Retire abroad statistics: how many Americans choose to retire overseas?

Summary  

Statistics for retiring abroad 

If you dream of retiring abroad, perhaps living out your golden years somewhere in Europe, you're not alone.  

The allure of adventure, lower living costs, and a change of scenery are just some of the reasons millions of individuals worldwide choose to move overseas in retirement.   

American Citizens Abroad estimates that, as of 2022, 5.1 million US citizens lived abroad, comprising 3.9 million civilians plus 1.2 million service members and other government-affiliated Americans. 

Of the hundreds of thousands of Americans who have opted to retire abroad, 38% chose Europe as their destination, no doubt drawn by its rich culture, healthcare systems, and diverse landscapes. 

Why are Americans retiring abroad? 

Financial concerns, including inflation, soaring healthcare costs, and the precarious strength of the dollar, are among the biggest motivators driving Americans to pack their bags and embrace retirement abroad. 

The United States consistently ranks among the most expensive places to live worldwide.  

A recent survey of 1,000 Americans revealed that having enough money to retire ranks as a top financial goal for Americans. However, nearly 40% doubt they will ever reach this goal, as economic crises and fluctuating economies force them to reevaluate their expectations for retirement. 

Looking at the numbers, it becomes clear that financial planning for retirement in the United States can be daunting.  

For instance, a healthy 65-year-old couple aiming to retire may need to amass a substantial sum of $300,000 in savings. That's without factoring in the considerable costs associated with assisted living, which can average around $4,500 per month, as indicated by the Cost of Care survey conducted by Genworth.  

Where do the majority of expats go? 

Neighboring Canada and Mexico are the top choices among expat retirees, with over one million US retirees collectively choosing to move here.  

Take a closer look at where American expats tend to settle (excluding ex-military personnel) to get an idea of the best place to retire abroad as an American: 

Most of these countries offer standards of living similar to those of the US, favorable climates, and a fair or advantageous exchange rate for the dollar. The cost of living is also similar or lower, with countries like France and Mexico also offering more affordable medical care.  

What is the retirement income for US expats? 

Many Americans are saving money by retiring overseas, as a typical monthly income may go further than in the US due to lower living costs.  

Various expat destinations offer affordable housing, healthcare, and everyday expenses, allowing retirees to enjoy a comfortable lifestyle on a modest income. 

In November 2023, the average monthly Social Security check was $1,710.78, according to the Social Security Administration. This income serves as a vital financial lifeline for many retirees, providing a steady source of funds to cover essential expenses. 

However, retirement savings are also crucial. Retirees need to build up a good-sized nest egg to ensure their savings will last throughout their retirement.  

Retirement savings vary across age groups, with significant averages:  

Understanding these figures is crucial for those considering retiring abroad from the US, helping them make informed decisions about their financial resources. 

What are the differences in healthcare costs compared to the US? 

Healthcare costs can make or break retirement plans.  

They are a common concern for retirees who may require increased care as they age. Luckily for those who opt for expatriate retirement, the grass is often greener on the other side.  

While healthcare in the US remains exorbitant, with the average primary care doctor's visit costing between $150 to $300, many top destinations for retiring abroad offer affordable options.  

Among the top 10 countries, Mexico boasts the lowest average healthcare costs, a whopping 60% less than US prices. Canada also has lower medical costs than the US, with the average doctor’s bill costing just $54.  

The UK has a robust National Health Service (NHS) that offers free healthcare unless people opt to go private. While Puerto Rico may not have any government-funded healthcare, the average doctor's visit only costs around $56.  

Israel is the only outlier, with slightly higher healthcare expenses than the US. In Israel, every resident is billed between $115 and $450 monthly as a member of one of the four different programs available under the National Health Insurance Law. 

What is the impact of tax on retirees abroad? 

While living overseas, US citizens and aliens abroad are still required to pay US income taxes on worldwide earnings, including any salary, business profits, investment income and more.  

The IRS can track foreign income, and retirees who earn over the minimum threshold of $14,700 must file a federal US tax return annually. 

Retirees also use measures like foreign income exclusion and tax credits to avoid double taxation. Still, they must be prepared for the additional time and expense of filing taxes in two countries.  

Retirees abroad also need to report foreign accounts to the US Treasury annually via the Report of Foreign Bank and Financial Accounts, or FBAR, if their total value exceeds $10,000. 

Get expert financial advice 

With factors like lower living costs, diverse healthcare options, and financial considerations driving this trend, the allure of expatriate retirement continues to entice individuals seeking a fulfilling and affordable lifestyle overseas.  

Let Unbiased match you with a financial advisor who can offer expert financial advice tailored to your retirement goals and financial situation.