Foreign Countries are going the extra mile to attract US retirees
IJ Zemelman Jan-10-2015
It’s not uncommon for US Citizens to make the decision to retire overseas. What’s unique about the current day in age is that there are certain countries making an effort to appeal to US Retirees to encourage them to spend their retirement years in their countries.
There are a few countries who are making certain concessions for seniors to encourage them to spend their retirement years abroad. In these foreign countries, retirees can stretch their dollar wider and take advantage of other services being offered to senior citizens.
Panama is one of the countries which is going the extra mile to cater to senior citizens. The country of Panama is offering sales tax refunds to seniors, bus tickets and plane tickets at half price, and senior privileges which offer senior citizens ‘front-of-the-line’ access in public service outlets such as banks and airports. More can be found out about the perks of retiring in Panama on the CNN report.
Nicaragua is another country intentionally catering to senior citizens. Nicaragua established a retiree residency program with a low retirement age of 45 to those whose income is at least $600 per month. In the Philippines, government agencies were created with the sole intention of attracting senior citizens.
For more information on countries offering special perks to retirees, visit Live and Invest Overseas.
A sizeable portion of US Expats are retiring in South and Central America, according to a new report from the Social Security Administration.
It is reported by the Social Security Administration that almost 50K retirees and their spouses are collecting Social Security benefits in Central America, South America, and the Caribbean. Just 10 years earlier, there were half that amount collecting Social Security benefits in these regions. While the cost of living and healthcare expenses are (and have been) rising in the United States, countries in these regions offer warm temperatures, lower cost of living, and more affordable healthcare.
Aside from the 12 countries in which sanctions by the United States are placed, you may collect Social Security benefits anywhere around the globe.
If you have reached retirement age (62 years old) or you have become disabled and you have worked at least 10 years in the United States, you are eligible to collect Social Security benefits. These can be collected anywhere in the world besides the following countries: Cuba, North Korea, Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.
Once you move back to the United States or to a country free of sanctions, you will be able to collect your Social Security payments – including any payments you were denied while living in a country with sanctions.
Affordable healthcare is a major consideration for US Expats living overseas. While you can acquire healthcare for a relatively low price in foreign countries, it is recommended that you maintain coverage under a Medicare plan in the United States.
It’s not a surprise that healthcare is a huge concern for US Expats and senior citizens in particular. Healthcare costs have been rising in the United States, and there doesn’t seem to be any relief. If you qualify for Social Security benefits in the United States, then you also qualify for Medicare; but this option doesn’t help when obtaining healthcare abroad.
Most foreign countries have very affordable healthcare options. Costa Rica, for example, offers a very low cost public healthcare plan. In many other countries, a healthcare plan isn’t even necessary, because it’s feasible to pay for medical expenses out of pocket. If you are living overseas, it’s still recommended to maintain a full Medicare plan just in case you are facing a severe healthcare crisis and need to return to the United States for care.
If you retire abroad, you will still need to file an annual US expat tax return and report any foreign bank accounts if you have over $10K in foreign financial institutions.
Remember that once you retire, you still have the obligation to file a tax return. Your pension or retirement income may be taxed in both your host country and the United States. There will be some credits you can take advantage of, like the Foreign Tax Credit, which allows you to take a dollar-for-dollar deduction on foreign taxes you pay. If you have other types of passive income, you may also need to report and pay taxes on this income. The United States is interested in your reporting all of your worldwide income.
Another important consideration is your responsibility to file FBAR (FinCEN Form 114) if you have at least $10K in one or more foreign bank accounts. You may also be required to file FATCA Form 8938 if your offshore assets reach a specific threshold.
I.J. Zemelman, EA is the founder of Taxes for Expats