Record numbers of Americans are retiring overseas because the US is too expensive

He didn’t know that his escape would be permanent: Shortly after he retired, he met his current wife, Elizabeth, and eventually decided to move to Spain permanently with her.

Now 67 and married and residing in Spain, Fawcett is very happy with his decision. While his wife still works, he spends his days playing tennis, reading and visiting beaches and cafes with expat friends who live in Barcelona. He and his wife have been able to travel around the continent, and are planning a trip to Paris for this year’s Olympics.

Fawcett says the same lifestyle wouldn’t be possible in the U.S.: Housing is much more affordable, food is cheaper, wine is cheaper. Public transportation is a godsend — Fawcett doesn’t own a car, so he doesn’t need one to get around. Walkability is also a big plus.

“It’s a great place to live,” said Fawcett, who became a resident in 2019. “There’s outdoor dining everywhere, the weather is great, and everything is so cheap.”

Fawcett is part of a growing trend of retirees, spurred by America’s retirement crisis, moving abroad instead of spending their retirement years in the U.S. As of December 2022, more than 700,800 people were receiving Social Security benefits overseas, according to the most recent data from the Social Security Administration. In 2000, that figure was fewer than 400,000.

Some people move abroad because they cannot afford to live comfortably in the United States on a fixed retirement benefit. Housing and medical costs, in particular, are becoming increasingly expensive. In the United States, a significant number of retirees rely almost entirely on Social Security benefits to cover living expenses. Average monthly cost is about $1,900A growing percentage of older Americans live in poverty and have little or no access to social services.

Others had always dreamed of traveling and immersing themselves in other cultures, and while they could afford to stay in the U.S., some realized they could get so much more for their money abroad.

“It costs almost nothing.”

The latter was the case for Susan Keenan Sweeney and her husband, Joe, who moved to Hungary in 2015. (Joe was born in Hungary but left as a child.) Sweeney, 69, had enjoyed a successful career in banking software in the US and had taken early retirement to Florida, but was discouraged by rising housing and health costs.

When she and her husband visited Hungary prior to their move, they were impressed by the low cost of living and relaxed pace of life, and decided to move there almost on a whim. They now own a house in the countryside, about two hours outside of Budapest, surrounded by vineyards. Sweeney works in the garden, enjoys fresh, seasonal produce from a nearby market, and makes jams and jellies at home. The couple spend the winters in Spain and the rest of the year traveling around Europe.

Sweeney also points out that the area’s excellent public transportation system is a big plus.Free admission for those aged 65 and overThey live in a rural area, and there’s a train station at the bottom of the hill, so they feel safe and have a sense of community. They save thousands of dollars a year in property taxes compared to Florida, and expat health insurance is a fraction of what it would be in the U.S., she says. One of their biggest monthly expenses is a U.S. Hulu subscription, which they watch via VPN.

“I consider myself to be on the cutting edge of retirement living,” Sweeney says. “It costs very little to live here.”

Trade-offs of living abroad

Of course, there are downsides: Sweeney’s family lives in the US, so he’ll have to plan trips to see them; the cultural differences can be difficult to navigate, at least at first, and Sweeney is still learning the basics of Hungarian; and personal wealth in Spain isn’t as high as it is in the US, Fawcett points out. Average salary That’s far less than the six-figure jobs you can find in the U.S. And of course, the pay is The tax burden is much higher.

If Sweeney and Fawcett had pursued their careers in Europe, they would not have been able to accumulate such a large amount of money through their high-paying careers in the United States. Most of their investments are still in American financial institutions because it would be difficult to travel. There is also a lot of other red tape and red tape to jump through when moving abroad. Sweeney and her husband hired a lawyer to help them buy a house.

“The first few years are more about bureaucracy than anything else,” says Fawcett. “Everything you do in Spain requires a ton of paperwork.”

But Fawcett argues that the standard of living is much higher for a broad range of people than in the US, with smaller benefits like fresh, cheap food and concert tickets being much more affordable and accessible, and bigger benefits like months of paid maternity leave, cheap post-secondary education, and affordable health care.

Courtesy of Susan Keenan Sweeney

“This is not America,” Sweeney said. “Things are done differently here, and that’s why we’re here.”

and Universal Health Insurance System Although hospitals in Hungary and Spain are often criticized for longer wait times and lower-quality medical care than in the United States, Fawcett and Sweeney were pleased with the level of care they received, including major procedures like surgeries and colonoscopies. The only downside is that many medical professionals don’t always speak English. Sweeney says that if something major were to happen, he would consider returning to the U.S. for treatment because of the language barrier.

“If an American came here and went to a doctor’s office, I’d have to pick someone up if they were on the floor,” Sweeney said of the culture shock. “There’s no insurance process. You just walk in, see the doctor and walk out.”

Mindy Yu, director of investments at Betterment, warns people interested in retiring overseas to take their time and prepare for the significant financial, legal and logistical pitfalls.

“Rather than viewing retiring overseas as a cheaper option, it’s important to start saving as early as possible while diversifying your portfolio to avoid risk,” Yu says. “Living overseas can result in new tax liabilities in both the U.S. and your new country of residence, so it’s important to consult with a tax professional with international expertise.”

Fawcett plans to remain in Spain with his wife, who cares for their 91-year-old mother and has grown children in the area, and Sweeney said he and his husband plan to stay in Hungary for the long term, but may eventually move from the vineyard to Budapest.

“I would encourage anyone thinking about doing this to take a vacation, rent a house and look around. You’ll find yourself in places you never dreamed you’d be,” Sweeney says. “If you were to retire and have a few months to spare, what would you do?”