What does CNN/Money say about this
From the "Ultimate guide to retirement - Should I retire to another country?"
Published online January, 2009
If you're worried that you'll outlive your money. The cost of living in many foreign countries is much lower than that in the U.S. That means your retirement kitty can last longer. But there are many factors to consider. Some include:
Taxes. Many countries have tax treaties with the U.S. that help to reduce the chances you'll be taxed twice. (Google expat sites for a given country and you'll find the info you need.) But even if you're living abroad full time, you'll still have to file a U.S. tax return.
If you work in retirement while you're living overseas, you can claim the Foreign Earned Income Tax Credit. In 2008 this allows you to exclude the first $87,600 you earn in the foreign country from U.S. taxes. Earn more than that amount and Uncle Sam is going to take his cut of your earnings. Pension income from U.S. sources is also going to be taxed, no matter where in the world you happen to be living.
Health care. It's a big issue - and potentially a big problem. Despite all the drawbacks with the health-care system in the U.S., the quality of care there is among the highest in the world, while some other countries are below par. Unfortunately, it's those countries with the lowest cost of living that frequently have the worst medical care But take note: Even in poor countries, the care available through private clinics, which are easily affordable for expats, can be equal or better than in the USA and cost FAR less.
Another huge issue for expat retirees is that Medicare coverage does not extend beyond U.S. borders. You'll either have to return to the U.S. for any care or budget to pay for care or insurance in your new home away from home. Either way, it can be more expensive than you bargained for.
Exchange rates. You'll be subject to currency risk. If your retirement income is in U.S. dollars, you could suffer if the country you live in sees its currency's value rise against the dollar.
Bill paying. Depending on the country, you may find it difficult to open a local bank account - and once you do, it may not be set up to handle deposits (such as Social Security checks) in U.S. dollars. Many expats deal with this problem by maintaining a U.S. bank account and then paying for a wire transfer (and transfer to local currency) a few times a year.
And if you plan to just rely on your U.S. bank, you'll ring up some sizable ATM fees anytime you want to get local currency by tapping your U.S. account. It can often cost you more than $5 per transaction, and many countries limit the amount foreigners can withdraw on a daily basis. As a result, you'll be stuck paying the nuisance fee on smaller withdrawals. If your money goes 4 to 5 times farther in spending power, however, this is not a big issue.
Most retirees who live overseas keep their credit cards based in the U.S. and make online bill payments. That's generally a good way to keep costs down.
Retirement Calculators
CNN/Money has a good calculator that will help you determine how much money you should have in savings (401k, etc) to supplement your income from pensions and social security. You can access teh calculator at this URL: http://cgi.money.cnn.com/tools/retirementneed/retirementneed_plain.html
Americans love self help books. As a category, there is nearly always one or more on the "top sellers" list. The topic of retirement is no exception. They generally fall into several major themes:
Retirement books - 4 themes
- Planning and preparing for retirement theme (often with an emphasis on financial planning)
- Continuing to earn money after retirement theme (presumably for those who didn't read/follow the advice in the books in the first category!)
- Enjoyment (What to do with your time) theme (Given that you DID do the things mentioned in the list of books in the first category!)
- Where to live (less expensively) theme
Listed below are examples of the many titles one can find online at a book seller such as Amazon:
Theme 1 - Planning and preparing for retirement
- Retiring Right: Planning for a Successful Retirement by Lawrence J. Kaplan
- Protecting Your Pension For Dummies by Robert D., Esq Gary and Jori Bloom, Esq Naegele
- Sorting Out Your Finances for Dummies (For Dummies) by Melanie Bien
- Investing For Dummies, Fifth edition by Eric Tyson
- Personal Finance For Dummies, 5th edition by Eric Tyson
- Retiring Wealthy for Dummies (For Dummies) by J. Knight
- The Complete Idiot's Guide to Retiring Early by Dee Lee
- The New Rules of Retirement: Strategies for a Secure Future by Robert C. Carlson
- How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won't Get from Your Financial Advisor by Ernie J. Zelinski
- The Wall Street Journal. Complete Retirement Guidebook: How to Plan It, Live It and Enjoy It by Glenn Ruffenach and Kelly Greene
- What Color Is Your Parachute? for Retirement: Planning Now for the Life You Want by Richard Nelson Bolles
- Your Retirement, Your Way: Why It Takes More Than Money to Live Your Dream by Alan Bernstein and John Trauth
- What You Don't Know About Retirement: A Funny Retirement Quiz by Bill Dodds
- The Retirement Savings Time Bomb … and How to Defuse It: A Five-Step Action Plan for Protecting Your IRAs, 401(k)s, and Other RetirementPlans from Near Annihilation by the Taxman by Ed Slott
- Your Complete Retirement Planning Road Map: A Comprehensive Action Plan for Securing IRAs, 401(k)s, and Other Retirement Plans for Yourself and Your Family by Ed Slott
- The Complete Idiot's Guide to Social Security and Medicare, 2nd Edition by MBA, Lita Epstein
Theme 2 - Continuing to earn money after retirement
- Working After Retirement For Dummies by Lita, MBA Epstein
- 202 Ways to Supplement Your Retirement Income by James Stephenson
- Second Careers: New Ways to Work after 50 by Caroline Bird
Theme 3 - Enjoyment (What to do with your time)
- How to Love Your Retirement: Advice from Hundreds of Retirees by Hundreds Of Heads, Barbara Waxman, and Bob Mendelson
- The New Retirement: Revised and Updated: The Ultimate Guide to the Rest of Your Life by Jan Cullinane and Cathy Fitzgerald
- 101 Secrets for a Great Retirement : Practical, Inspirational, & Fun Ideas for the Best Years of Your Life! by Mary Helen
- The Joy of Not Working: A Book for the Retired, Unemployed and Overworked- 21st Century Edition by Ernie J. Zelinski
Theme 4a - Where to live (in the USA, less expensively)
- America's Best Low-Tax Retirement Towns, 3rd Edition: Where to Move to, and From, to Slash Your Taxes in Retirement! (America's Best Low-Tax Retirement Towns: Where to Move to from to) by Eve Evans, Elizabeth Niven, and Mary Lu Abbott
- Retirement Places Rated: What You Need to Know to Plan the Retirement You Deserve by David Savageau
Theme 4b - Where to live (outside the USA, less expensively)
- There are no books on this topic - that is why we have developed this web-site!
Links to Other Retirement and Healthcare Sites</h2>
AARP Website
CNN Money site with good information on retirement planning.
Decision Street with information on retirement and healthcare.
Pearls of Wisdom "Fourteen Things That It Took Me Over 50 Years To Learn" By Dave Barry
RetirementJobs.com site providing information about working after retirement and other topics.
Top Retirements communities and baby boomers.
The Century Foundation site providing information on retirement and health care issues.
Links to Other Retirement and Healthcare Related Articles
Bankruptcies Rise Fastest for Over-55 Group - Washington Post.
Health-Care Trends You Dare Not Forget - Washington Post
Healthcare Crisis Countdown - Christian Science Monitor.
Healthcare reform's unlikely ally: big business - L.A. Times.
Hot Retirement Tips - The Motley Fool.
Many Americans retire years before they want to - USA Today.
Retirement crisis looms as many come up short - USA Today.
Retirement hopes meet reality - Scottsdale Republic.
The Coming Retirement Crisis - Forbes Magazine.
The Elderly Population Booms, but Care Doesn't Keep Pace - Wall Street Journal.
