Retiring overseas: Is this the moment?

Retire abroad
Retire abroad   

Ah, retiring overseas. For many people nearing the end of their work lives, the idea of setting sail for a new, faraway home is the stuff of dreams.

Not surprisingly, retiring overseas is becoming increasingly common: Some 373,224 retired workers received Social Security checks overseas in 2013, the latest data available, up from 306,906 in 2008 and 246,890 in 2003.

Today, soon-to-be retirees have more reason than ever to think that dream can become reality, thanks to the strong dollar. As of January 15, $100 would buy 92 euros, up from 83 euros at the beginning of 2015. That same dollar amount would now buy roughly 1,827 Mexican pesos, compared to 1,474 on Jan. 1, 2015. The Colombian peso is up roughly 33 percent from a year earlier.

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All of that means buying a home or any other assets overseas is easier than it has been in some time, said Kathleen Peddicord, publisher of "Live and Invest Overseas."

"If you have a fixed income in U.S. dollars, right now the U.S. dollar is super strong," she said. "What I recommend as a strategy is, find a place you want to live where the dollar is very strong right now, and buy your residence. Once you do that, buying at today's strong dollar value, you can buy at a good price and you have taken the cost of housing off the table."

But before you take the plunge, it's wise to stop and consider all that is involved in retiring overseas. Buying your home may be just the start.

Just setting up residency in another country comes with a cost, for example. In some countries, the process of obtaining a residency visa can take a year or more, and the paperwork and legal fees can cost as much as $5,000, Peddicord said.

Then there is the matter of working in later life. Many experts advise that working past age 65 is the best way to ensure a financially secure retirement. But working in another country is not so simple.

"In most countries, they won't let you work unless you are working off the grid," said Art Koff, founder of Retired Brains, an online job and information resource. As a result, many people living overseas who want to work end up doing so for U.S. employers, he said.

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That may be why some expats opt to set up shop for themselves. Opportunities certainly exist, Peddicord said.

"Look around in the country where you move, and I guarantee in these developing, emerging markets, you will identify gaps and opportunities," she said. In most countries, you will not need a work permit to open your own business, she added, but you will owe taxes on your income.

Whether or not you work, you will also need to be sure you pay what you owe to the Internal Revenue Service. Living overseas does not put you out of its reach, particularly if you are receiving Social Security checks or other regular government checks. You are allowed to exempt some foreign earned income, but you must file.

"Anybody who tries to move overseas and not pay taxes is unquestionably going to get nailed sooner rather than later," Koff said.

Another financial consideration is health care. Medicare will not cover your medical costs overseas, though Peddicord and others recommend paying the premiums to maintain your eligibility in case you return to the U.S.

As for paying for health care locally, your options will vary. In some countries the care is extremely inexpensive and high quality. In others, you may want to obtain global health insurance from a company like Bupa or Cigna.

Travel is something else to factor in. Tourism and trips home can be a big part of expat retirees' plans, so it is worth considering the cost of getting where you want to go.

Your day-to-day living expenses may well be lower overseas than in the U.S., and a strong dollar can cut them even further. But to be prudent, calculate what your food and other costs would be if the dollar were to weaken significantly. Peddicord recalled living in Ireland when the euro was worth $1.50.

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Clearly, retiring overseas is not a simple matter. But for those who want to take the plunge, this could be the time.

For her part, Peddicord is planning for later life in Paris. She already owns an apartment there, but for those thinking of a move to the City of Light, she offered encouragement.

The weak euro is putting an admittedly expensive city more in reach, she said, and the terror attacks of last fall have dampened demand. For now, she said, "it's a buyer's market."