Best Country to Retire To

[Alan]

I have been living in Thailand since 2017. Yes you have to pay US federal taxes. No you don’t have to pay state taxes if you are not living there and have no assets or income in the state. That would also be true if you moved to another state in the US. I paid California taxes the first two years to make sure I was going to stay in Thailand indefinitely. I no longer pay taxes in CA.

You have to research your tax liability whether you move to another state in the US or overseas. It varies by country as it also varies by state.

Thanks for the confirmation, it can get very complicated depending on the particular tax treaty the USA has with the country you are moving to.

I mentioned State taxes because I continue to pay Louisiana State taxes even though I moved from there 14 years ago, but still receive income from a Louisiana company. My daughter, who moved to England in 2022, is still being taxed by California but hopes to be clear of them for tax year 2024.

 

[flyingaway]

That is funny because murder rate in Mexico is 5+ times higher than in USA.
EU countries have very low murder rate but so do places like most of New England.

https://worldpopulationreview.com/country-rankings/murder-rate-by-country

I read several comments on TripAdvisor and other places that there are lots of people selling drugs on the 5th Avenue in Playa del Carmen, one should not use drugs and deal with drug dealers there. In fact, we did not see even a single person looks like a drug dealer and nobody tried to sell any drug to us. I would worry more about the random shootings in the U.S. cities.

 

[brett]

People retire to other countries for all sorts of reasons. We know several people who retired after 30 years, sometimes more, who returned to their birthplace.

It is not just COL, weather, or taxes.

Two that we know retired to Scotland, another one to the UK, and yet another to Crete. For essentially the same reasons. To be close to extended family, etc.

 

[Badger]

If we were to choose another country it would be Mexico. We love the people, culture, food and excellent affordable healthcare. For us there is only one reason to leave the USA, it is the ever-increasing violent crime.

So "Taco Tues" would become "Taco Mon, Tue, Wed, Thurs, Fri, Sat, and Sun".

 

[ShokWaveRider]

So "Taco Tues" would become "Taco Mon, Tue, Wed, Thurs, Fri, Sat, and Sun".

The Street food in PV and Bucerias is REALLY good.

Shame there is not a peaceful place in the world anymore with Zero crime and good healthcare that was welcoming, we would go there.

 

[Onda]

Shame there is not a peaceful place in the world anymore with Zero crime and good healthcare that was welcoming, we would go there.

Do not Malta and Portugal fit this criteria?

 

[ShokWaveRider]

Do not Malta and Portugal fit this criteria?

I am a Maltese citizen by decent, it is way too crowded for us. A completely different Malta as to when I was a boy. Plus, it is a long way from the US.

Portuguese is a very difficult language, even if one knows Spanish. We could get Maltese Passports if we wanted, so it would not be too difficult.

We prefer Mexico quite honestly; you just have to choose your spot. Some folks here have property and live part time in Mexico. Maybe they can chime in.

 

[Onda]

I am a Maltese citizen by decent, it is way too crowded for us. A completely different Malta as to when I was a boy. Plus, it is a long way from the US.

But it is welcoming, with a crime rate 16 times lower than in the USA and with excellent health care. As a bonus, English is a legal language + you can save some money on taxes.

 

[ShokWaveRider]

But it is welcoming, with a crime rate 16 times lower than in the USA and with excellent health care. As a bonus, English is a legal language + you can save some money on taxes.

I must admit, I wish my family still had property there, we sold it in 2000, then it would be a different story. But the crowds, Malta is one of the most populous Islands in the world.

 

[HenryD]

I mentioned State taxes because I continue to pay Louisiana State taxes even though I moved from there 14 years ago, but still receive income from a Louisiana company. My daughter, who moved to England in 2022, is still being taxed by California but hopes to be clear of them for tax year 2024.

I can't fathom why one would pay state taxes when one doesn't live there.

We left Minnesota in July 2023 when we sold our house and established South Dakota residency. South Dakota only requires one to be physically present 1 day every 5 years. We now have drivers licenses, voter registrations, and vehicle title/registration/insurance that reflect that. We have not spent more than a few days in South Dakota since attaining residency as we a fully nomadic. As far as my wife's employer (South Carolina based), and my employer (Minnesota based) we are South Dakota residents and they withhold the appropriate state income tax ($0). We both paid Minnesota taxes for decades and have no intention of continuing to do so. We'll file a part-year resident Minnesota return for 2023 then no more.

I believe technically the tax should be withheld for the state 'where the work is done' if one is permanently resident somewhere. Or in the state in which the employer is headquartered if you are fully on the road like us and having worked from a dozen states in the last six months. But then we'd end up claiming it all back from the HQ states anyway. Getting our employers to deal with this was very simple for my wife because her company already had South Dakota employees. With mine it was a bit more of a struggle as they are smaller and had to file some extra paperwork with South Dakota. Minnesota does not have as aggressive a reputation as California and we haven't spent more than a few days working from Minnesota since leaving so I am not worried. The feds are getting their due either way so I don't see why they would care.

 

[Alan]

I can't fathom why one would pay state taxes when one doesn't live there.

We left Minnesota in July 2023 when we sold our house and established South Dakota residency. South Dakota only requires one to be physically present 1 day every 5 years. We now have drivers licenses, voter registrations, and vehicle title/registration/insurance that reflect that. We have not spent more than a few days in South Dakota since attaining residency as we a fully nomadic. As far as my wife's employer (South Carolina based), and my employer (Minnesota based) we are South Dakota residents and they withhold the appropriate state income tax ($0). We both paid Minnesota taxes for decades and have no intention of continuing to do so. We'll file a part-year resident Minnesota return for 2023 then no more.

I believe technically the tax should be withheld for the state 'where the work is done' if one is permanently resident somewhere. Or in the state in which the employer is headquartered if you are fully on the road like us and having worked from a dozen states in the last six months. But then we'd end up claiming it all back from the HQ states anyway. Getting our employers to deal with this was very simple for my wife because her company already had South Dakota employees. With mine it was a bit more of a struggle as they are smaller and had to file some extra paperwork with South Dakota. Minnesota does not have as aggressive a reputation as California and we haven't spent more than a few days working from Minnesota since leaving so I am not worried. The feds are getting their due either way so I don't see why they would care.

It’s a Louisiana thing, I have to file a Non-Resident return and pay Louisiana taxes on my SERP retirement income which is paid and reported on a W2. A few years after I started receiving my SERP payments my ex-employer contacted me to say that the IRS have told them that I should also be paying payroll taxes (FICA and Medicare) on that SERP income, which I now do.

When we moved to England a few years back I updated my address in England with Vanguard but made the mistake of putting our daughter’s address as a correspondence address. Vanguard allows this and it is clear on their website that your street address is where you reside. The year after I made my first Roth conversion while living here Vanguard must have sent a copy of my 1099-R to the California department of revenue who came after me for State taxes. I had to prove that I didn’t reside in California that year, and that Vanguard was not a Californian company.

https://www.investopedia.com/terms/s/serp.asp

 

[HenryD]

The year after I made my first Roth conversion while living here Vanguard must have sent a copy of my 1099-R to the California department of revenue who came after me for State taxes. I had to prove that I didn’t reside in California that year, and that Vanguard was not a Californian company.

Oh my, that sounds painful. I'm sitting in California right now but thanks for reminding me to never give them any ideas that I am anything other than an occasional visitor.

 

[W2R]

Like some others here, I am of the opinion that the best country to retire in (for me) is the good ol' U.S.A. I was born in the USA. What few relatives I still have, are in the USA. I speak and understand English (and French, and a little Japanese and Hawaiian, but English is my primary language).

Within the USA, there are several states we could enjoy during retirement but so far Louisiana is fine with us. I want to live in a place that is HOME for me, since during much of my life I have had to travel or move frequently and often felt like a Stranger in a Strange Land no matter where I was. But at this point, I have lived longer in New Orleans than anyplace else. We have traveled and moved so much in our lives that we feel like moving again would be nearly torture for us.

Frank's family has lived in New Orleans for over 6 generations so he has especially strong ties to this historic city. I like living here too, for uncountable reasons including the fact that I like hot humid weather and also I really can't afford living in Hawaii any more. I have lived here for over a quarter century so I feel like I know my way around and fit in, by now. So far we have been able to put up with the few negative aspects of living in New Orleans (excessive violent crime and hurricanes come to mind).

So here we are: in what we think/hope is the best location for us during retirement.

 

[oiseux]

another perspective

I'm late to the thread, but since there were some unanswered questions why, I'd thought I'd lend my perspective. I've been an expat in Switzerland and have bought in the French Riviera in advance of early retirement, using the time in the interim to build relationships and improve language skills.

From the retirement perspective, people who are pursuing this change are looking for new adventures. They often don't have children or are OK with spending only parts of the year with them. Especially in an area with other expats, language is not as large of a barrier and new relationships are actually easier to form than when moving within the US. It does take time to build relationships with locals, often due to language. The most common refrain I see from expats is how busy their social calendar has become. They also have an affinity for the culture and Europe in general. A smaller fraction are driven by societal issues.

Logistically, health care in France is among the highest in the world and will generally cost an early retiree less (Switzerland is even better on quality, I believe). For me, daily living is 20 to 40% less, but comparisons vary depending on where you are living in both countries. (Paris may be more expensive than rural midwestern or southern America, overall. Some things like gas are way more expensive, other things like phone/internet/tv and insurance are fractions of even rural america). Violent and gun crimes are very low, overall. The weather in the Riviera is comparable to coastal central California (but a little more humid in summer). The tax treaty ensures nearly every one is paying no more taxes than if they had stayed in the US. In fact, I've met more than few expats who have switched their initial choices after realizing that the tax burden wiped out cost of living differences with other nearby European destinations (However, there is a wealth tax on real estate, with exclusions and on the level of US property tax rates, and a high inheritance tax). Other downsides include the penchant for strikes and demonstrations (often isolated to major centers), some petty crime in certain city areas, and some political divisions.

Switzerland is generally more expensive and colder but on metrics like health care, civil unrest, crime, quality of life, pollution, economic disparity, political divisions etc are superior to the US (and even its neighbors).

A word on taxes, without renouncing US citizenship (and exit taxes, if they apply), the best you can essentially do (legally) is the same equivalent level as your US federal obligations.

 

[Markola]

I suppose if one had a Roth IRA large enough, one could escape US income taxes.

 

[braumeister]

I'm late to the thread, but since there were some unanswered questions why, I'd thought I'd lend my perspective.

Thanks, nice summary.

 

[Alan]

I suppose if one had a Roth IRA large enough, one could escape US income taxes.

Not all countries recognize the tax free status of a Roth so may be taxed by your country of residence, plus you would still have to file a US tax return.

I also discovered that the IRS requires mandatory withholding of Roth distributions if the owner is a resident overseas, which means filing a return to get the tax refunded. I have complained to Vanguard about this who say that the IRS require these withholdings of all IRAs, even Roth IRAs for overseas addresses.

 

[Alan]

Thanks, nice summary.

+1

 

[oiseux]

I suppose if one had a Roth IRA large enough, one could escape US income taxes.

Yes, a married couple could actually construct a legal income tax free existence up to a certain level, using the standard deduction of 29.2K and cap gains level of 94K in 2024, using a combination of taxable sources plus Roth, tax free interest, etc just like the US. This would hold in France for US sources for US citizens, but there may be some exposure in other countries, depending on the country. You can see an illustration here: link (not my site, but an example of a US expat who moved from Spain to France)

 

[brett]

Tax obligation is about the only reason that I know of that US citizens choose renounce their citizenship.

I can understand this if you were born in the US but spent most of your life in another country.

It must feel like a burden for those who retire, and become expats in another country, and have to navigate the tax issues of two countries (not to mention States).

As an example, we have a friend in Canada who was born in the US but lived in Canada for the past 40 years. She won a lottery in Canada a two years ago. Not taxable in Canada...but taxable in the the US. She had to pay the tax on her US return with little or not relief.

She will be very reluctantly renouncing her US citizenship. She has no plans to return. Besides any additional tax, she is paying a fair dollar just to have her US tax return completed by an accountant and has been all these years. Plus she will have to pay again to get the requisite IRS clearance certificate.

It pays to clearly understand the tax implications before making a final decision on the target country. It seems to me that when we were researching this a few years age there were some EU countries that requested an asset listing. I suspect that it was in preparation for a future asset tax!

 

[Alan]

I can understand this if you were born in the US but spent most of your life in another country.

Or have never been to the USA but happen to be born to a US citizen.

FATCA requires foreign financial companies, including pension providers, to report any USCs that are customers of theirs. Up to now, in the UK, I have not seen anything more than a simple question “Are you a US citizen?” when opening a bank or savings account so it is very easy for a person who was born to a USC but has never applied for a US passport or lived in the USA to evade the IRS.

 

[JJpop]

I'm late to the thread, but since there were some unanswered questions why, I'd thought I'd lend my perspective. I've been an expat in Switzerland and have bought in the French Riviera in advance of early retirement, using the time in the interim to build relationships and improve language skills.

From the retirement perspective, people who are pursuing this change are looking for new adventures. They often don't have children or are OK with spending only parts of the year with them. Especially in an area with other expats, language is not as large of a barrier and new relationships are actually easier to form than when moving within the US. It does take time to build relationships with locals, often due to language. The most common refrain I see from expats is how busy their social calendar has become. They also have an affinity for the culture and Europe in general. A smaller fraction are driven by societal issues.

Logistically, health care in France is among the highest in the world and will generally cost an early retiree less (Switzerland is even better on quality, I believe). For me, daily living is 20 to 40% less, but comparisons vary depending on where you are living in both countries. (Paris may be more expensive than rural midwestern or southern America, overall. Some things like gas are way more expensive, other things like phone/internet/tv and insurance are fractions of even rural america). Violent and gun crimes are very low, overall. The weather in the Riviera is comparable to coastal central California (but a little more humid in summer). The tax treaty ensures nearly every one is paying no more taxes than if they had stayed in the US. In fact, I've met more than few expats who have switched their initial choices after realizing that the tax burden wiped out cost of living differences with other nearby European destinations (However, there is a wealth tax on real estate, with exclusions and on the level of US property tax rates, and a high inheritance tax). Other downsides include the penchant for strikes and demonstrations (often isolated to major centers), some petty crime in certain city areas, and some political divisions.

Switzerland is generally more expensive and colder but on metrics like health care, civil unrest, crime, quality of life, pollution, economic disparity, political divisions etc are superior to the US (and even its neighbors).

A word on taxes, without renouncing US citizenship (and exit taxes, if they apply), the best you can essentially do (legally) is the same equivalent level as your US federal obligations.

I would love to split my time between California and Switzerland but the best place for anyone is personal and these constant articles are pretty annoying. I would not live in Costa Rica or Mexico if you paid me but for many it is their perfect place.

 

[ddoorn]

Costa Rica: Free National Healthcare Once a Citizen

Just saw this article: https://www.insidehook.com/travel/best-place-to-retire-2024

Spoiler alert: it's Costa Rica if you don't want to read the article. I have no burning desire to relocate to another country but I find it fascinating and I feel like it would be a good place to visit. Maybe even a place to rent during the winter other than Florida. Anyone ever explore such options?

We enjoyed Costa Rica and visited it a few years ago and researched in advance to select a few ex-patriots to visit with and see how they were doing. All were content and making it work for themselves. We avoided the NW section of Costa Rica (Nicoya province ) as it seemed from what I read as though it was groomed for higher bracket tourists and ex-pats. We were in the capital area around San Jose and a little north in Heredia. Also the rainforest area around Mount Arenal and along the Caribbean shore around the black sands of Puerto Viejo.

My biggest concern was not knowing Spanish and the degree to which most people did not know English. I didn’t trust myself to adequately learn a new language and didn’t want to feel isolated.

We did use medical services while we were there and we were very impressed with the quality and the degree of satisfaction ex-pats had with the nationalized health services which isn’t to difficult to acquire once you move there.

 

[ERhoosier]

LOL
I say America in the less crowded places though. Rural America has so many benefits, even though you sacrifice some of the finer things in life.

Fringe areas around many big cities can have a rural feel but maintain decent access (say 45-60min highway drive) to the "finer things" of those big cities.

But trouble is urbanization can happen surprisingly fast. Smallish big city suburb DW & I live in went from being fairly fringe with a small town feel to 'downtown concrete jungle' in just 8 yrs

 

[brett]

I would love to split my time between California and Switzerland but the best place for anyone is personal and these constant articles are pretty annoying. I would not live in Costa Rica or Mexico if you paid me but for many it is their perfect place.

Ditto. Could not agree more.

For the life of me I have never understood this 'best' business. Best country, best hotel, best city, best whatever!

Without any context it is completely meaningless.