Can you retire abroad in 2023 amid the perpetual crises?
It's hard to envision a brighter outlook in 2023. With the war in Ukraine and other parts of the world, persistent inflation, the energy and economic crises, the return of the Covid waves, the threat of a global recession, and purchasing power being squeezed everywhere, millions of people are in the process of reviewing their life plans. In France, the retirement reform project is stirring up passion. While retirement at the age of 64 is unthinkable for many, others find it quite conceivable. Conversely, in Japan, this issue has long been resolved. There is the legal retirement age (65) and the age at which thousands of Japanese seniors decide to stop working, generally 70, 80, and even more sometimes, in certain businesses. In the face of the ever-rising cost of living caused by repeated crises, it is not always possible to envisage a happy retirement in the shade of palm trees.
At the same time, however, we are witnessing a surge in those "getaway dreams". As a matter of fact, retirees are embarking on a new life abroad more than ever before. For example, France has over one million retired nationals overseas.
If the health crisis has triggered the urge to leave, it seems to be also the common idea that is motivating retiring travelers. For them, it is now all about enjoying life precisely because the world is in crisis. It is, by their living standards, just another way to stay dynamic and envision themselves in another setting. If retirement marks the end of professional or parental life, it is also the beginning of a new life and often the start of a new adventure abroad.
Benefits of retiring abroad
Why is there such a craze for retirement abroad? Well, the primary advantages lie in a better living environment and climate. Retirees tend to opt for sunny destinations, such as Spain and Portugal. Their art of living, the mildness of their climate, and the richness of their landscapes are highly praised.
Retirement is no longer associated with the end of life. It is, on the contrary, synonymous with a new life, longer and healthier for an increasing number of retirees. After one or more lives devoted to studies, work and children, retirement is a new beginning that makes one feel young again. In fact, the retirement-expatriation project takes you forward and into new activities. Abroad, retirees will have more time for themselves and for others. They will find time to learn and practice the language, discover the new environment, try new activities, socialize with the locals, etc. As a matter of fact, these are essential benefits that contribute to the success of the new life abroad.
What are the best countries to retire in?
According to a study conducted last year by Visual Capitalist, an online publisher specializing in global economics, technology, and market research, the top 3 countries to retire in are Norway (81%), Switzerland (80%) and Iceland (79%). Ireland comes in at the foot of the podium (76%). Australia is one point lower (75%). New Zealand, Luxembourg, the Netherlands, Denmark, and the Czech Republic are in 10th place (73%). Life expectancy, quality of life (environment, water, biodiversity, air quality, etc.), infrastructure and government policy on health and retirement (spending on long-term care, taxation, etc.) are among the criteria used to rank these countries.
Future retirees abroad also take into account other equally important criteria like the distance between the host country and the family, the amount of sunshine, and the language spoken. Many Europeans opt for Portugal, Spain, Morocco, or Greece. These countries are also among the best destinations for retirement. Further afield, Senegal, Thailand, Cambodia, and Colombia are also gaining popularity. All these countries have one thing in common: the living environment (sun, beautiful landscapes) and the low cost of living. However, the ongoing crisis is driving up expenses for seniors.
Inflation, economic crisis: The threat of precariousness
Expat life is also about expenses. To boost their purchasing power, retirees often opt for countries where the cost of living is lower than theirs. Since 2020, however, there have been successive crises, each feeding on the other, and recession threatens many economies around the world. For retirees with solid incomes from pension schemes, life insurance, real estate investments, and so on, there will be no problem. They will continue to have the necessary resources to live, even if their cost of living increases (food, energy, health costs, etc.).
For those whose income is more tenuous, caution is advised. The pandemic has plunged thousands of expatriate retirees into precariousness. Governments have released emergency aid programs, but these were only one-off measures that were not intended to last. The crisis has not only lasted, but it has even worsened. For some retirees, the golden life abroad has become just as, if not more, restrictive than what they experienced before leaving. To warn them of the possible complications of expatriation, the US Federal Department of Foreign Affairs launched a campaign last year for its 180,000 or so retired nationals abroad.
What should you consider when planning retirement overseas?
In order to enjoy retirement in a foreign country, one must first be aware of the current economic situation prevailing there. The latter can be unfavorable, in which case, when preparing for retirement abroad, you need to make sure that you will have enough means to withstand the challenges of the economic context and to be able to make the most of it. It is important to make sure that you will be able to support yourself abroad, even if your purchasing power drops.
Which visa are you eligible for? Find out what you can do and what your visa will allow you to do. You should also look into international health insurance.
In principle, retirement pensions can be paid abroad. However, it is up to the retiree to notify the authorities of their retirement plans. You will also need to provide proof of life to continue receiving your pension.
Similarly, you must inform all the organizations and institutions to which you are affiliated, like banks, insurance companies, etc. Certain passbook accounts must be closed in the event of your departure.
Beware of taxes. If you have left everything behind to live in a foreign country, you are dependent on the new country. But you may still be taxed in your homeland if you have retained interests there (rental income, for example). Check if your home and host countries have signed a tax treaty.
Don't underestimate culture shock. Moving abroad can be an ordeal, amplified by the fact of living far from your family. Even if the distance is short (you live in a neighboring country), the geographical distance can be a problem. Build your project with your loved ones. Get them involved. Recreate a new way of keeping in touch through technological tools.
More tips for planning your retirement overseas
New life, new country: how to prepare for it? Here are some practical tips on how to enjoy retirement abroad.
Know your health requirements
Talk to your doctor about your moving abroad plan as soon as possible. If you are followed by several doctors, explain your project to each of them. Ask if they know colleagues in your host country. Check with your doctor to ensure your host country has the necessary infrastructure for your treatment. Inform your health insurance company as well of your moving abroad plans.
Is it necessary to learn your host country's language?
It is often said that the ability to learn diminishes with age. But it is also true that there is no age limit to learning. Challenge yourself. Learning the language of your host country is an adventure in itself and an integral part of your new life abroad. There are countless articles extolling the virtues of a retirement in the sun, where you can take time for yourself, a great reward for the years spent at work or taking care of your loved ones. But this should not prevent you from reaching out to others. Learning the language will facilitate your integration with the locals. Avoid staying in an "expatriate bubble", and integrate into the local community.
Should you keep a foot in your home country?
It all depends on your plans and financial means. Do you plan to live abroad for a few years and then return to your home country (or move to another country)? Do you plan to stay in your host country for the rest of your life? Some people choose to sell all of their belongings to reinvest abroad. Others prefer to keep their home to earn rental income or to use it as a second home. Keeping a foot in the country of origin can indeed be advantageous. But beware of taxation. Seek guidance from your banker and expatriation experts to choose the right solution for you.
Useful links:
Swiss Confederation: retiring abroad
