I’ve written in the past about the possibility of retiring overseas. While this can be a great way of stretching your retirement dollars, I recently ran across a blurb in Bottom Line/Personal that talked about some of the hidden costs of retiring outside of the United States.
For example, even if you move overseas, you’ll still have to pay income taxes on Social Security benefits as well as distributions from your pension, 401(k), traditional IRA, etc. You’ll even have to pay tax on income earned while abroad, though there are certain treaty provisions as well as the foreign earned-income exclusion that can reduce you liability. In addition, Medicare does not cover treatment outside of the United States. Thus, while many countries provide nationalized health care, you’ll need to check out how they handle foreign residents — you may or may not be covered.