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ext month, Matt Palmer, 60, and Lisa Barr, 63, a retired couple from Quincy, Mass., and Penni, their six-year-old retired racing greyhound, are moving to one-half of a two-family house they are renting with a contract to buy in Lucca, Italy, a lively Tuscany town on the Ligurian Sea. A mechanical engineer and business traveler to Italy for 35 years, Palmer already speaks fluent Italian, which Barr plans to learn. They fell in love with Italy a quarter-century ago and have visited together 26 times since, giving them a chance to see the entire country with an eye towards where to settle. They chose Lucca (the birthplace of opera composer Giacomo Puccini) for its temperate climate, cultural scene and proximity to art mecca Florence, a 75-minute train ride away. “We are making our dream happen,” Palmer says.
No, retiring abroad doesn’t have to be the culmination of decades of dreaming and planning. But it does require extensive research, planning and yes, some boring, but necessary paperwork.
Start by consulting the Forbes list of the Best Places To Retire Abroad. In 2024—featuring 96 recommended spots in 24 countries, on four continents and several islands. Each country’s description includes the sort of practical information we considered in making our picks, including cost of living, healthcare costs and quality, taxes, natural hazard and climate change risk, the difficulty of getting permission to live there, travel connections back to the U.S., and whether you can get by without being fluent in the native language.
Almost all our picks have a lower cost of living than the U.S. average—some, such as Colombia, Indonesia, Malaysia and Mexico, are way lower. You can even live affordably in much of Europe, if you stay away from expensive cities like Paris. Do your homework, and you could end up living more cheaply than in the U.S. and enjoying spectacular scenery or culture and food, to boot.
One plus for most of the countries on our list: Quality medical care and health insurance is available at a cost so far below U.S. price levels that private insurance or even out-of-pocket payments can replace Medicare without bankrupting you. Several countries, including Uruguay, Italy and Spain, even allow expats to join their national health care systems at some point under certain circumstances. Medicare can’t be used in foreign countries. But it is a possibility for retirees close enough to easily drive or fly back from some countries on our list, including Aruba, Belize, Canada, Costa Rica, Mexico and Panama.
One thing you probably won’t save on with a foreign retirement is taxes. Unlike most other countries, the U.S. taxes its citizens on their income no matter where they live, so there’s no break there. The country of foreign residence, of course, has its own taxes, often at higher rates. U.S. tax law allows U.S. filers to take a foreign tax credit against U.S. taxes for certain tax payments made to other countries, but this is somewhat limited. Still, the U.S. has tax treaties with most of the countries on the list and these treaties provide some protection against double taxation—that is, taxation of the same income by both the U.S. and the country of residence. The Internal Revenue Service website, irs.gov, provides guidance as well as a list of tax treaties in effect. In the unlikely event a U.S. retiree is allowed to work abroad and has earned income, the U.S. Foreign Earned Income Exclusion under certain circumstances shields up to $126,500 from U.S. taxation.
A handful of countries on our list, including Costa Rica, Malaysia, Panama and Uruguay, don’t tax any foreign income of expat retirees, while several others, including Colombia, France and Thailand, don’t tax pension and Social Security payments. Spain and Italy don’t tax foreign pensions if they were earned in government service. Our firm suggestion: Consult competent tax professionals, and expect to pay more for tax preparation assistance as well as advice on such issues as filing Foreign Bank Account Reports (FBARs) to the Treasury. You can face stiff penalties for failing to file. Even something as simple as opening a bank account to make any mortgage payments can have legal repercussions if not handled correctly.
Overall political stability is another important issue, and it can change from year to year. Ecuador, Nicaragua and Peru made some previous Forbes lists of best places to retire abroad but aren’t on the list now due to unrest in key places. On the other hand, we now include Colombia and Croatia, which not so long ago had big problems. As in the U.S., many countries on this list have safer places and those to avoid. In Mexico, for example, some of the border cities are dodgy.
A key issue, of course, is what it takes as an American retiree to gain the right to live in a foreign country. Most of the countries on this list allow foreign retirees to settle upon a showing of adequate income resources, such as pensions, Social Security and retirement accounts, or overall net worth. Put simply, other countries don’t want Americans coming and taking local jobs, but they’re more welcoming to retirees bringing money from the U.S. to spend. Adequate income can range from a minimal amount—e.g. $12,600 a year for two in Cyprus—to a substantial $110,000 a year for a couple that wants to stay in the Republic of Ireland. In some countries, family connections, such as a grandparent born there, are a big help. That can work in Ireland.
We put Canada on the list despite the fact that it’s very hard for an American retiree without close family living in Canada to move there. But our northern neighbor allows American tourists to stay for six months a year with few questions asked, raising the possibility of simply splitting your retirement time between the U.S. and Canada. Similarly, Costa Rica recently extended its tourist visa to 180 days. Kirk Misich, 59, and Julie Hill, 65, a Seattle-area couple nearing retirement, plan to use that provision to shuttle (without longer-term Costa Rican residency) to a home they purchased in the Pacific Ocean town of Potrero. “It’s a lot easier,” says Misich.
Of course, each country has very different procedures that need to be followed. Paperwork frequently has to be translated into the official language of the country. Some countries specify that an application must first be filed with the country’s U.S. embassy or nearest consulate, while others require the paperwork to be filed only after the retiree arrives in the country on a tourist visa. The website of the country’s U.S. embassy often has helpful information laying these details out. Some expats retain a lawyer or specialist to handle the process. The initial permission to stay beyond a tourist visa is generally granted for a limited period of, say, a year or two, with the possibility of renewals and, eventually, something similar to permanent residence.
An excellent way of scoping out what might become a future home is to use a tourist visa to stay as long as possible—most countries allow at least three months. It is often possible to rent an apartment on a short-term lease. That could lead to a longer-term rental, since most Americans end up renting, not buying a home. Buying property in a foreign country can entail all kinds of complications, and in some places is hard to do. There are other issues too; for example, Belize has had problems with fraudulent land sales to Americans.
Expats retiring to a foreign country generally have to show proof of medical insurance, which is a smart thing to have, even without a mandate. Coverage can be identified from such sources as the Association of Americans Resident Overseas and Medibroker. Reflecting the lower cost of healthcare abroad, rates are generally reasonable, but finding coverage for some pre-existing conditions can take time.
A crucial warning: Even if you’re retiring abroad, make sure you enroll in Medicare Part A when you turn 65 (unless you’re still working and have insurance through your job). Part A covers hospital care in the U.S. and it’s free. But also pay premiums for Medicare Part B, which covers doctors and other outpatient services. (Part B premiums for 2024 start at $174.70, but can be a lot steeper if your income is above $103,000 for a single or $206,000 for a couple.) Why pay for something you’re not using? You might come back some day. Should you decline Medicare Part B now and later return, you can be hit with a late enrollment penalty equal to 10% for each year you would have been paying premiums.
Due diligence, of course, is a key to any successful move. The internet and social media have made this a lot easier, though ultimately, a physical scouting visit before you move is wise. High school special education teacher Colleen Kennedy began researching retirement spots seven years ago. She knew she wanted someplace conducive to outdoor living, but cheaper than the Los Angeles area, where she grew up and spent most of her professional career. She considered cities in Nevada and Arizona but found them too hot for too much of the year.
So, Kennedy started searching abroad. She scoured print and online sources and considered, but rejected, South America. Slowly, she turned to Europe, eyeing spots in Italy and Portugal, which both have significant numbers of resident American retirees and are on our list. As part of her research, she joined several Facebook expat groups focused on individual countries. (If a group for a location you’re interested in is closed, ask to join and then fire away with questions about the nitty gritty: cost of living, crime, banking issues, ease of bringing personal property such as a car, and so on. Expats tend to be a helpful bunch, except for a rare retiree who wants to discourage newcomers to protect a good thing. Not on Facebook or Instagram? Turn to Google and look for retiree blogs.)
In 2022, after Kennedy found herself drawn foremost to Spain, she took a two-month check-it-out trip to the Iberian Peninsula, which sealed the deal. Spain, she says, “felt like California. It was a very good fit.” The Costa del Sol was particularly inviting. Now 65 and retired, this month she moved from Los Angeles to Mijas Costa, along the Costa del Sol west of Marbella. She found Mijas Costa—-and a lease on an available apartment just a 10-minute walk from the Mediterranean—through a connection with one of her former students, whose father was from Spain. Eventually, she’d like to buy a place there or elsewhere in Spain but is getting what she describes as a “soft start” with a rental. Another wise approach. With lower rent and medical costs and no need for a car, Kennedy figures her cost of living is just a third what it was in Los Angeles.