Retiring abroad?

Retiring overseas is an exciting opportunity, but one that comes with unique considerations.

by UBS

Questions you can ask your UBS Client Advisor

  • How do you pick the right destination?
  • What should you do about your healthcare?
  • Which financial implications should be top of mind?

For many, retiring abroad is a dream come true: There is the pull of exploring a new and exciting place, enjoying nicer weather and even possibly a lower cost of living. For the baby boomer generation—who are living longer than ever—retirement is likely to stretch for decades. This opens up all sorts of new possibilities, but it also brings unique considerations.

When it comes to retiring abroad, there are several factors to take into consideration. Here are a few to think about before you make your decision—just like going on a vacation, anticipating your retirement can be half the fun!

As you start thinking about retiring abroad, look at where you stand now in terms of both your current finances and your potential retirement income.

Take stock of your expenditures and think about any lifestyle changes. For example, if you want to keep two homes, will you need to make any adjustments to your savings or retirement plans?

Also consider longevity risk—that’s the potential to outlive retirement savings. Justin Waring, Investment Strategist Americas at UBS, notes one of the major differences of the baby boomer generation compared to those before: “Baby boomers will be the first generation where there’s a good chance they will spend as much time in retirement as they did in the workforce.”

For many, moving abroad can reduce the cost of living, which can add years of savings power to your retirement portfolio.

With an endless number of destinations to explore, there is a lot to consider. To start, be sure to think about non-negotiable factors—these can include everything from temperate weather, access to quality healthcare, security or a lively ex-pat community.

Of course, the cost of living should also come into play. This is one area where moving in retirement can make a meaningful difference. Waring notes that “cutting your retirement spending by nearly 30% could have a huge impact on the sustainability of your retirement plan.” The same is true of moving somewhere with higher housing costs, taxes or other living expenses.

There are many cosmopolitan destinations around the world which can provide the benefits of a relatively high living standard with a lower price tag. The UBS Prices and Earnings report can help you find the location with the right balance of amenities and costs for your family.

As much as you might adore your new home, you’ll probably want to travel back home to visit relatives or to explore new destinations.

Take time to research the travel rules and regulations of your top retirement destinations. There are often important considerations around visas and residency permits or applications.

Also think about the basics: Is it easy to get to the airport? Will your visitors have difficulty getting to your new home?

As retirees age, more spending tends to go toward healthcare-related issues than virtually anything else. Even if you are in great health now, you should compare the different healthcare systems of the destinations you have in mind.

Some questions to think about:

  • Will you need to buy additional healthcare or insurance during your time abroad?
  • Do you have health issues that have long-term care requirements?
  • Will you still be able to consult with your primary care doctor in times of need?
  • How accessible is the healthcare system in case of emergency?

No one wants to think about the worst-case scenarios, but it’s better to prepare as health becomes an increasingly important issue.

Picking up and moving abroad, while exciting, can cause financial complications—especially when it comes to your banking, investments and taxes.

There are also special factors to consider about real estate. Depending on your location, the rules and financial burdens can shift. For example, buying a home to live in full time versus a potential investment property you’ll rent out can have different tax impacts.

To get a full picture of what you need to know, do your research and speak with your Advisor. Make sure you discuss all of the implications with your family, as well. There are nonfinancial considerations, like being able to visit the grandkids, that may end up being vital to your decision.

While retiring abroad has its own challenges, being prepared and working with your Advisor to come up with a strategy can help you make the right decision about where you’d like to spend your retirement years for the best bang for your buck and, of course, optimal happiness.

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