Ask an advisor: Should I retire in a different country?

Ask an advisor: Should I retire abroad?

August 15, 2023 6:34 PM

For Americans behind on their retirement savings, countries like Vietnam offer a much lower cost of living.

Welcome back to "Ask an Advisor," the advice column where real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.

In the United States, retirement is expensive. On average, Americans expect to need $1.27 million to retire comfortably, according to one recent study by Northwestern — an estimate that has repeatedly increased since 2020.

One reason for that is inflation, which has reached historic heights in the past two years. Another is the cost of health care, which is particularly expensive in the U.S. The average American spends $5,000 more on health care than a citizen of any other high-income country, according to the Kaiser Family Foundation.

Is the solution to retire somewhere else? Many countries offer a more affordable lifestyle than the U.S. In Vietnam, for example, the average cost of living in Ho Chi Minh City is 170% less than in New York City, according to the fintech company SmartAsset, and the average rent is 538% cheaper.

All this makes retirement as an expat a tempting option for some Americans. One of them, a nurse in New York City, is contemplating a big move in her golden years. Should she take the leap? Or are there other options she hasn't considered? Here's what she wrote:

Dear advisors,

I'm a 36-year-old hospital nurse in New York City, and I only just started saving for retirement. I don't think I'll be able to afford the post-work lifestyle I want in the U.S. But what if I retire in another country?

I've been a registered nurse for eight years now, but expenses have left no room for retirement savings. I only just recently paid off $80,000 in student loans, as well as a down payment for my apartment. And as the mother of a 5-year-old girl, I'm also paying for all the many costs of raising a child in New York.

The upshot of all this is I just started contributing to my 401(k) this year. When I finally retire, I want to live in a nice neighborhood and keep enjoying things like travel and eating out. But this just doesn't seem within reach in the U.S., where prices are insane and only keep rising. I've read about countries where the cost of living is cheaper. Should I start learning Vietnamese?

Sincerely,

Questioning in Queens

And here's what financial advisors wrote back:

Don't forget to think local

Noah Damsky, a chartered financial analyst and principal at

Marina Wealth Advisors

in Los Angeles

Retiring abroad is certainly worth considering, as the cost of living in New York City can feel overwhelming. But in addition to living abroad, it's also worth considering other options in the U.S. with lower costs of living. Almost every other metropolitan city outside of Los Angeles and San Francisco will be cheaper than New York, so you're bound to have some options! If you decide you're open to moving before retirement, you may find a lower-cost city that also has a better overall quality of life and better schools for your daughter. This might put you in a more comfortable financial position today, which enables you to better prepare for retirement.

Keep your options open

Michael Hansen, a certified financial planner and the co-founder of

Frontier Wealth Strategies

in Walnut Creek, California

You have 30 years to decide, so don't panic. Plan.

The best plan is one that is flexible, because a lot of things can happen in the future. For example, in 30 years your daughter might have her own family that you would want to be close to, which might eliminate your desire to emigrate.

But in the meantime, you should explore countries that you might consider retiring in where health care is good and the cost of living is cheaper than in New York. Go on vacation to these countries and check them out. It's one thing to read about them, but another to actually live there. A month's vacation in one of your preferred countries should give you a good insight.

Start planning now and you will have loads of choices when you actually have to retire.

Weigh the pros and cons

Jude Boudreaux, a certified financial planner and partner at

The Planning Center

in New Orleans

There are great benefits in living overseas, but also great challenges. Do you know the language well enough to get your car repaired or speak to an emergency physician in that language? What kinds of activities do you enjoy, and will the new location provide you with those opportunities?

If retiring abroad is your dream, then certainly continue to learn the language, and if possible spend extended time in that country. Some individuals find that living somewhere for two or three months shows them they don't want to live there long-term, and it's useful to find that out before you make a big leap.

Whether in the U.S. or overseas, start saving, build as your career grows, and make smart purchases!

Research, research, research

Michelle Gessner, a certified financial planner and the founder of

Gessner Wealth Strategies

in Houston, Texas

Retiring abroad is definitely not for everyone. Even if you move to a place where there are a lot of English speaking expats, you may find that many differences in culture add up unexpectedly to feeling very displaced from home.

However, it is worth exploring different parts of the world where the cost of living is less and the culture agrees with you. In addition, some countries provide a streamlined process that makes it fairly easy to obtain a visa that leads to citizenship.

It is worth exploring! You can start by doing your own research or working with an organization like International Living, which provides guidance for a small fee. Countries like Greece and Portugal are popular with expats because of their relatively easy visa policies, beautiful weather and scenery, and low-cost, high-quality health care.

I recommend that you visit for at least one scouting trip to really get the feel for the place before making any decisions. Plan on spending a week or two there to get a true feel for the culture and amenities. Join Facebook groups for expats who live in that area so you can chat with people who have experience there.

It's also worth renting before buying property, although the specific country may have a "Golden Visa" program that allows you to purchase property there as an easy way to obtain a visa leading to citizenship. Learning the language is definitely a benefit, but in cases where there is a robust expat community or strong English speaking community, it may not be necessary to be proficient.