Mother shocked us when she announced that she planned to move and live abroad. The occasion was her 70th birthday, so the whole family was there. No one knew what to say, so she continued. She had been considering this move ever since she retired several years ago and she had narrowed her choices to four places: Puerto Vallarta, Belize, Panama, and Costa Rica
All of her choices offer a comfortable climate (Mom is a life-long New Englander), rich culture, a much slower pace of life, and, obviously important to a retiree, a much lower cost of living. All, she added, were easily accessible to the United States, which meant frequent family visits were possible. Mother, a former language teacher, had served as chaperone on several student trips to Mexico and Central America, and speaks fluent Spanish, so language would not be a problem.
While the birthday party provided a perfect environment for her announcement, it clashed with our assumption that, in her retirement years, Mom would be close to her children and grandchildren, maybe not quite next door but close enough for frequent and easy visits. Too, we wondered, how would she manage without her lifelong friends, her weekly bridge games, the book club she had belonged to for years, even her favorite Ben and Jerry ice creams and Starbucks’ Frappuccinos.
But, once the shock wore off, we wondered whether living abroad might not be a good choice for her. The lure of having a better retirement lifestyle and making her retirement nest egg last longer is a hard combination to beat, especially when combined with the adventure of doing something entirely new and different.
Then we began to wonder about the drawbacks of being so far from home and family, her personal safety, access to quality doctors and hospitals just “in case,” the neighborhood she might live in, financial implications, and political stability. She may be healthy and mobile now, but what about in five or ten years? Then what and how would she manage?
All of us, mother included, decided to do some research to answer the questions we had, then have a family conversation to consider all the pros and cons of Mom’s proposed move. Here, in brief, is what we found:
Mom may be fine now, but she will be getting older and will need care and support at some point in the future. That means easily accessible, first rate health care is a must. But there was good news: her preferred destinations offered subsidized national health care once residency was established. The level of medical care is generally quite high and provided at a fraction of what it would cost in the US. According to International Living (a website devoted to living abroad), health care costs run about a third to a fifth lower than in the US, depending on the treatment. In Mexico, for example, healthcare generally costs half or less, and is provided by professionals trained in the US in the latest technology and techniques.
We also took a closer took at locally available services, specifically to learn if there are people she could reach out to for assistance. For example, agencies that could send someone to check her health and living situation? Or help with chores around the house, cooking, or driving to the market or medical appointments? To find answers, we checked web sources such as Expat Exchange and Live and Invest Overseas. Too, the US Department of State has an invaluable country-by-country listing of health and medical services information.
Medicare does not cover health services outside the US. Mexico, for example, does not accept US health insurance or Medicare/Medicaid; neither do Costa Rica or her other preferred retirement destinations. Since skipping medical insurance while waiting for her to be eligible for health coverage was not an option, we decided to purchase private short-term health coverage from sources such as the Association of Americans Resident Overseas, the British United Provident Association (BUPA), ASA Inc., and Cigna. We also kept her Medicare and paid her Part A and Part B premiums so she could travel to the United States for medical treatment, if necessary.
Finally, we questioned whether Mom was amendable to living in the country of her choice while she was still healthy and independent, and later move back to the US when, and if, her health deteriorates and she needs more care. Though acknowledging that dealing with and coordinating health care issues long distance would be challenging even for a child and parent dealing with distance only in the US, Mom suggested we take a closer look at the question later, should the circumstances arise. We agreed.
We worried that Mom had picked her potential retirement homes based on her happy memories as a tourist. She had never lived anywhere outside of the US and never confronted the practical realities of an expat life. What made sense was renting a furnished condo or home in an area she wanted to live with the expectation that she could slowly ease into the local life and culture.
Aside from the appeal of climate and cost of living, how would she respond to the different pace of life in her selected locations? Easy-to-access public transportation? Availability of services? A plumber, electrician, handyman or telephone service showing up several hours (or days later) than a scheduled appointment?
Living the local life and culture would also give us a reasonable estimate of the cost of living. So, we did research on how the move could affect affordability. Several online databases of user-contributed information calculate these costs. Figures from Numbeo show that rental prices in Tamarindo, Costa Rica, for example, are about 54% lower than in Houston and that rent prices in Seattle are almost 500% higher than in Puerto Vallarta. They also show that consumer prices in Miami are 112% higher than in Boquete, Panama, and that grocery prices in Miami are 40% higher than in Bocas del Toro, Panama.
Taxes and Money Matters
Even if she moves all her assets into her new country of residence, Mom will be subject to U.S. taxes (and in some cases, state taxes) as though she lived in the US. Moreover, she cannot forget that her new country of residence may also require filing some type of tax return.
As far as money, Mom should keep her bank account open in the U.S. so she can continue to receive her Social Security and any other income and to pay any U.S. bills. Opening a bank account locally makes sense to receive money transfer from the U.S., pay local bills, and provide spending money. Too, applying for a local credit card to avoid currency exchange fees and ATM withdrawal charges.
Admittedly, leaving the old and familiar and starting a brand-new life abroad sounds appealing, especially to someone who has been dreaming of this kind of retirement for years, but the pros and cons of such an extreme move need to be carefully considered.
Living abroad could be a plus for Mom. We looked at her situation and carefully researched the facts on health coverage, housing, care, banking and available services. We discussed and talked through her reasoning and desires on this major undertaking. We visited expatriate websites, social media sites, and discussion forums, and eventually agreed a move might be worth the risks involved.
But we also agreed that such a move might have major downsides. Moving from the comforts and security of a life and culture where she had grown up, married, and raised a family to a foreign culture would be painful. We would miss her, of course, but she would be missing so much of our family life: weddings, graduations, birthdays, and births, and their impact on family dynamics. Still, none of us know what the future has in store.
Perhaps the takeaway is to be clear that you accept Mom’s decision to live her future life abroad, far from family and friends and all that is familiar. That is certainly not how the family envisioned her retirement years, but we now accept and support her decision, grateful that her destinations are not that far away–and determined to save all of our frequent flier miles so we remain a close knit family with regular and frequent visits to and from her.
But we are also grateful that we all agreed—Mom included—to revisit her decision to live abroad so far from friends and family “if and when” health or other circumstances dictate.