I think one of the largest groups of Americans who decide to retire overseas are military veterans. It makes perfect sense on many levels. Many military veterans have spent considerable parts of their career living abroad, they may speak two or more languages, and have grown accustomed to life overseas, particularly in the developing world. Living back home in America may seem boring and slow, or you may just decide you want to try something new.
Regardless of your reasons for considering overseas retirement, you should take some time to make the decision before jumping in with both feet. Here are some pros and cons. Keep in mind this is just a top level overview – just enough to get your thinking about it. If you think overseas retirement might be for you, then I recommend doing further research.
Benefits of overseas retirement for military members
Retiring abroad is a great option for military veterans. Unlike most Americans they will have usually have a guaranteed pension on top of their social security benefits. This can mean a retired military veteran faces a retirement in relative wealth compared to most Americans, and extraordinary wealth compared to other people if the veteran decides to live in a poorer, developing country.
Benefits of formal visa programs. Many countries, particularly poorer ones in Southeast Asia and Latin America have formal retirement visa programs under various names and guises. These visa programs have reduced or no taxation for retirees on a pension, allowing you to save considerable money over many parts of the United States. The requirements of these can vary substantially from country to country, but in general you must not have a criminal record, you must show signed proof of your pension, you must show proof that you have private healthcare, and you must be over a certain age. You will typically apply for the visa stateside and apply through the nearest consulate or embassy of the country you wish to move to.
Expat communities. Many countries have entire communities populated by retired ex-patriots. No, we’re not calling you unpatriotic, that’s just a term for someone who chooses to live in another country! The benefit of these communities is a greater sense of home and a shared experience. It is much easier to make the transition to living overseas if you are around people who are in a similar situation – you can share experiences and help each other when needed.
Service and Benefits for Veterans Living Abroad: The Department of Veterans Affairs has a portal dedicated to providing information for military retirees who choose to live overseas during retirement. Visit the VA site for more info.
Downfalls and risks of retiring overseas
Drawbacks to retiring overseas. As any experienced expat knows, while there are many benefits to living overseas, there are drawbacks. You cannot export an American lifestyle overseas without substantial expenses. You will deal with inefficient businesses and bureaucracies, far worse than in America. You may deal with a lot of crime. You may see a lot of poverty. Healthcare may be cheap, but it might not be as high of quality. You may be far away from your loved ones and friends.
Risks of retiring abroad. While retiring abroad is being portrayed in the media as a way to garner a wealthy lifestyle for pennies on the dollar, it is still fraught with risk. The cheaper the country you move to, the poorer and potentially dangerous the country. A poor country is at best financially unstable, and at worst politically unstable. Do research on the history and the government of the country you decide to move to before moving.
Advice for those consider overseas retirement
My advice to any veteran considering moving overseas to retirement is to make use of the skills and instincts that allowed you to prosper in previous foreign residences. Be cautious, and keep a low profile. Americans are hated in some parts of the world, and in others mildly disliked. Don’t make waves.
From a financial perspective my most general advice is to maintain some kind of address or contact back home for bills and banking relationships. Keep the bulk of your money in America rather than investing locally. And always have a plan for quickly leaving the country if trouble seems to be stirring.
About the author. Rick Todd writes at Expat Investing, where he writes on living working and retiring overseas from a financial perspective.