Financial advisors working with retirees, or the soon-to-be-retired, need to come to an important realization – more and more Americans seem to be retiring abroad.
According to a recent CBS News piece, the number of Americans retiring outside of the United States jumped 40 percent to 413,000 between the 10-year-period from 2007 to 2017.
Some estimates even put that number today as high as 500,000.
While that figure may be relatively small in the grand scheme of things – there is currently an estimated 42 million American retirees – it is a reality that financial services professionals should be made aware of given that retirement planning is generally part of a financial advisor’s offerings.
One of the main driving factors behind the retiring abroad movement is money – many expatriates see things like rising U.S. healthcare costs as a turn-off to continuing to live in the U.S. during retirement years.
Retirees voice concern over having to pay more for healthcare during a period in their lives when they simultaneously have less income than during their working years yet could potentially require more healthcare services given their age.
And Medicare doesn’t seem to be the total fix for this conundrum; yes, those 65 and older get general coverage but copays and out-of-pocket healthcare costs still seem to be on the rise for some prescription medications and other services, (think dental services, for example.)
Those Americans who are choosing to retire elsewhere say the economics work in their favor; they receive their Social Security and retirement savings in U.S. dollars, but are able to spend their money in countries with a lower cost of living, according to the CBS News report published in late September.
In addition to lower medical costs, many retirees who have moved to other countries have also experienced lower rents, lower taxes and more “bang” for the proverbial buck, meaning they’re getting more than they would in America at a fraction of the cost.
As for rumor that expatriates will forgo their Social Security if they move abroad, that is simply not true.
Social Security dollars can be electronically deposited into any U.S.-based bank account and the recipients can then have their funds electronically transferred to any overseas account, and they can withdraw their money in the country in which they’re residing.
The fact of the matter is, financial advisors working with U.S. retirees would be remiss if they failed to realize the increasing number of former America workers who now call a country other than the United States home.