On Retirement

Retiring south of the border

Relocation tips for financial advisory clients with a sense of wanderlust

Sep 9, 2012 @ 12:01 am

Traditionally, retirees in search of warm weather, year-round sunshine and lower taxes relocate to places such as Florida and Texas.

But the Great Recession took a heavy toll on many Americans' retirement dreams. In the wake of lost jobs, shrunken 401(k) balances and underwater mortgages, a new wave of retirees may bypass the American Sunbelt altogether.

Increasingly, adventurous retirees are heading further south, to Mexico, Belize, Costa Rica and Panama, in pursuit of warm weather, cheap real estate and affordable medical care. It can be a viable way to stretch their depleted savings and Social Security checks.

Now don't get me wrong. I don't expect all your clients to pack up and head for the border.

But for a growing segment of current and soon-to-be retirees, an expatriate life in sunny Central America or Mexico can be the ticket to the sweet life without the sticker shock. If you have a client with a sense of wanderlust, you can serve as a valuable resource — and a reality check.

Remind them that though their cost of living might plummet and their quality of life could improve, they won't be in Kansas (or Chicago or New York) anymore. Clients who don't thrive on change and aren't comfortable in new situations won't be happy in another country.


But if your clients are up for an adventure, some Latin American countries offer financial incentives to attract transplants, and relocating to a tropical destination could be the ticket to a dream retirement.

Panama's generous pensionado program, for example, offers U.S. retirees who relocate to that country discounts on utilities, airline tickets, medical bills, hotel stays, and even tickets to movies and cultural events. With all its benefits and an active expatriate community, Panama, where the U.S. dollar is the local currency, ranks as among the most affordable and appealing options for retirees.

Mexico, with its inexpensive real estate, good health care system and relatively relaxed visa policy, is another affordable option for retirees. Lake Chapala and San Miguel Allende, vibrant communities popular with Canadian and U.S. retirees, are far from the border towns that have been plagued by drug cartel violence.

English is the official language of Belize, the tiny Central American country formerly known as British Honduras and popular with divers and eco-tourists. Its Qualified Retired Persons program allows anyone 45 or older with at least $2,000 of monthly income from any source to import household goods and cars duty-free, to pay no income taxes in Belize and to retain their U.S. citizenship.

But no matter where American citizens live abroad, they still have to pay U.S. income taxes. For details, see IRS Publication 54, the Tax Guide for U.S. Citizens and Resident Aliens Abroad, at irs.gov.

California lawyer and certified public accountant Don Nelson offers detailed tax information for Americans living and working overseas on TaxMeLess.com — including explanations of the tough new rules on offshore accounts.

Social Security benefits can be wired almost anywhere in the world, but it is easier to have the check deposited directly in a account that can be accessed abroad. For details, see Your Payments While You Are Outside the United States at ssa.gov.

Although Social Security benefits cross borders, Medicare coverage doesn't. Still, it is a good idea for your clients to sign up for Medicare Part A, which covers hospital costs, when they turn 65 so they can use it when they come back to the States.

It is free, and they can enroll online at ssa.gov (click on Medicare).

But if your clients don't plan to spend any time in the United States, they should skip enrolling in Medicare Part B, which covers outpatient services and doctor's visits. It's costing most new enrollees about $100 per month this year (higher-income retirees pay more) and can be used only in this country.

But be aware that if they decide to enroll in Medicare Part B later, they will pay a 10% penalty as part of their monthly premium for every year after age 65 that they delayed enrolling. For those who retire before 65, one option is to live overseas for a while and to move back home for good once they become eligible for Medicare.


The Internet offers a host of resources for learning about retiring beyond U.S. borders. International Living magazine (internationalliving.com) is a great place to learn about retiree incentive programs, read firsthand accounts from American expats who took the plunge and get the latest scoop on real estate bargains.

One of my favorite websites is retireearlylifestyle.com, hosted by intrepid world travelers Billy and Akaisha Kaderli. The Kaderlis retired 20 years ago, when they were in their late 30s, and have been sharing their around-the-world adventures with readers ever since.

In their newest e-book, “Your Retirement Dream IS Possible,” for which I wrote the foreword, the Kaderlis offer valuable insights about how to flesh out retirement dreams, assess finances and work toward relocation goals. You don't have to be an aspiring globe-trotter to benefit from their wisdom and experience.

Even an armchair traveler can pick up valuable tips from this e-book, which is available at their website as a PDF download for $14.95. Whether you are planning an extended vacation or a more permanent change in latitude, you will learn to travel light, gathering experiences rather than souvenirs.

Mary Beth Franklin (mbfranklin @arjuna-design.com) welcomes your comments and suggestions for column topics. Twitter: @mbfretirepro


What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

May 02


Women Adviser Summit

The arjuna-design Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

We are about to enter the next chapter for exchange-traded funds. What do investors expect? What do advisers wants? Jillian DelSignore of JPMorgan Asset Management offers her perspective.

Video Spotlight

Recommended Video


Latest news & opinion

Super Bowl of financial scams that hit NFL players

Big paychecks often attract unscrupulous financial advisers to the National Football League, resulting in a long list of high-profile financial implosions, many of which end up in court.

Funds that missed the January rally some by a little and some by a lot

Here are 10 funds that whiffed when at bat against the S&P 500 index, and why they struck out.

LPL Financial signs up 953 NPH advisers and $34.4 billion in assets

Broker-dealer says it is on track to bring over 70% of NPH revenue as part of its acquisition.

Treasury market pummeled in its worst January since 2009

'Melt-up' of yields pushes 10-year to 2.74%, its highest level since 2014

These funds have gained more than 10% in just a month

And not all of the funds did it with tech stocks


Hi! Glad you're here and we hope you like all the great work we do here at arjuna-design. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting arjuna-design.com? It'll help us continue to serve you.

Yes, show me how to whitelist arjuna-design.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Last News

wells fargo advantage index s&p 500 index funds comparison how to claim social security death benefit inflation prediction calculator estimating social security benefits at retirement free disc personality profile test matthews asia growth fund 401k minimum withdrawal rules www hewitt com 401k morningstar fund research monthly cost of medicare part b pimco all asset all authority fund age limit to contribute to roth ira group retirement services great west life bank of america merrill lynch new york office who is married to jennifer garner bank of new york mellon pershing how to roll over an ira how to buy berkshire hathaway class b stock what is the spousal benefit for social security eaton vance atlanta capital smid-cap i value of a 1942 wheat penny vanguard target retirement 2045 fund review does 401k reduce agi turbotax online vs software vanguard index funds best ssi cost of living hartford dividend and growth american funds growth fund r2 state farm agents hiring is money from a life insurance policy taxable t rowe price retirement 2040 adv vanguard floating rate fund franklin income securities fund wells fargo bank cd interest rates