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Retiring in Europe: Easier Than You Think

Older Americans find few barriers to a rewarding and affordable lifestyle

When David Hatfield retired seven years ago, he and his British wife planned to move from Rhode Island to a large house they owned in California.

But even the best-laid plans have a way of changing. Illnesses in his wife’s family forced a string of trips back to England. “Those illnesses—coupled with an astoundingly generous offer to buy our California house—persuaded us to retire to Europe,” says Hatfield, 72.

They found that France, just a short ride from England via high-speed trains, was an appealing retirement choice.

“The English weather stinks, and house prices are comparatively high, and it’s very congested. But in France there’s great weather and lower house prices and it’s not very crowded,” Hatfield says.

Today the couple owns a sprawling stone farmhouse with a swimming pool and fruit trees set on three acres in southwestern France.

Attractions galore

Like the Hatfields, older Americans are blazing trails in new locales across Europe. They’re motivated mainly by a desire to stretch their dollars, but many cite other benefits as well: a gentle climate, welcoming neighbors, a bounty of cultural and culinary treasures, and a surprising acceptance of English.

According to the Association of Americans Resident Overseas, more than 5.26 million Americans live abroad in 160-plus countries, not counting those in the military. No one keeps statistics on how many are retirees, but they appear to number in the hundreds of thousands at least.

It’s not an experience for everyone, of course. People starting a post-career life in a foreign country have to be comfortable adapting to new customs and sometimes a new language, and having limited contact with family members and longtime friends in the States.

Making the move has been helped by cheaper air travel and Internet technology, such as free software for online video chats, that make visiting and communicating with loved ones back home a lot less burdensome.

But if you’re adventurous enough to consider retiring overseas, you probably have bigger concerns in mind. How difficult is it to get residency documents? Will good medical care be available as I age? How will I handle my financial affairs?

Many who retire to Europe say that these issues were easier to handle than they had expected.

Favorite American destinations

Diana Heeb Bivona, senior editor at Taking Up Residence, an online source of retirement information, says that while older Americans live all over Europe, many find the southern part of the continent attractive thanks to its lower expenses and milder weather.

Kathleen Peddicord, the Panama City-based publisher of Live and Invest Overseas, another online retiree resource, says most Americans retiring to Europe congregate in France, Spain, Italy, and Portugal and Ireland.

“You’ll find English-speaking enclaves—thanks to the Brits—in France, Spain and Portugal, and probably in parts of Italy as well,” she says. Other options include new members of the European Union in the east such as Poland, Hungary and the Czech Republic, which are less expensive but pose greater language and cultural hurdles.

“Budapest and Prague both have growing [expatriate] business communities that a retiree could tap into,” she says. “In addition, the language gap is closing as the next generation in this part of the world is learning English in school.”

Some retirees are even venturing to little-known countries such as Slovenia, where spacious villas can be had for as little as $180,000 and where many people speak English.

A helping hand with paperwork

No two destinations are alike in how they treat incoming retirees. No matter where retirees wind up, though, Bivona urges them to seek help with the residency process.

“In some countries the visa and permit process can be quite bureaucratic, and it is best to seek local legal advice to make sure it is done properly,” she says. But for other countries—the United Kingdom, for one—the process is more straightforward and can often be started online.

Other experts say that for retirees who don’t plan to enter the local job market, obtaining a residency visa to live in a European nation such as Italy, Spain or France is rarely a problem. “It wasn’t at all difficult to get permission” to live in France, Hatfield says, especially because the couple applied locally instead of via the embassy in the United States.

A wealth of information on residency requirements can be found on the Web sites of individual embassies and consulates.

Options for health care

For those eager to explore retirement in Europe, probably no concern carries more weight than health care.

“The really important thing to understand here is that your U.S. health insurance isn’t going to follow you outside the country,” Peddicord says. “It will not cover you abroad. There are almost no exceptions to this.”

That includes Medicare, which does not provide coverage for hospital or medical costs outside the United States. You can enroll in Medicare when you turn 65 and pay any required premiums, but you will have to return stateside to receive care.

A good option for many retirees in Europe is their new country’s national health insurance, if they qualify to join. Costs are low compared with the United States, and in most cases the quality of care is high. In 2000, the World Health Organization evaluated the world’s health systems and ranked the United States 37th, lower than 21 European countries.

Dayton Rogers, 65, decided six years ago to retire from Florida to the Maremma region of Tuscany in Italy. Part of the attraction was the country’s superior health care services. “The Italian doctors are great,” he says.

A third option for coverage is private health insurance. “Retirees overseas must arrange for local insurance in the country where they retire, which can be super-cheap—as little as $40 or $50 a month for a reasonable policy,” Peddicord says.

Peddicord also advises checking out the benefits of an international health insurance policy from a company such as BUPA, HTH, or AXA.

“This is more expensive than a local policy, but there’s an important advantage: A local policy covers you only locally, but an international policy can cover you anywhere you travel,” she says. “And, while it’ll be more costly than a local policy, it’ll be a bargain, still, compared with U.S. insurance rates.”

Handling your finances

Finances are also a big part of the equation for anyone considering retirement abroad.

Generally, foreign banks are happy to establish accounts for foreign residents. Some Italian banks even offer dollar accounts, Rogers says. “Transfers are relatively straightforward,” he says. “For example, Social Security pension payments can be transferred directly.” As of last December, Social Security was sending retirement benefits to nearly 400,000 people living abroad.

But many foreign retirees choose to have their benefits deposited in bank accounts they maintain in the United States. Keeping U.S. accounts and credit cards is a good idea, says Scott Simons, who moved with his family from California to Ireland several years ago. Not only will they come in handy when visiting the United States, he said, but maintaining funds in more than one currency can help you avoid exchange fees and dampen the effects of currency fluctuations.

Paying taxes can be tricky for expatriate retirees, but there’s usually no extra burden for residents of Europe.

Laura Sheridan, managing editor of www.internationalliving.com, which has published retirement information for nearly 30 years, warns never to proceed toward retirement overseas without first seeking tax advice.

“That said, I’m pretty sure all European countries have double taxation agreements with the United States, so if you’re already paying tax on any pension or other income originating in the States, you won’t have to pay additional tax in the new country,” she says.

That was David Hatfield’s experience in France. “I would guess that between the two countries I pay about the same as I would if we lived in the States,” he says.

But “if you’re earning any income in the new country—such as rental income from a vacation home—that’s another matter,” Sheridan says. “Tax will be levied on it.”

In fact, Sam Okoshken, a U.S. lawyer in Paris, says that anyone purchasing property in Europe should seek a local expert’s advice, as the legal process is often very different from that in the United States.

Another consideration is estate law. A move to a new country and the purchase of property almost always triggers the need to create a new will in that country.

In general, a separate will is still required in one’s country of origin, because the distribution of real estate and other assets is almost always governed by the country in which the assets are located, not by the country in which the owner resided.

Worth the hassles

Is all the paperwork and dealing with bureaucracy worth it? Some people, at least, say their daring leap ended in a retirement dream come true.

Rogers was able to afford a large stone farmhouse, with gardens and terraces on three levels, at an elevation of 750 meters (2,460 feet)—supposedly the optimum height for longevity, he says.

He says one of the best aspects of his new life is the Italian people, who are “warm, open, and enjoy a gregarious nature and sense of humor.” In general, he says, American retirees are accepted immediately, even if they don’t speak Italian—so long as they make an effort to learn at least a few words.

Although Rogers admits that Italy in general can be expensive, he said that its good food is very inexpensive if you befriend local producers. “All the local food is grown right in front of your eyes, and organically as well,” he says.

Simons, who is not yet retired, publishes a Web site for retirees and anyone else considering a move to Ireland.

“If you want to live in a vibrant, friendly, English-speaking, and absolutely beautiful country, you’d be hard put to find a better place than Ireland,” he says. “And, as anyone who ever visited Ireland can tell you, the Irish love Americans.”

Simons offers one important caveat, however: “It can often rain buckets in Ireland.”

Shelley Emling is a New Jersey-based writer on consumer and business topics. Her family returned to the United States this year after living for six years in London.

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