Retire Abroad: Six Countries for Americans to Consider

August 3, 2022 | | 5 minute read
Expat Tax Blog. Tax Tips for US Americans abroad.

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A couple of American Seniors Retire Abroad in Germany

Ah, retirement, better yet retirement abroad. The period of life where you have hit the prime age to leave the workforce behind permanently. Many people across the globe are currently daydreaming about that new phase in life that leaves many wondering: Where should I retire? Am I ready to retire abroad?

It may surprise you that nearly half a million retired Americans are enjoying their new-found-freedom in a country other than the US right now. With more time than ever to jump headfirst into a new culture, language, and life of travel, why not retire abroad?

As professionals in expat taxes, we’re sharing six countries that we think are promising for retirees in terms of tax treaties, ease of visa acquisition & affordable housing. These 6 are by no mean the limit! Already abroad? Stay in good standing with the IRS and File your tax return annually!

Cyprus: For Sun Seekers

While Cyprus may be known more for being a hot-spot European vacation destination, it is also a wonderful place to enjoy your retirement abroad and soak up the sunshine. In 2004 Cyprus entered the European Union, which elevated its safety and infrastructure, making it a reliable and beloved retirement location.  

Suppose you’re looking to retire in Cyprus. Keeping this abroad destination in mind, you will want to research their Retirement Immigration Visa. This is a popular option amongst retirees due to the country’s low cost of living and wide use of the English language.

Retirees in Cyprus will also enjoy their tax benefits, allowing you to choose either a 5% flat rate or a tiered system depending on your pension income.

Filled with olive groves, vineyards, beaches, and mountain views, Cyprus is at the top of our list for Americans looking to enjoy a slower pace of life in their retired years.

Morocco: For Adventure Seekers

Located in Northern Africa, it may surprise you that Morocco has slowly become an expat hub for those looking for a challenge in an old-world society with the comfort of political stability. 

Setting up your residency permit in Morocco is generally simple (albeit lengthy). You must apply within the first thirty days of arriving in your new town with a valid passport and passport-style photos. Of course, you will also need to meet their income requirements to prove you can sustain your life there.

With low-cost housing, proximity to Europe, and the Atlas Mountains, Morocco is a fantastic option if you have between $800-1,000 per month in income. Make sure to brush up on your French before heading out the door!

Portugal: For Foodies & Surfers

Image of a Trolly is Lisbon. Something to see when you retire abroad.

Oh, and ease of residence establishment! For US citizens to retire in Portugal, you must prove you have $1,070 of income per month. After a 120-day visa, you can easily extend your stay for multiple years until you hit permanent residency status.

Again, Portugal has low-cost housing, allowing you to get more bang for your buck, allowing for more exploring across this small but rich country filled with the culture around every corner. As a retiree, you also have a right to healthcare through the Portugal National Health Service, where most doctors speak English.

Portugal is the first on the list that also offers a nice tax treaty benefit for US expats, where your social security benefits are normally only taxable in one country, rather than subject to tax in both! 

Germany: For Hikers & Beer Lovers

While the cost of living may be higher in Germany than in the countries listed above, it is still a beloved spot for Americans looking to retire abroad. In Germany, you are less likely to feel the wave of culture shock, but you will find several significant differences from the US in this central-European country.

With top-notch healthcare and a melting pot of cultures, Germany is a large country that will take several years to discover inside & out truly. We also have to mention it has a great tax treaty with the US regarding tax deferral on pension income until distribution, recognition of US tax-favored IRA accounts, and social security benefits only being taxable in Germany. If the prospect of learning German worries you, you can rest easy in a city where you can easily get by with English. Though the locals will appreciate your efforts to speak their language!

For more information on living and paying taxes in Germany, check out our Expat in Germany Country Guide!

Thailand: For Permanent Vacation Seekers

Did you know that living in Thailand is 1/3 cheaper than living in the US? With a landscape that will take your breath away and ease of access to other Asian countries, Thailand is ideal for those looking for a mixture of relaxation and adventure. A true build-your-own-adventure type country.

Luckily for retirees looking to do abroad, Thailand offers a retirement visa that you can apply for while still in the US at a local embassy or when you arrive in Thailand. You can also rest easy knowing that you are not obliged to pay taxes on any foreign earned income (your retirement fund) while living in Thailand, allowing you to spend more of your hard-earned money traveling the countryside and cities. 

Italy: For the Artistic Palate

An American who chose to retire abroad in Italy

If you are considering retiring in Italy, you will not only want to brush up on your high-school level Italian but on The Elective Residence Visa for retirees.

When retiring in Italy, you must show proof of sufficient financial funds. You’ll need to be able to show you have an annual income of at least €31,000 if you are single or €38,000 if you’re married. This proof can come from either active income or a combination of social security payments, pension or investment returns, 401k, or IRA funds.

Proving sufficient funds is a common thread you will find in almost every country when retiring abroad. However, the amount will vary greatly from government to government.

Depending on where you want to live in Italy, prices can be similar to the US in Rome or Milan but decrease significantly in other parts such as Abruzzo or Puglia.

Live out your Italian dream and spend your days experiencing a rich culture with history around every corner by taking Italian courses or learning how to make fresh pasta from a Nonna.

Before You Depart

If you still aren’t sure where you will head once it’s time to clock out for that last time, there is still time to decide. Before going abroad, it is essential to get all your tax and retirement fund ducks in order. Just keep in mind that even if the countries above may have very favorable or low tax rates, you are still normally subject to the US tax rates on your worldwide income! If you are already abroad and need help with your expat taxes, we can help with that! Through our live chat, tax tips for US Americans abroad, or filing with us. Let MyExpatTaxes help take some weight off your shoulders this next tax season. 

Written by MacKenzie P

August 3, 2022 | | 5 minute read

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