiring abroad comes with a few concerns, the first being financial. Pre-retirees have to plan for the tax implications and the impact on their retirement benefits. This may require they alter their investment portfolios. While many countries have reciprocal agreements with the U.S. to make sure expatriates aren’t paying taxes twice, there are exceptions. Diamond recommends consulting with a CPA with international experience.
Diamond also says that U.S. citizens should be aware that though their Medicare benefits can travel with them to a certain extent, their long-term-care insurance usually does not.
Moving abroad also has implications for estate plans, says Addeo.
“It’s important to make sure that the right structures are set up to put as much of the money as possible into the right hands,” Addeo says. “There are so many tax implications from living abroad, it’s important to make sure that everything is being reported properly when estates are being moved around. They need to have that planned in advance of their move.”
Retirees should also have a plan for a return to the U.S. if their health declines or in case of another contingency.
“Generally, people who want to do this are very optimistic,” Diamond says. “Maybe they want to stay there forever, but there are a lot of people who will end up coming back. We need to make sure they have a place to go or the money set aside to make sure they have a place to go.”