Retiring abroad

Retiring in another country is no longer exotic. The Social Security Administration sends payments to more than 700,000 beneficiaries outside the United States, a number that has grown steadily for decades ¹. Some of those are foreign workers who earned US benefits and went home, but a large share are American retirees drawn by lower costs, milder weather, or family ties abroad.

The appeal is real: in much of Mexico, Portugal, or Panama, a Social Security check that feels tight in an American suburb covers a comfortable life. So are the complications. Moving abroad does not end your US tax obligations, does not take Medicare with you, and adds a layer of visa paperwork that must be renewed and re-proven for years.

This article covers the machinery: the visas, the health care, the taxes, and the parts of the decision that glossy retire-overseas articles tend to skip.

Popular destinations and their visas#

Most countries that attract American retirees offer a residence visa based on proving steady income, and the thresholds below are the current published figures. They change with inflation, minimum wages, and exchange rates, and consulates apply them unevenly, so treat the table as a snapshot and confirm with the consulate that serves your state before planning around a number.

A few notes behind the numbers. Mexico's amounts are tied to a national index (the UMA) and recalculated each year, and individual consulates quote different dollar figures ². Portugal's D7 threshold rides on the minimum wage, and consulates typically also want to see about a year of funds already sitting in a Portuguese bank account ³. Panama's pensionado grants permanent residency right away and comes with legally mandated senior discounts, which is why it has been a retiree favorite for decades ⁴. Costa Rica's version starts as temporary residency and is renewable ⁵. Spain's non-lucrative visa forbids work, including remote work for a US employer in most readings, and its threshold is pegged at four times a public benchmark figure called IPREM ⁶.

Sources for this section: [2] [3] [4] [5] [6]

Health care: Medicare stays home#

Medicare pays for essentially no care delivered outside the United States; the exceptions are narrow, such as an emergency in Canada while driving directly between Alaska and the lower 48 ⁷. A few Medigap plans reimburse foreign emergencies, but only during the first 60 days of travel, which helps visitors, not residents ⁷.

Retirees abroad therefore rely on the local system. In the popular destinations, care is a mix of public systems that legal residents can join (Costa Rica requires pensionado residents to enroll in its national system, the Caja, with contributions based on income ⁵) and private hospitals paid for with private insurance or cash. Private health insurance is also a visa requirement in several countries: Spain's non-lucrative visa expects a policy from a Spanish-authorized insurer with full coverage and no copayments, and Portugal's D7 requires private coverage at least until the residence permit grants access to the public system ³⁶. Private premiums generally run far below US prices for people in their 60s, but they climb with age, exclude pre-existing conditions more aggressively than US law allows, and many local insurers will not take new applicants past their early 70s. Quality is genuinely high in the major cities that retirees favor and much thinner in rural and coastal areas.

The hard decision is what to do with Medicare Part B, which charges a monthly premium whether or not you can use it. Keeping it means paying for coverage that is useless abroad but ready the moment you return, and many expatriates keep Part B precisely because they expect to move back if health fails. Dropping it saves the premium but re-enrolling later can mean waiting for an enrollment window and paying a permanently higher premium; the penalty math is covered in Medicare enrollment periods. There is no one right answer, only a bet on whether you will return.

Sources for this section: [3] [5] [6] [7]

Taxes follow you#

The United States taxes its citizens on worldwide income no matter where they live, so retiring abroad means filing a federal return every year for life. Four points catch retirees in particular.

First, the foreign earned income exclusion, the provision expatriates cite most often, applies only to money earned by working abroad. It does nothing for Social Security, pensions, annuities, or IRA and 401(k) withdrawals, which remain taxable by the US exactly as they would be at home; see taxes in retirement for how each source is treated. Tax treaties and foreign tax credits usually prevent true double taxation, but they add complexity rather than removing it.

Second, foreign accounts trigger reporting. Once your non-US financial accounts together exceed $10,000 at any point in a year, you must file an FBAR (FinCEN Form 114), and larger holdings, starting at $200,000 in assets for a single filer living abroad, add IRS Form 8938 under FATCA ⁸. The forms are informational, but penalties for skipping them are severe, and many foreign banks demand proof of US tax compliance before opening accounts for Americans.

Third, your old state may not let go. States tax based on domicile, and one that considers you still domiciled (because you kept a house, a driver's license, or voter registration) can keep taxing your income. Cleanly establishing that you have left, sometimes by first moving to a no-income-tax state, is a standard step in an exit plan.

Fourth, the country you move to may tax you as well, and some visas push you toward it. Spain's non-lucrative visa asks holders to live there at least 183 days a year ⁶, and spending more than 183 days in a calendar year is what makes someone a Spanish tax resident ⁹. What that costs depends on the local system. Spain taxes residents on their worldwide income, so a US pension, Social Security, or investment income can all be taxable there ¹⁰. Portugal taxes residents on worldwide income too, at progressive rates reaching 48 percent in 2026 ¹⁴. The non-habitual resident regime that once taxed a new arrival's foreign pension at a flat 10 percent closed to new applicants in 2024, and its replacement is aimed at workers in science and technology rather than retirees, so a pensioner who moves there now pays the ordinary rates ¹⁵. Panama and Costa Rica tax only income earned inside the country, which usually leaves a foreign pension or Social Security check untaxed locally ¹¹¹². The treaties and foreign tax credit noted above usually stop the same income from being taxed in full twice, but a second tax home still means a second set of rules.

Caution: Estate documents rarely travel well. Wills, powers of attorney, and beneficiary arrangements drafted for US law may not control property in a country with forced heirship or different probate rules, so cross-border estate planning advice is worth paying for before you buy property abroad.

Sources for this section: [6] [8] [9] [10] [11] [12] [14] [15]

Social Security crosses borders easily#

Unlike Medicare, Social Security works almost everywhere. US citizens can receive retirement benefits in nearly any country, by direct deposit to a US bank or to banks in the many countries with payment agreements ¹. The exceptions are short: payments cannot be sent to anyone in Cuba or North Korea, and they are restricted in a handful of former Soviet republics, including Belarus, Kazakhstan, and Uzbekistan, unless the beneficiary qualifies for a narrow exception ¹. A US citizen in Cuba or North Korea gets withheld payments back after moving somewhere payable; rules are stricter for beneficiaries who are not US citizens ¹.

Housekeeping still matters. SSA periodically mails questionnaires to beneficiaries abroad to confirm they remain eligible, and missing one suspends payments. Claiming rules are unchanged by geography, so the analysis in when to claim Social Security applies from Lisbon as much as from Phoenix.

One rule that used to reduce benefits for people with a foot in two systems is gone. A pension from work not covered by US Social Security, which includes many foreign pensions, once lowered a worker's own US benefit through the Windfall Elimination Provision. The Social Security Fairness Act ended that provision, and December 2023 was the last month it applied, so a foreign pension no longer trims the US benefit ¹³.

Sources for this section: [1] [13]

Rent before you buy#

Nearly every experienced expatriate gives the same advice: rent for six to twelve months before buying anything. A town that charms you for two vacation weeks can feel different through a rainy season, a holiday away from grandchildren, and a visit to a local emergency room. Renting also teaches the practical map (which neighborhoods flood, where the hospital traffic is, what utilities really cost) before you commit capital to a market that may be hard to exit; foreign property is usually illiquid, and buying often brings tax and inheritance wrinkles of its own. The math and psychology of shedding a US home first are covered in downsizing.

The downsides people underestimate#

The failure stories usually involve predictable things. Distance from family is the big one: grandchildren grow up between visits, and when a parent or sibling back home gets sick, you become the long-distance relative arranging flights. Language is the second; daily life in tourist zones works in English, but hospitals, tax offices, and courtrooms mostly do not, and managing a serious illness in a language you speak poorly is genuinely hard.

Health itself is the third. Local care may be excellent for routine needs and still require medical evacuation to a bigger city, or back to the US, in a complex emergency, at a cost that can reach tens of thousands of dollars without evacuation coverage. Long-term care abroad can be inexpensive, but the informal family networks many countries rely on will not exist for you, and returning to the US in your late 80s to be near care and family (a common ending to the story) means re-entering the US housing and insurance markets years after leaving them. None of this argues against going. It argues for a written plan for coming back, kept current alongside a realistic budget, and for treating the move as reversible rather than final. Part-year arrangements, six months abroad and six at home, are how many retirees split the difference; travel in retirement covers the lighter-commitment version.

RetiredWiki. (2026, July 18). Retiring abroad. https://retiredwiki.com/article/retiring-abroad