Those dreaming of retiring overseas may need to consider several issues before making such a destination their dream post-work getaway.
For the many retirees who say they are considering such a move — 3.3 million of the nation's 78 million Baby Boomers, Time magazine noted
— there are risks that must be taken into account.
From finances, to legal issues, to dealing with foreign governments and currencies, retiring overseas can have its challenges for those who are not citizens.
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Here are five drawbacks of retiring overseas.
1. Family Ties
If you want to see your family members frequently, you'll have to travel. Don't expect the grandchildren to schlep to your home, even if it is a stunning island destination. School schedules, family work obligations and such make it harder for those reunions you might long for. You may be traveling more than you expected to see your extended loved ones, Merrill Lynch noted
2. Marital Strife
Such big life-changing moves may cause conflict in your relationship, Merrill Lynch added. Retired couples should make sure both are on the same page with the move so when problems occur, there won't be anger and blaming.
3. Health Care
Quality health care may not be available, especially to those who need specialized care. That may require frequent return trips to the United States, which can be costly. Also Medicare does not work for health coverage outside the United States. Leaving the U.S. for a period and returning will likely cause your Medicare enrollment premiums to go up higher than if you'd enrolled earlier, experts warn.
Living abroad will not exempt you from U.S. taxes. You must pay the IRS income tax wherever you live, as a U.S. citizen. Those who give up their U.S. citizenship, still will owe taxes as nonresident aliens.
Noted Merrill Lynch: "The U.S. also has laws to collect income tax from retirees who move their assets to a foreign country. The good news? Many countries, such as Canada and Mexico, have tax treaties with the U.S. that prevent double taxation."
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Also, some foreign banks are wary of working with Americans because the Foreign Accounts and Tax Compliance Act (FATCA) requires foreign banks to file U.S. paperwork for ex-pat accounts, Time said.
While some things may be cheaper — rent and mortgage, for example — others may be most costly. They include gas, food and utilities as well as other goods like computers and clothing, Time noted.