Retiring Abroad? Make Plans for Handling Your Money

Even if you keep your U.S. accounts, relocation experts recommend opening a bank account where you move. In some countries, such as Costa Rica, Malaysia and Thailand, depositing a certain amount in a domestic bank can be a route to securing residency.

Using a local bank gives you a ready source of cash that isn’t subject to currency fluctuations and conversion fees. It also simplifies paying regular bills like utilities (providers in some places require a local bank account) and handling income if you work or set up a business in your new country.

Rules for opening bank accounts vary by country, but typically you’ll need to show a passport and proof of local residency and make a minimum initial deposit. Make sure the bank you choose accepts transfers from your U.S. financial institution (and vice versa) and find out the fees involved. (Major U.S. banks charge up to $50 for an outgoing international wire transfer.)

You can also use cash transfer services such as Wise, XE and Remitly to move money quickly from a connected U.S. account to your foreign bank or another recipient, in local currency. You’ll need to create an account with the company to use it to send money. These services typically give you a better rate for most currencies than you’d get from your U.S. bank or your local bank if you send dollars to your local account. They can also save you on transfer charges compared to using a bank.

Taxes

Moving to another country means paying taxes in that country, but it doesn’t sever your obligations to the IRS. You still need to file an annual U.S. tax return (and possibly a state return, depending on whether you maintain U.S. residency and whether it’s in a state that taxes income).

The good news is that the U.S. has tax treaties with more than 60 countries that protect Americans living in those places from being fully taxed by both countries on the same income. The bad news is, that’s not as simple as it sounds.

“Even with a treaty in place, the type of tax doesn’t always line up,” says Amanda Rand, president and CEO of Spinnaker Trust, a financial planning and investment management firm in Portland, Maine. For example, something that would be considered a capital gain in the United States might be taxed in another country as ordinary income, which often means higher rates.

Another wrinkle: Not every country bases taxation on the calendar year, as in the United States. In the United Kingdom, for instance, the tax year runs from April 6 to April 5. Not only do filing dates differ — so do the amounts you need to report and how you track them. “It's kind of a minefield,” Rand says.

There may also be extra U.S. tax filing requirements for expats. For example, if you are still doing any work for pay, you may need to file IRS Form 2555 on foreign earned income. It’s worth the extra paperwork; you can exclude that income — or at least a big chunk of it) — from U.S. taxes if you’ve established another country as your tax home.

For the 2024 tax year, up to $126,500 of income earned while living abroad can be excluded from U.S. income taxes. (If the income is from self-employment, you still need to pay Social Security and Medicare taxes.) The exclusion does not apply to pensions or passive income such as investment returns.

You must also disclose any foreign financial accounts with an aggregate value of more than $10,000 and offshore financial assets worth more than $200,000 under IRS reporting requirements designed to curb money-laundering and tax evasion.

Your U.S. tax preparer may not have encyclopedic knowledge of multinational tax laws, so financial professionals and relocation experts recommend finding a provider in the country where you’re moving.

The nonprofit group American Citizens Abroad, which advocates for Americans living overseas, has directories of firms that provide international tax preparation and financial services. You can also tap expat networks on social media or in Meetup groups for recommendations of local tax pros.

“It’s really not unlike trying to find a CPA or an attorney here in the United States,” says Stewart Koesten, chairman at Aspyre Wealth Partners in Overland Park, Kansas, who is semiretired himself and in the process of moving to the Netherlands. “You rely on word of mouth or ask professionals you know.”

Social Security

American citizens can receive Social Security benefits almost anywhere, save for a handful of countries to which U.S. entities cannot make payments due to Treasury Department sanctions or other restrictions. There may be additional conditions for noncitizens who collect benefits and live abroad. The Social Security Administration (SSA) has a pamphlet with details.

Since Social Security payments are made by direct deposit, you can simply keep them coming to your U.S. bank account. You can also have them sent to a bank in the country where you live, provided it has a direct-deposit agreement with the U.S. (Most countries do.) Remember, though, that Social Security will still calculate your benefit in U.S. dollars, and the amount that lands in your foreign bank each month can change with exchange rates.

You can notify the SSA of a change of address and direct deposit information online if you have a My Social Security account. You can also apply for retirement benefits, family benefits or Social Security Disability Insurance (SSDI) online,  if you didn’t claim them before leaving the U.S.

If you do have Social Security payments sent to you abroad, the SSA will send you a questionnaire every two years in May or June (and every year once you reach age 90) to ensure you remain eligible for benefits. Take care to complete and return it promptly; you could lose some of all of your payments if you do not respond and report any changes in your living situation.

Health insurance

However you’re getting health insurance in the States, you’ll almost certainly need to make an adjustment before moving abroad to ensure there are no gaps in your coverage. Many countries require proof of health insurance as part of the initial visa process. Medicare, with very few exceptions, doesn’t cover you outside the U.S. Neither does most private health insurance, and travel insurance typically is time-limited and does not cover preventive care.

Some U.S. insurers, including Allianz, Cigna and IMG, do offer international health coverage. They can also help you find English-speaking medical professionals abroad. If you’re considering one of these policies, check with the immigration office in your new country to make sure it meets their visa requirements.

After a certain period as a legal, taxpaying resident, you typically can qualify for your adopted country’s national health insurance program. It likely will cost less than coverage in the U.S., which has the world’s highest per-capita health care costs, according to World Bank data.

Private health insurance is also widely available, and in some countries local insurers offer low-price plans expressly tailored for expats to meet visa rules, Ingrim says. Check the regulations where you plan to go, though — in many Latin American countries, for example, you cannot buy a new policy if you are over a certain age, typically 60 or 65.

Accessing health care abroad is not only often less expensive, “it’s much more straightforward,” Leffel says. “It’s not long waits and it isn’t difficult to find a doctor. People find that hard to get used to at first.”