Answers to Common Questions Americans Have About Retiring Overseas
Want Your Money to Last Longer? Think About Moving Outside the U.S.
It's daunting, this idea of retiring overseas. Anything that we try that's new seems difficult: riding a bike, driving a car, or understanding the stock market. All were difficult, until you started to learn. As time passed, it became easier as you studied and understood the tasks at hand.
Questions will arise, whether you like it or not.
What if I can't do this? What if I make a mistake? How do I start? On and on, they will be entering your mind, like a slow leak from a kitchen faucet.
Questions Answered About Retiring Outside the U.S.
I will answer some of the basic questions about retiring overseas. With this information, you will be able to approach a move outside the U.S. with less fear.
1. Do I have to renounce my U.S. citizenship?
No. You can be a U.S. citizen and live in most countries without renouncing and changing your citizenship.
2. Do I have to become a citizen of the country I retire to?
No. Many countries allow you to have a permit called "Permanent Residency."
This allows you to live in the country permanently. Laws vary from country to country. Mexico and Central America countries want retirees. Hence, they try to entice retirees to pick their country to move to. Each country will have the "Permanent Residency" laws posted online.
3. Do I have to get a visa before moving to another country?
Usually not. Being American, most countries in the world will give you a visa when you enter the country you have chosen. (Each country lists visa requirements online. Just google the country you've chosen, and all the visa requirements will be listed)
4. Can I buy a house or land in countries outside the U.S.?
Usually, the answer is yes. But restrictions are sometimes in place on what kind of land and how much you can buy.
Some countries will not let you buy any land that's next to the ocean or a lake, river or stream.
Countries may limit the amount of land you own as an individual.
To get around these restrictions, people form corporations and partnerships. These forms of businesses can buy properties that individuals could not. Incorporating in the country you're moving to is a viable option; this would be separate from anything in the U.S.
Some people form NGO's (non-governmental organizations). NGO's will get different treatment than an individual, and are nother option to consider when buying land. NGOs are usually charitable foundations: Doctors Without Borders, Christian Children's Fund, Bill Gates Foundation, etc.
5. Do I have to pay taxes in the country I retire to?
Yes and no.
The tax systems outside the U.S. are different.
On my SS income, I pay no taxes, but when I buy something I get heavily taxed. Most countries have enacted a VAT tax (Value Added Tax). This is like a "sales" tax, paid at the time of any purchase. (It's actually a "value lower" tax - because you get nothing for the taxes you are paying on the product)
Always assume that a government will get taxes from you - one way or another. For example, entry and exit payments for a stamp on your passport are a tax. Fees for bringing in any sort of vehicle or building supples are a tax.
6. Do I pay property taxes if I buy land or a house?
Yes, though they are much lower than what they are in the U.S.
7. Is it safe?
In most areas, I would say yes.
As in the U.S., there are some areas that you really don't want to live.
Areas in Mexico close to the border of the U.S., and certain areas of Nicaragua and Honduras are not the safest places. But most of Guatemala, Costa Rica and Panama have low crime rates.
Use common sense. Don't flash money or jewelry around. Keep laptops and cameras hidden unless you're using them.
When you travel through countries outside the U.S., Canada and Europe, most properties will have walls around them. This is for two reasons - to keep people out and to hide what's behind the walls.
Don't flash your wealth to outsiders. Keep your house low key. No use tempting the poorer people with items that they would like to have.
Look at the world crime statistics. Most Dangerous Cities in the World is a good place to start.
Talk to expats in the country that you're thinking of moving to. (InterNations is a good place to ask questions.) They will be happy to share their experience of what areas are safe and the areas to avoid.
8. Do I have to learn the language?
I've been traveling for over two years, and my Spanish has not improved greatly. Hand gestures, basic knowledge of the language, and translation on my phone has worked well.
That I can't communicate with the locals is my loss for not knowing the language better. I lose, not them.
9. Is the corruption bad?
Everything is relative to this question.
I have not had that much of a problem with corruption.
I got robbed at the border of Guatemala and Mexico, and the police were somewhat involved (long story) .It was partially my fault for not being more aware of what was going on.
I've gotten out of tickets by giving money to the police, which seemed preferable to losing my license until court date.
I know that in Nicaragua, President Ortega has a little fiefdom that he's embellishing, with money being siphoned off to his "businesses." Does it affect most expats? No.
Corruption was so bad in Guatemala, they elected a TV comedian as a President. Believe or not, he's done a lot of things to alleviate corruption in the police departments, judicial system and the government.
Solving corruption is easy. It's getting the right people in power who can stop the corruption that is difficult.
Corruption has gone down. Latin American countries are trying to get into the "21st Century" by being fair and honest, as much so as in the U.S.
As an individual, corruption should affect you very, very little.
10. How do I go about buying land or a house?
Because some countries re-allocated land after civil unrest in the '70s and '80s, titles for properties still create some headaches.
Always, always have a reputable company do a title search.
The other thing about land and homes is that squatters have rights in most Latin American countries. If you don't secure your land with fencing or a wall, and squatters move onto the property, it's a long process to get them off your property.
This is why a having good lawyer is important—they'll be your guide while charting a course through the rules and regulations of the country you've chosen to retire to. Listen to what they tell you. It never hurts to confirm what they're telling you with other expats, just to be on the safe side.
The U.S. Government and Americans Overseas
I will apologize ahead of time, because the main reason I left the U.S. is the government's actions on our freedoms. They are taking them away, slowly but surely. The other thing the government has done is allowed big banks to steal the wealth of the American citizens through actions from the SEC, the FDIC and the FED.
It disgusts me what's going on in America, and my ire is aroused even more because of the way the U.S. government treats its citizens who are living overseas. The U.S. government is one of a few (I think five) countries that tax their citizens on foreign income. If you have a bank account overseas, you have to report that to the U.S. government, or face a fine and possible jail time.
I read an article about an American being denied the opportunity to open a bank account in Switzerland; the paperwork the U.S. government wants on its citizens is too cumbersome for the bank to bother with for accounts by Americans. This applicant had dual citizenship, Swiss and American. He finally came to the conclusion that it was wiser to renounce his U.S. Citizenship.
The cost of renouncing your citizenship has gone from just under $500 to over $2500 in the last couple years. Nothing has changed, except the fact that a record number of Americans are renouncing their citizenship, and the U.S. government sees a way to squeeze more money out of its citizenry.
Because of the burdensome task of filing all the forms that the IRS and Treasury want expats to file, more people are finding it a logical move to renounce their U.S. citizenship, and become a citizen of the country they've retired to.
Even if you renounce your citizenship, for the next ten years you still have to pay taxes on any monies earned overseas.
You'll notice if you buy insurance or put down large deposits in foreign countries, you have forms to fill out to ensure you are not laundering money. This is due to U.S. government regulations.
All foreign transactions go through an American bank, so if the bank or financial institution you're dealing with does not abide by those rules, the U.S. government can make international transactions difficult or impossible.
Now if a bank does get caught laundering money - HSBC and Wachovia - they get fined, not shut down. So, American banks can do illegal transactions and pay fines and still make money. Pretty clever of the U.S. government and the banks, isn't it?
As I was researching this, I've found the government has changed the rules for passports. It used to be you could get another 24 pages for your passport at an American Embassy when your passport pages were all filled up. They changed that in 2015, and now you have to reapply for a new passport.
Mine is still good for another 9 years, but this allows the government to control your actions. I still have to get a new passport, as mine only has two pages left, and then all the pages have been used. I'll have to do this in Panama.
If I write something inflammatory on my blog, and it's flagged by the NSA (the National Security Administration) they can deny my application. It's not a "right" to be able to get a passport; the U.S. Government has to approve your request.
Remember, actions by the NSA are approved by a secret court: no representation by any individuals are allowed. So, if the NSA presents a case against me (and of course I would have no knowledge of this because it's all done in secret), and the court deems me a "threat", they could flag my passport as to not be renewed, and I would have no recourse. And silly me, I thought I was from the land of "Liberty and Justice for All!"
Financial Requirements for Expats
- A list of IRS requirements if you're living overseas: IRS
- Bank account requirements can be found here: FBAR
- Requirements for filing income taxes: FATCA
- Additional information on taxes can be found here: Expat Info Desk
From my personal experience traveling throughout Mexico and Central America, the terror that strikes most expatriates' hearts is not caused by problems in the country they live in, it's caused by the intrusion of the U.S. Government into the lives of expatriates.
If you have a spouse from the local country you're in, the U.S. government wants his/her information along with the Americans.
The paperwork for foreign banks is cumbersome, thereby limiting the banks that Americans can deal with. Doing business involving transactions over $10,000 requires a huge amount of paperwork, to prove to the U.S. Government that one is not laundering money or financing terror.
Think of this however you want, but to me this is another invasion of my privacy by the U.S. government that's uncalled for.
If you move overseas—no matter where you move outside the U.S.—you must abide by the rules or face fines and jail time. Courtesy of your elected officials in D.C.
Finding Out More
In conclusion, most of the questions you would have about moving overseas can be found on the internet. Just type in your question or concern about any country in Google search, and the answer will be found.
Expats (expatriates - people who've moved from their home country to a new country) are active in almost all countries of the world. Many are very helpful when it comes to supplying information to those that are new to traveling the world.
Another good source of information is travel blogs. Thousands of bloggers making a living while traveling the world. Pick you country, your travel style or interest (food, photography, art) and search travel blogs, and you will find 10's if not 100's of people who've been to where you're thinking of going.
Even here on Hubpages, I know people who write that are from Costa Rica, India, the Philippines, France, Spain, Thailand and many more countries.
Once you begin investigating, you'll be surprised how easy it is to connect with others from different countries or connect with people who are doing what you're thinking of doing.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.