Dreaming of retirement in Panama, or even Portugal?
With financial preparation, starting your next chapter abroad isn’t just achievable—in some cases, you can stretch your dollar much further than it would go in the US.
That’s the case for Edd and Cynthia Staton, who moved to Cuenca, Ecuador, in 2010 to escape the 2008 financial crisis that had ruined their retirement plans in the US. Since then, they have written best-selling books on expat retirement and have an online program called Retirement Reimagined. Edd calls international living a “retirement trifecta,” as the couple lowered their expenses, raised their quality of life, and will save 20% of their Social Security payments for the future.
“We have an incredible lifestyle,” he says, referring to their penthouse apartment, walkable city, and nearby restaurants. If they remained in the US, “we would be struggling and not able to do many of the things we enjoy,” he adds.
While saving money isn’t always the case—some destinations can be as expensive as, or more than, the US—if you’re craving a new adventure, retirement abroad might be for you. From banking and taxes to health care and emergency funds, here’s your essential financial checklist to help make your international move as smooth as possible.
1. Budget for significant upfront costs
Unless you’ve spent considerable time at your dream location, it’s critical to do trial stays before going all in. That means paying for transportation, lodging, and daily living expenses during those scouting trips.
Once you’ve decided on your ideal place, the costs will continue to add up. Among them: flights, shipping or storage for your belongings, visa-related charges, and potential fees for a lawyer or other specialist to help you navigate required paperwork.
If you’re renting, you may need to pay the first month’s rent plus a security deposit in advance. If you’re buying a home, you’ll need a down payment, as well as money for closing costs and legal fees. You may also have to pay for furnishings if you don’t ship yours—and potentially pay for utilities and internet services. (And if you’re bringing a furry friend, factor in vet visits, vaccinations, a travel crate, and airline fees.)
If you’re buying property, know what you’re getting. Ownership rules vary widely. Confirm whether you receive full ownership (fee simple, a type of ownership that grants the most control over a property), a land lease, or another structure—and what rights and restrictions come with each. Build in time and budget for reputable local counsel and a translator, if needed.
After budgeting for all expenses, add at least another 10% to cover the inevitable surprises that come with a major international move.
2. Make sure you can access your money
Before you relocate, contact your financial institutions to ask about potential restrictions on trades, transfers, deposits, and withdrawals when conducted outside the US. Also, find out about foreign transaction fees, currency conversion costs, and wire transfer limits.
Keep in mind that some institutions may require nonresidents to close their accounts, so be prepared for that possibility.
Also ask about wire transfer protocols and restrictions, advises Thomas Sutton, who now lives in Lisbon, Portugal, with his wife Nancy after first testing out retirement in South America. The couple discovered that some US banks require international wire transfers to be initiated in person rather than by phone or online. “That’s something to be cognizant of,” he says.
To simplify money management, they also opened a local bank account in Lisbon. If your country allows it, this step can help reduce currency exchange fees and foreign transaction charges. Having an in-country bank account can also simplify local bill payments.
You can continue to receive US Social Security while living abroad. Depending on the country, you may have the option of getting payments directly deposited into your local bank. Alternatively, you can receive payments in a US account and access the funds through transfers and ATM withdrawals as needed. In the latter case, check the fees before deciding where to have the money deposited.
3. Create a plan for health care costs
You may not get comprehensive coverage abroad if you have a standard US health insurance plan, and Medicare typically doesn’t cover medical services outside the US. So it's important to plan for health care expenses.
Options include getting private insurance, securing international coverage, paying out of pocket, and, if it's allowed, signing up for government health care if you become a resident. Many international retirees opt for private “expat insurance,” which is designed for those living abroad and can include coverage for both routine care and emergencies, such as a medical evacuation.
Ask a financial professional with Medicare expertise about keeping Medicare active while you live abroad, as it can help you avoid re-enrollment penalties down the line. One place to consider, Fidelity’s Medicare Services® offers impartial, complimentary guidance.
Enrollment also ensures you’ll have coverage when visiting the US or if you decide to return permanently. “We know people who said that they’re never going back to the States, but then they’re back there for medical issues,” says Edd.
Also on the health care front, research access to any ongoing prescriptions before choosing your new location. “If you’re taking medications, make sure they are available and, if so, how much they will cost,” says Nancy. Some may be prohibited or restricted, even if you have a valid US prescription.
4. Understand US and local taxes
Unless you give up citizenship, you’re still on the hook with Uncle Sam. That means filing an annual tax return if your income is above IRS thresholds. And early withdrawals from your 401(k)s and IRAs can still trigger a 10% penalty plus income taxes.
Watch for worldwide income and wealth taxes. Many countries tax residents on their worldwide income. Some also assess a wealth tax that could apply to all your assets—even investments that remain in the US—warns Steven Feinschreiber, senior vice president and head of methodology at Fidelity Strategic Advisers. Local definitions, thresholds, and exemptions vary, so advance planning matters.
Mind transaction timing. Some transactions treated favorably in the US may not receive the same treatment abroad. For example, selling your primary home in the US can qualify for up to a $500,000 exclusion of capital gains for married couples filing jointly—but your new country may not recognize that exclusion. For this reason, it can make sense to complete a US home sale before becoming a tax resident abroad. An international tax professional can help you map the sequence and avoid penalties.
Keeping up with tax laws in one country can be tough enough—but add in a second country and it can be especially tricky. A cross-border tax pro can help you stay compliant in both countries and make the most of available benefits.
5. Maintain healthy emergency savings
Unexpected expenses can pop up no matter where you live—but especially so if you’re in another country. You may need to buy plane tickets to the US for a family crisis (or, on a happier note, for a special celebration). You can also be hit with surprise expenses like health care bills, car repairs, or home maintenance.
Aim to set aside enough money to cover 3 to 6 months of essential expenses.
A cash cushion can help you avoid selling investments at a bad time and buy you flexibility if exchange rates move against you—so you may have less to worry about while enjoying your adventures abroad.
6. Plan your residency—or citizenship—carefully
If you’re considering long-term residency or citizenship, learn the rules well ahead of time.
- Residency pathways: Many countries allow you to apply for citizenship after a certain number of years as a resident (often with a language exam).
- Citizenship by investment: Some countries offer programs that allow citizenship (or residency) in exchange for investment in the local economy.
- Tax implications: Becoming a resident can subject you to worldwide income taxation in that country. Understand how residency, domicile, and source of income rules would apply to you before you make a move.
What to know if you’re a Fidelity customer
If you’re a Fidelity customer moving abroad, there are a few important things to keep in mind.
Account access and restrictions:
Fidelity does not open new accounts for individuals residing outside the US. If you already have an account and move abroad, you can maintain it, but:
- You may not be able to make new deposits or buy additional securities.
- Mutual fund purchases are restricted for non-US residents.
- 529 and HSA contributions must stop, though existing balances can remain.
- Some services like margin lending or options trading may be limited.
- If you have a Fidelity managed account, your discretionary asset management relationships may be terminated.
- Fidelity crypto accounts must be closed if you move out of the US.
What you can do generally
- Reinvest dividends and capital gains in mutual funds.
- Sell existing holdings and withdraw proceeds.
- Maintain your current mutual fund positions.
Fidelity offers international phone support. Find country-specific numbers at Fidelity.com/ContactUs.