Lifestyle

Is Renting a Better Option in Retirement?

street in small town - rent or buy in retirement

When the kids are gone, you might start thinking that your four-bedroom family home feels a bit too large, not to mention a money drain. Probably you need less space, and you want someone else to take care of it. But now you need to decide if you want to buy or rent.

Owning real estate is a big part of the American lifestyle. However, ownership is more expensive than most people realize.

When you are getting closer to retirement it may be more important to secure income from your retirement portfolio than to drop money into a new house.

Besides making a financial decision, you need to think about how it will fit into your new lifestyle. Do you love to own your place and fix it up the way you want it? Or it will be a big relief not to worry about yard work, broken faucets, or a water heater?

If you’re getting closer to retirement you might already have an idea how you want to spend your days. Buying a condo by the water or on a golf course might fit your retirement lifestyle perfectly. Other people would prefer to sell the house, cash out, and spend money on travel. So, renting would be a better option for them.

How to figure out if you are better off renting or buying?

Factors to consider as you decide

When deciding whether to buy or rent, calculate how much is your retirement income and then how much income you will need to pay the bills.

Keep in mind that the housing cost is the biggest category in your budget. Then you should look at the home prices in your new location and compare it with the yearly rent in the same community.

Here are some key factors to help you with your rent or buy decision.

Renting in retirement:

Whether you want to rent a smaller house or a downtown condo, you need to decide what you want out of a rental. And again, it will depend a lot on financial and emotional matters.

The upside of renting

Your money is not tied up. Owning a home in retirement is not always financially wise. If renting is cheaper than owning, you’ll be better off investing your retirement funds and letting it grow.

It can increase your retirement income because investments often grow at a faster rate than real estate. The only money you tie up is your security deposit. With the fixed cost of rent and no taxes or insurance, you can have enough cash for travel, activities, or charity.

For example, you sell your house and get the sale proceeds worth $500,000. If you decide to rent, you can have that money invested. Assume a 5 percent annual return on your investments or $25,000 which means a monthly return of $2,083 ($25,000:12 = $2,083).

If you can rent a comparable home for that price, you would be well financially without the hassle of ownership.

No maintenance, renovations, or repairs. When you became a tenant, you hardly had any responsibilities, besides paying rent on time.

So, when the water heater needs to be replaced or the faucet leaks, you just pick up a phone and call the landlord. You do not need to worry about the upkeep of the rental building or any repair costs. You can spend time and money on things you like to do.

Less space and more amenities. As a retiree, you do not need a big car to drive kids around and you do not need a third and fourth bedroom when it is just one or two of you.

You are more likely to want a pool or gym somewhere on the property, and a janitor who will fix a leak and take care of the yard.

In general, rental units in apartment buildings or condominiums tend to be located closer to town centers. You can walk to the coffee shop, museum, library, or the bus stop a block away from your place.

Lifestyle flexibility. Lifestyle flexibility is a key advantage to everyone who rents. For retirees, flexibility means having the option to move to be near children, grandchildren, or family members. The other option is to spend different parts of the year in different places or abroad.

When you need a change in your life, moving out of a rental can be much faster than moving out of the house. Landlords cannot stop you from moving out even though it may be a fee for breaking a lease.

You do not have to worry about selling or renting out your home. On the other hand, selling a house can take months sometimes years, depending on your house conditions and the local housing market.

The downside of renting

Annual rent increases. Usually, rents go up every year. When you own a home, your mortgage is a fixed payment, and you can only expect an increase in taxes and insurance. While renting, you could expect a 3 to 10 rent percent increase every year.

Unfortunately, you do not build any home equity with every payment. Besides, when the real estate market is booming and prices are going up, you do not get any appreciation as a renter. Your landlord builds equity and gets all appreciation from the rising real estate prices.

No feeling of security. Dealing with a landlord is not always easy. Your landlord can decide at any time to sell the place, force you to end the lease, and find another place to live.

Inconveniences of renting. Renting a place might include many inconveniences. You will need to get permission from a landlord or property manager if you want to re-paint or decorate your place.

Some rentals do not permit pets or have a strict pet policy. You might deal with issues like noisy neighbors, poor maintenance, shortage of parking places, and more.

Owning in retirement:

When you start thinking about downsizing you need to decide whether homeownership or renting makes the most sense for your situation. Like any decision, it will depend a lot on emotional and financial issues.

The upside of homeownership

Sense of stability. Homeownership gives you a sense of security and stability. Many people feel safer knowing that they own their home. There is a sense of security in knowing that this is your home, and nobody will kick you out of it.

Furthermore, you do not need to worry about a landlord bumping up the rent or starting a major renovation and asking you to move out.

Fixed mortgage payments. Many retirees worry about mortgage payments and how to afford them in retirement while living on a fixed income. But if your mortgage is paid in full, you will only need to pay property taxes and insurance.

However, if you still have a mortgage and have to make mortgage payments every month, it will come as a fixed payment.

Home equity. There is another important advantage of homeownership – building equity. With every mortgage payment, you accumulate more home equity. Then if you need it, you can take a home equity loan, line of credit, or even a reverse mortgage.

Increase in value. Everyone knows that housing prices are going up. In many popular places, you can see a significant increase in value if you own a home for 10 or 15 years.

Control over updates or improvements. If you own your home, you can make any kind of improvements or renovations without asking the landlord’s permission. The same comes with pets. There are different kinds of policies and restrictions on what kind of pets are allowed in rental buildings.

The downside of homeownership

Your money is tied up. If you decide to buy a house or condo in retirement you will be using a big chunk of money for a down payment or paying full price in cash. Your money will be tied up in that home for a long time.

Think about where the money will come from to pay your housing expenses. Keep in mind that the insurance, taxes, and upkeep of the house go up every year.

Also, it is going to be harder to get a mortgage when you retire because you do not have an income. So, if you consider buying a home, make sure to do that before you stop working.

The costs of repairs, maintenance, and renovations. We all know that owning a house means repairs, maintenance, and yard work. It could cost thousands of dollars if you need to replace the roof or your heating system. Maintaining the house and the yard takes time and money.

Moreover, you might want to renovate your new home and make it more personal. But it could be expensive when you live on a fixed income.

Hard to sell. Your home is a real estate investment and real estate is not considered a liquid investment. It cannot be quickly converted to cash like stocks or bonds. As a result, it is hard to sell when you need money.

There are a lot of tradeoffs between renting and owning. There is no right answer for everyone. You have to decide what fits your lifestyle and cost of living.

7 Steps to Get Emotionally Ready for Retirement

by Maggie Leave a Comment

man works on a laptop-emotionally ready for retirement

People often feel overwhelmed by the idea of retirement. That can lead to putting off thinking and planning for their next phase of life.

Even those who feel excited about retiring can often experience anxiety if they do not have a plan to help them make a transition. Others struggle because their jobs are a part of their identity. And it gives them a sense of purpose and a feeling of belonging.

While we cannot predict the emotional impact of leaving the job and becoming a retiree, we can take steps and prepare ourselves mentally and financially for our next phase of life.

Step 1. Start preparing in advance.

Every life change or transition comes with emotional discomfort.

A lot of retirees only prepare for retirement financially. They are not aware of the emotional impact retirement can have on their lives. Preparing early is the best way to be ready mentally and emotionally.

Getting ready for retirement may be challenging at first, especially if you like your old routine and do not know what to do instead. But accepting that it is the next chapter of your life earlier can help you get ready better.

How soon you should start preparing for retirement? The time frame can be different for everyone.

You should begin making plans once you decide that you are ready for retirement. Keep in mind that preparing for a major life change for most people cannot be done within one week, or even one month. It is best to start preparing yourself mentally within 1-5 years before retirement.

Begin envisioning what you want your retirement to look like in about 5 years. Some people may want to keep working part-time. Some would prefer to volunteer or start their own enterprise. Many others would prefer to travel and explore the world.

Step 2. Personalize Your Plan.

Retirement is a huge transition. A big part of successfully transitioning to retirement is preparing yourself mentally for the emotions you will fill.

Knowing what to expect and planning things ahead of time will be a cushion as you transition from one way of life to another. Going from 40 hours working life to having all the time in the world does not happen overnight. It will be a transition. Make sure that you know what you want to do in retirement.

Hone your vision and create a detailed list of things that you really want from it. Some people will be happy to have no schedule and just sit back and go with the flow. Others need to have goals, commitments, and obligations to fill their days. Focus on what works best for you. Create opportunities that align with your needs.

Creating a retirement bucket list can be helpful to have goals and ideas so you can make the most out of your golden years.

5 Reasons Why You Should Have a Retirement Bucket List

Step 3. Check your finances.

Finances are one of the biggest factors when you mentally prepare for retirement. Going from earning a steady paycheck to living off your retirement savings takes a big mental adjustment.

Be realistic. Make sure you have a retirement plan that fits your financial situation. And that includes having a retirement budget plan for your dreams, activities, and projects.

One of the best things you can do to prepare for retirement is to reduce your expenses. Reducing your expenses before retirement helps you free money to pay off any kind of debt and mortgage or add to your savings right now.

Some simple ways to reduce your expenses include cooking more food at home and eating out less, cutting your cable bill by using streaming services, switching insurance providers, and more.

If you want to make sure that your finances are fit for retirement, get a realistic sense of what you will be spending in retirement.

The best advice is to create an estimated retirement budget based on your current and future expenses. You might have a general idea of what you are spending now. But you will be better prepared financially for retirement if you have a clear picture of your expenses now and how that might change in the future.

Your emotional and financial plans should be in sync. And if you want to have enough money in retirement, make sure your lifestyle matches your budget.

Step 4. Replace work routines with new routines.

One of the most common challenges in retirement is adjusting to the lack of structure that comes with not having a regular job. It may sound like a paradise but in reality, it can lead to boredom, loneliness, and even depression.

To be mentally prepared for your retirement think about how you want to replace your work routines. Our work gives us a purpose, identity, and steady routine. Many retirees go restless or feel lost when they go from a full schedule to an empty calendar.

Suddenly, you have a lot of free time on your hands. The loss of structure and routine in life can bring a sense of isolation and sadness. You need to find a replacement for your work routines. The transition from a structured work schedule to a more unrestricted one can be difficult to navigate. It will leave you feeling uncertain about what to do next.

Having a routine in retirement definitely has benefits. But how do you build that routine? The simplest way is to visualize what your ideal week would look like and then plan accordingly. Think about the activities that bring you joy, such as social activities, interests, and hobbies. And then schedule them into your week. Do not be afraid to stop and try something else if a routine or habit is not working for you.

A few ideas to add to your retirement routine:

Create an exercise routine.
Create a grocery shopping and meal planning routine.
Create a routine for social connections and socializing.
Set aside time for learning something new.
Join a group or club.
Try something new each week.

Step 5. Discover your new purpose in life.

Living a purposeful life can help you feel satisfied and content with your own life. This gives you a reason to look forward to each new day.

What most of us do not often realize is that the sense of purpose relates to our jobs and the many demands through our working years. This might have included raising a family, buying a house, paying off the mortgage, and more.

Retirement changes everything. Some new retirees feel a loss of purpose after leaving work. Their jobs provided structure, stability, and a reason to get moving each day. Those extra 40+ hours a week are not always easy to fill. Find a purpose in your retirement life becomes of paramount significance.

So, how to find a new purpose in life? Think about how to refocus your life by writing down your interests and things you want to do in retirement.

Many people find their purpose in doing meaningful work like being a volunteer while others might find that their purpose is to help family and friends. Some people find their purpose is going away on a spiritual journey or helping others on a similar path.

Think about who you want to be in retirement and ask yourself:

What special talents or interests do I have?
Do I have a dream that I want to pursue?
What do I want to achieve?
What skills I can use to benefit other people?
Do I like to work at something I am used to, or would I prefer to face new challenges?
What would I regret not doing if I die?

As you gather your thoughts answering those questions, you can begin to outline what your new purpose in life might be. Look at retirement as a time for exploring, developing new skills, and trying out new interests and activities.

Step 6. Discuss your plans with your spouse.

Many couples assume they share the same vision about their life in retirement without talking about it. But if you and your spouse or partner have different ideas, this can lead to conflicts and disappointment because you are not on the same page anymore.

Just like everything else in life, communication is critical here. It is important to discuss your plans and dreams with each other. The worst thing you can do is not share your plans until you are ready to retire.

Maybe your spouse does not want to retire at the same time as you. Or perhaps you want to move closer to your children and grandchildren, but your spouse has another plan in mind. Keep each other in a loop about your plans. Start this conversation as early as possible so you are all on the same page.

Another topic to discuss with your spouse or partner is how to manage matters at home. You need to talk about how to handle household activities.

If you are retiring together, you need to discuss how to handle alone time and together time. If you are the only one retiring, the transition can be tough because the roles are changing once you retire. Your spouse needs to get used to the fact that you spend more time at home. Also, you might be expected to do more household activities than you anticipated.

Step 7. Take time to process and adjust your emotions.

As I mentioned multiple times in this article, retirement is a major life change and a long process. Give yourself time to adjust to the new situation. Prepare yourself emotionally for the adjustment.

Accept that you will be sad for a little bit after retiring. Then make some plans to make yourself busy again and get comfortable in your new life.

Many people try to rush into other activities to escape from their real feelings of sadness. This can bounce back to you. Have realistic expectations. Make a list of what you can reasonably expect to do in the first weeks and months of retirement. Try not to stack your list with too many things to do. Remind yourself that you are allowed to adjust. Take it easy on yourself.

Retirement is a huge milestone in your life. Celebrate the beginning of it to make it memorable.

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Moving Abroad for Retirement – The Pros and Cons

by Maggie Leave a Comment

Temple in Japan - moving abroad for retirement

Moving abroad can be a great adventure and an exciting way to spend retiring years. For those looking for adventure, retiring abroad can also open new possibilities for traveling to different places.

Of course, moving abroad for retirement is not for everyone. First, you and your spouse have to have a sense of adventure. Then, you have to make a lot of decisions before leaving the US including how to live on a fixed budget and how to communicate with your family and friends who still live in the US. Also, you need to create a wish list of everything you would like to see in your new place.

There is a chance that you may want to come back to the US after a few years of living abroad. In this case, you will need to figure out where to live, and how to get your documentation and health insurance in order.

Many people dream of moving abroad after they retire. However, moving abroad is a big step and there are lots of things you need to consider first, especially when it comes to your finances.

In this article we will look at the pros and cons of moving abroad for retirement.

The Pros of Retiring Abroad.

Retiring abroad is an adventure.

Many retirees choose to move abroad simply because of the experience of it. Everything feels new and exciting, like a fresh start in life. It is an adventure.

Living in a new country can allow you to experience a different way of life. If you are looking for adventure, retiring abroad can open the possibility of traveling to different places, learning about new cultures, food and lifestyle, and simply meeting new people.

When you live in your home country, it is easy to get into a routine and stick with it for years. But moving to a new country and living an adventurous lifestyle will make your life feel more fulfilling.

Lower cost of living.

It is not a secret that many retirees choose to move abroad to take advantage of a low cost of living. Many people find that living abroad allows them to get more out of their retirement savings. But depending on where you go, some foreign locations can have a higher cost of living.

For example, in many countries, you can live a comfortable middle-class lifestyle for less than $2000 per month. This budget includes rent for a decent apartment ($700 per month), public transportation, entertainment, and $20 basic meals at the restaurant.

You can get by on this budget in many countries throughout Southeast Asia, Central and South America, and Eastern Europe. A few popular destinations for expats on a tight budget include Cambodia, Thailand, Vietnam, Indonesia, Colombia, Peru, Ecuador, Mexico, Georgia, Armenia, Romania, and Montenegro.

You get to learn a new language.

It is nearly impossible to learn a new language without immersing yourself in the new culture.

By moving abroad, you put yourself in the perfect situation to learn the local language. You can learn the basics of a new language by taking some classes once you arrive. To achieve fluency, you can practice with your new local friends, read books or local newspapers. Even if you put in zero effort, you will still pick up a decent amount of the local language out of necessity.

Another option is to start learning a new language before you relocate by using apps, books, and online resources. One of the most popular language learning resources for free is Duolingo.

You get to experience a new culture.

One of the best parts of living abroad is to experience a new culture. You will learn about how other people live. Additionally, you will expand your horizons and learn about the world.

Culture is a broad term. Food and language, art and architecture, traditions, values, and social habits are all considered culture. The best way to experience a foreign country’s culture is to go and live in it. Who knows, you may even absorb some elements of the local culture into your new life.

You will travel and explore new places.

One of the best parts of moving to a foreign country is the ability to travel around the region you moved in.

Living in a new country will give an opportunity to explore and experience a different way of life. You can find yourself living in an area with a slower pace of life. Also, you may find yourself living closer to the sea, mountains, or other outdoor areas that are perfect for exploring. It can be a great way to enjoy a new way of life and explore the world.

woman at the cafe table - moving abroad for retirement

You might find that retiring abroad will offer you a chance to live your life to the fullest. When you look back years later, you might find that your time living abroad was one of the most memorable times of your life.

You will meet new people and make new friends.

It can be easier to make new friends while living abroad than in your home country, especially if you are older. Because you will be part of the expat community when you move abroad.

Many cities have large established expat communities. In the expat community, you will meet new people and you have a good chance of making friends with fellow expats.

You get to simplify your life.

When most retirees move abroad, they do not take with them all their furniture, cars, clothes, and other belongings. Retiring abroad forces you to simplify your life.

Chances are, you will find you need less stuff than you had before. Some people get rid of everything and travel only with a few suitcases and a backpack. Many people prefer to get rid of the old stuff they have accumulated over the years. Getting rid of your old clothes, furniture, knick-knacks, and other belongings often takes off the weight of your shoulder.

You get access to better healthcare.

When you get to retiring age, the quality of healthcare is one of the first things you think about.

Keep in mind that your US health insurance won’t cover you outside of the United States. Medicare generally will not work overseas. Hence, when planning how to pay for your medical care as a retiree in a foreign country, you have to choose from three options:

You can purchase a local insurance policy.
You can invest in an international insurance policy.
Also, you can choose to opt out of medical insurance and set up an emergency medical fund.

Still, most retirees do not feel comfortable having no medical insurance. When you are retiring abroad you want to ensure to have access to the best care possible at reasonable prices you can afford.

In some places overseas, healthcare can be free. The catch is you must be a legal resident. The further catch is that the available free health care services may not be up to a standard you will be comfortable with. However, there are still countries in Latin, Central America, and Europe with excellent and affordable healthcare services.

6 Best Countries in the World for Expat Healthcare

The Cons of Retiring Abroad.

Missing family and friends.

Moving abroad can be a great adventure and an exciting way to spend retiring years. But moving away from home can be a difficult challenge. It can become lonely. You will feel homesick and miss your friends and family while living abroad.

Depending on your location it might be expensive to fly back and forth between countries. Eventually, your relationship will suffer. You will miss the major life events of your friends and family. You will also miss out on spending holidays, birthdays, and weekend getaways together. All of it might hurt your relationships. Chances are, you will slowly drift apart from some of your friends and family if you do not see them regularly.

Moving abroad is expensive.

Many retirees move abroad to cut their expenses. But depending on where you go, moving to another country can be expensive.

First, you have to rent or buy property. It comes with the costs of associated fees for local lawyers and translators. And then there is the cost of moving your furniture and personal belongings to another country – transporting a shipping container generally costs thousands of dollars. In addition to that, you will have to pay for visas or residency permits, taxes, currency exchange, and family visits.

If you want to see your family at least once a year, you have to fly them to the continent you are living on. You might have to budget $1,500 – $2,000 (or more) per year for air tickets. If you are on a tight budget and you want to see your family more often, consider choosing a nearby country.

It would be more affordable to move to Mexico, Central or South America instead of Europe or Asia. Flights home will cost much less.

The language barrier.

It can be overwhelming if you decide to move to a non-English-speaking country. Eventually, you will need to learn to speak at least a little of a new language.

Not being able to speak a local language and communicate freely will make your day-to-day life more difficult. Everything becomes a struggle. Tasks like renting an apartment, opening a bank account, shopping at the grocery store, or renting a car will be a hassle.

Another problem is that some languages can be incredibly difficult and time-consuming to learn. Specifically, when you are older. It might take at least a year or two for you to become comfortable speaking a new language. And much longer to become fluent. Some languages are easier to learn than others. As an English speaker, you will probably pick up Spanish, German, or French faster than Chinese or Arabic.

If you do not want to learn a new language you should choose your new home in a country where English is an official language, spoken everywhere.

Culture shock.

Some cultures are harder to understand and integrate than others. You will be immersed in a culture that is not your own. It can take some time to get used to it.

Everything from local customs to day-to-day interactions may feel strange and unfamiliar at first. But then with time and patience, you will eventually grow accustomed to it.

It can be difficult to integrate.

As a foreigner, who does not speak the local language yet, you may find it difficult to make local friends and fully integrate into local culture.

Locals socialize and work with other locals. They often have circles of friends that span decades. Also, they prefer to spend a lot of their time with their family. That is why learning a local language is essential. It will help you talk to your neighbors, make new friends, and assimilate into the new culture.

If you are looking for some ideas for your retirement destination, read this article:

The World’s Best Places to Retire

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9 Reasons Why Retirement Planning Is Important

by Maggie Leave a Comment

man and woman in the gym-retirement planning is important

Retirement is a major lifestyle change and not everyone is prepared for that change.

Planning for retirement is not always easy. Creating a realistic retirement plan requires that you know what you want. Most people are focused on the financial part of their retirement without giving enough thought about what to do with their time once they retire.

You need to figure out what you want to do in retirement and how to prepare for it. Because preparing well in advance will make your transition into retirement less stressful. After all, you will be retiring from work not life.

The important thing to remember is that the retirement plan is not something static you can put on the shelf and forget. It is a reflection of our ever-changing lives, goals, and dreams. If you have not given enough thought about your retirement years, maybe it’s time to start now. After all, if you want to have a happy retirement, you will need to plan for everything.

If you want to learn about why retirement planning is important, I have created a list of the 9 most important reasons.

1. To Prepare for a lifestyle change.

Retirement changes your life, and you need to prepare for it.

Some people may want to continue their lifestyle just as it is today. But others may plan to drastically change everything and go with something new and adventurous. Or you are somewhere in between.

What you dream about today might be totally different from what you decide to do when you retire. But whatever you decide to do in retirement, make sure that it makes you happy.

2. To Maintain your standard of living.

Knowing your financial situation is key when planning for retirement. You want your current lifestyle to continue even after retirement.

Today, your current expenses are covered by your monthly paycheck. After you stop working you want to make sure that your day-to-day expenses are covered by a regular income stream. It is not going to be your employer paycheck anymore but a combination of Social Security benefits, pension (if you are lucky), withdrawals from your retirement accounts such as 401(k), IRA, Roth IRA, and retirement savings.

It is important to know what you can financially expect when retired and how to invest and save money while still working. You need to have a clear picture of how much your nest egg is enough to retire comfortably.

You will find some helpful tips reading these articles:

3. To Be prepared for a longer Life.

When you are planning for retirement, you want to know how many years you need to cover financially.

Estimating your longevity will help to determine how much you can spend and how much time you have to enjoy your golden years. Our baby boomer generation will live longer than any previous generation. And that long and healthy life will cost money.

According to Social Security Administration, a 65-year-old man can expect to live until 84 and a 65-year-old woman can expect to live until 86.5. And those are just averages. Many baby boomers will live past age 90.

The fear of running out of money in retirement is one of the most discussed on personal finance sites. Many things could go wrong in your retirement years like long-term illness, death of the spouse, economic and stock market recessions.

If you do not have enough money to cover the expenses, it will affect the quality of your life and put a lot of pressure on you and your family.

4. To Prepare for unexpected life events.

Anything unexpected can happen during your life.

You can plan all you want but your life can take a turn when something unexpected is happening. It is better to be prepared for it financially. You would not want to depend on your family in case of any medical or financial emergencies. You should always have an emergency fund that will keep you prepared for unexpected life events.

The rule of thumb is to save 3 to 6 months of living expenses in an emergency fund. But it is recommended to save up to 12 months. Keep in mind that retirees are not technically at risk of losing their income from a job since they have stopped working. But they could still find themselves in a position where they need funds quickly.

The best places to put your emergency savings:

Money market deposit accounts
Money market mutual fund
Online savings account
Bank savings account
Certificate of deposit (CDs)

Saving your cash in a traditional bank savings account is one of the safest ways to go if you are not comfortable exposing your money to a higher risk of stock markets.

5. To Avoid unnecessary stress.

It is not a secret that many retirees stress about their financial situation and if they have enough saved to retire comfortably.

This makes sense because running out of your savings fast would leave you dependent on Social Security alone. And these benefits do not provide enough to live on. When you are under that much pressure, your entire quality of life and health suffer. You might find it difficult to eat, sleep and enjoy your life.

But by planning in advance, you will be able to set realistic retirement goals and then estimate the amount of money you will need. This way you should be able to pursue your new hobbies and activities without any financial dependence.

In the end, creating a retirement plan where you look at the lifestyle you want in retirement and then at how financially to support it will help you avoid stress.

6. To Find happiness in retirement.

It is a well-known fact that many retirees struggle to find happiness after they leave the workplace.

The main reason is that they do not have a retirement plan besides the financial part of it. A lot will change once you are no longer working.

Many people have to create a new social circle because their social activities were work-related. Also, as a new retiree you have to create a daily schedule because you do not need to go to work anymore. Additionally, many people are not aware that they often need to find a new identity for themselves while transitioning to a new phase of life.

Just remember that every life change comes with emotional discomfort. But preparing in advance will help you with the transition from a working life to a life filled with leisure.

You should think thoroughly about how you want to spend your time. So, you can make the most out of it. When you do not have a plan for how your retirement should look, you will probably find yourself depressed and disappointed or waste your days with unrewarding activities. But if you are truly in sync with your new lifestyle, you will find happiness in retirement.

7. To Fulfill your retirement goals.

The lifestyle of today’s retirees is different from the lifestyle of their parents. Today’s retirees are very active. They travel, volunteer, play sports, or start new businesses. They like to spend their time with family and learn new technology or skills.

When we have a lot of free time ahead of us, we start thinking about what we would like to do with it. Sorry to say but often life takes over and we may focus more on day-to-day chores and less on our goals.

However, it is a proven fact that people who set their goals achieve more in life than people who do not. Even in retirement, setting goals will help us define what we want to learn, explore, and accomplish.

I would encourage you to set up short and long-term retirement goals. Because goals provide direction to the future. Goals can offer a new sense of purpose and practically force you to commit time to something each week that is just for you.

The important thing to remember is that having a goal means you know where you are going and what it takes to get there.

8. To Complete your bucket list.

Retirement is a time when you can do all the things you want.

In many cases, people do not know what they want to do once they are retired. This is the reason why you need to start planning for your retirement. Because if you know what you want to do, you can start preparing for it.

Creating your bucket list is the simplest way to figure out what you want to do in retirement.

A retirement bucket list is a list of all the things you want to do when you retire. Start by creating a list of all your dreams you want to achieve. Sometimes it can be challenging to create a bucket list. But do not limit yourself, and do not hesitate to put your wildest dream on paper. You can always decide later if there are things on that list that have to wait for a while before completing it.

If you are looking for inspirational ideas for your bucket list, read my article:

5 Reasons You Should Have a Retirement Bucket List

9. To Leave a legacy.

Many people feel it is important to leave a legacy.

You have worked hard to build a life of comfort for you and your family. In the end, you want to make sure that this level of comfort lasts for years to come for your family when you are gone.

Leaving a legacy is not mandatory but gives us a greater sense of purpose while living. You may hope to be remembered for your actions and provisions by those who survive after your death. This type of planning asks you to envision how you want your money to be used and where it can make an impact.

Here are a few related posts you might want to read:

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Are You Thinking About Retiring Abroad?

by Maggie 2 Comments

man an woman walking - moving abroad in retirement

Most Americans prefer to retire in the US, but some adventurous baby boomers are looking for ways to retire abroad. According to a study by International Living magazine in 2023, Americans are moving abroad to spend less money and live healthier and happier lives.

If this sounds like you, you probably have many questions about retiring to another country. What are the best countries to retire in? How can I find good quality healthcare? How will I learn the language? Do I have to pay taxes?

The good news is that there are thousands of retirees who have already moved to a new country. So, there is tons of information available on where and how to retire abroad.

Why retire abroad?

There are a few big motivators for retiring abroad. First is the sense of adventure. Living in a new country can be an exciting experience, giving you an opportunity to broaden your horizon, learn about new cultures, try new food, or simply have a fresh start in life.

Another big reason to retire outside of the US is that many baby boomers didn’t save enough for retirement or their retirement nest egg lost value and never recovered.

These are financial realities for a growing number of baby boomers who are hitting 65 without enough money stashed away to maintain their standard of living. The number of retirees who draw Social Security outside of the US is growing every year.

How to choose where to go?

Typically, when people start their research on where they would like to live, they often consider places where they had an amazing vacation. But vacations and reality often clash.

A beach town might seem like a perfect location for a holiday. However, once you decide to relocate issues like climate change, frequent flooding, and hurricane season become much more of a consideration.

The best advice is to make a list of priorities and what is most important for you to have in a new place.

One helpful tool is an International Living magazine thorough survey of ‘where to retire’. Annual Global Retirement Index is a study that incorporates several different factors including affordable housing, quality healthcare, safety, political stability, weather, and more.

The World’s Best Places to Retire in 2023

Once you decide where you would like to retire you will need to start looking at residency requirements, visas, healthcare, and how taxes work.

Establish residency.

Every country has its own residency requirements, such as providing a certain amount of annual or monthly income, showing substantial savings, or even purchasing real estate.

There is a difference between temporary residency, long-term residency, and permanent residency.

Keep in mind that establishing permanent residency in a foreign country does not necessarily means citizenship. In some countries, permanent residency leads to access to public healthcare and permits to work. But you cannot vote in an election or get a passport.

Several countries offer ancestry citizenship to those who can prove that they have ancestors who were citizens of that country. Ancestry law varies from country to country, but do not underestimate the value of the second passport. If you get one in a European country, you will have access to free healthcare and even send your kids to college for free.

EU Citizenship Through Ancestry

Learn about visa requirements.

Visa requirements vary from country to country. But if you are retired and do not need to work, those kinds of visas associated with retirement (non-working visas) are relatively easy to obtain.

For example, if you want to move to Portugal, you will need to apply for the country’s popular D7 visa. It’s also known as Retirement Visa or Passive Income Visa. This type of visa means you have to prove that you can support yourself without working. First, you will obtain a temporary resident visa. Then after a few years, you can apply for a permanent residency visa, which allows you to travel through the EU like a citizen.

Keep in mind that qualifications for each type of visa typically include a background check, proof of income, and proof of international health insurance (you can switch over to a country’s health insurance after you obtain residency). Additionally, in some cases, you need to open a local bank account and have proof of local accommodation.

Here is a helpful guide to a List of Countries with Retirement Visa

Pay your taxes.

Many people do not realize that there are requirements for reporting your income even though you live in another country. This is much easier to plan upfront than to deal with after the fact.

As a US citizen, you are always required to pay taxes even if you have retired in another country. You will still have to file an income tax return with the IRS and will have to declare any money withdrawn from your retirement accounts.

Keep in mind that pre-tax retirement plans such as 401(k) and IRA, retirement pensions and often Social Security benefits are incomes that remain taxable.

Organize your assets.

If you are planning to retire abroad, you have to think about how to organize your assets. You don’t need to move your assets with you. Your stocks and bonds portfolio, your annuity, and retirement accounts such as 401(k), IRA, and Roth IRA, can remain in the US.

To cover your day-to-day expenses, you can open a local bank account to accept regular transfers from your US account and pay bills.

Also, you can open an online banking account which makes it easier to manage your money while living abroad. It makes more sense to apply for a direct deposit from Social Security than wait for a check mailed abroad. Online banking may prevent currency change or check-cashing fees.

Major credit cards such as Visa, Master Card, and American Express are accepted in many locations around the world. In many cases, it will be easier to use credit cards to cover your daily expenses and purchases.

But if you decide to move your assets abroad, you need to work with your account or tax attorney to find out how your assets will be taxed.

If you choose to move to a high-tax country like France or Switzerland, your expat life can cost you more than expected due to high taxes. On top of local taxes, you may be taxed in your home country as well. Thus, before making the move, it is a good idea to investigate the tax laws of your new country to get an idea of what you will be paying for.

Think about healthcare.

When you reach your retirement age, healthcare is one of the first things you think about. The fact is the US has one of the most expensive healthcare in the world. By retiring abroad, you can save thousands of dollars and still receive the greatest healthcare service possible.

As of 2023, South Korea, Taiwan, Denmark, Austria, Japan, Australia, France, Spain, Belgium, and the United Kingdom made the list of the 10 best healthcare countries in the world.

Keep in mind that if Social Security will follow you as you travel, Medicare coverage will not because it is extremely limited outside of the US.

Depending on where you plan to live, you may find international or American insurance companies that sell health insurance to foreign visitors. Similarly, depending on your new country, you may find that healthcare is affordable, and you do not need to buy additional insurance. If not, find out what coverage you will have as a visitor and plan accordingly.

6 Best Countries for Expats Healthcare in 2023

Connect with others.

When you have decided which country you want to move to, consider the expat community that you will likely be part of. Many cities have large established expat communities with regular expat meeting groups. On another hand, some cities have small tight-knit expat communities made up of just a handful of people.

Chances are, you will want to be a part of the expat community. This can be a good thing and a bad thing. Some of these communities are better than others. But it can be easier to make friends if you join an expat community.

Just do Google search for “expats+ your new city name” and you will find one. Also, it is not a bad thing to check out various websites where the global community of expats has answers to your questions and is willing and able to assist.

My favorite website is Expat.com where you can learn more about housing, health insurance, places to eat and visit, and more. There are also private Facebook groups that cater to retirees abroad including Retired or Thinking Retirement?

At the same time, you will get more from your time abroad if you take the time to learn the local language and then make friends with locals. There are tons of free tools out there to help you learn your chosen language.

For example, I am a huge fan of the Duolingo.com website which offers free language lessons in French, Spanish, Italian, German, Portuguese, and more. In addition, you will probably be surprised by how many local people speak English.

Final Thoughts

Retiring abroad has become very popular in recent years. If you are a retiree, it will offer you a unique opportunity to explore the world, expand your horizon and experience a new way of life. Whether you are looking for a warm climate and beautiful scenery or want to explore a new culture and learn a new language, retiring abroad has its own benefits.

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