Halfway through the 2020s, Americans are shattering the rules traditionally governing retirement. Whether it’s retiring at age 55 or starting a second act after leaving the corporate world behind, today’s baby boomers and Gen-Xers are placing their unique stamp on retirement in a way their parents or grandparents never dreamed.
That’s surely the case for the growing number of U.S. retirees opting to retire abroad in their golden years.
According to the U.S. Social Security Administration, 760,000 Americans currently draw a Social Security check while living abroad. That’s up from 500,000 in 2016, the SSA reported.
Calling beautiful bourses like Portugal or Panama home is a tempting proposition for wanderlust-minded American retirees. Yet many won’t get very far if they fail to prepare for the myriad personal financial challenges that come with retiring abroad.
“It’s not easy,” said Joe Cronin, president of International Citizens Insurance and a world traveler who’s spent long stretches of time in Moscow, Tokyo, Mexico City, Sydney, London, Athens and Argentina. “The largest retirement challenges stem from fluctuating exchange rates, understanding foreign tax systems, and managing accounts across multiple countries.”
These complexities can quickly drain retirement funds or create compliance headaches if not planned for, Cronin said. “Currency conversion losses and double taxation are particularly tricky without professional guidance.”
Why is retirement planning so challenging overseas, and what can U.S. retirees do to take command of their cash management situation? Here’s a look at some of the most significant financial management issues that arise when retiring in a foreign country, along with expert tips to mitigate any trouble.
Getting clean access to your cash
Transferring U.S. retirement funds overseas often comes with extra bank fees, transaction delays, and foreign exchange headaches, Cronin said.
To make things easier, he recommends opening a U.S. bank account that partners with an international bank for lower rates, or setting up online offshore accounts in your resident country. “Working with a tax advisor familiar with cross-border regulations ensures compliance while maximizing your disbursed funds,” Cronin added.
Watch out for access restrictions, too, as some U.S. retirement accounts may have limitations when accessed abroad, said Federica Grazi, founder of Mitos Relocation Solutions, a London, U.K.-based living abroad relocation services firm.
“Check with your financial institution to ensure seamless withdrawals,” Grazi said. “Additionally, align withdrawals with major annual expenses rather than taking regular monthly amounts, which might result in unnecessary FX costs.”
Streamline your tax issues
Managing cross-border taxes and fees is another major cash management hurdle for retirees abroad.
For starters, U.S.-based disbursements may automatically withhold taxes. Grazi advises working with a professional to optimize the timing and size of your withdrawals to avoid overpaying.
Local tax laws present another layer of complexity. Generally, spending 183 days or more in a country makes you a local tax resident, said Crystal Stranger, senior tax director and CEO of OpticTax.com in Boulder, CO. However, because retiree income is typically passive, many countries won't tax it locally. Additionally, foreign tax credits can often help offset your U.S. tax burden.
The bigger trap for American expats is assuming local taxes are all they need to worry about. Unlike most countries, the U.S. taxes its citizens on worldwide income regardless of where they live.
"Many retirees forget this when they move abroad and only find a local tax expert," Stranger says. "Keep in mind you’ll need to pay U.S. federal income tax, and depending on what state you last lived in, you may also still have state income taxes to pay.”
Currency exchange (FX) fluctuations
For Americans, retiring to a foreign country often means you’re dealing with multiple currencies, such as the U.S. dollar and the in-country currency. Juggling two currencies is no easy task for U.S. retirees unfamiliar with international financial issues.
For example, the USD/EUR exchange rate shifted from 0.9 in August 2024 to 0.97 in 2025. It currently stands at 0.87 in 2026.
“For retirees converting USD income into euros in Mediterranean countries, this could mean swings of approximately $3,500 per year on a $50,000 annual income,” Grazi said. “These fluctuations can significantly impact budgeting and long-term financial security.”
To streamline the local currency process, retirees can leverage multi-currency accounts that allow easy transfers between USD and the local currency. Retirees can avoid traditional banks' high exchange rates by using online services like Wise or Revolut for transfers and conversions, Cronin said. “Locking in exchange rates through forward contracts can also mitigate risk from currency fluctuations.”
Cost of living changes
While some countries may seem inexpensive initially, local inflation or loss in competitiveness could erode purchasing power over time.
“For example, property rent in Portugal increased by 49% between 2017 and 2022, and rent hikes have since then come under regulation,” Grazi said. “It’s essential to prepare by tracking economic trends in the new country.”
Unexpected legal costs
Legal fees for property purchases, visas, or inheritance laws can also be unpredictable. “Planning ahead and building a contingency fund for such expenses is a wise move," Grazi added.
Watch for healthcare expenses too
Retirees relying on Medicare need to understand its strict limitations abroad.
“At a minimum, I recommend retirees living full time overseas maintain their Medicare Part A coverage,” said Stewart Koesten, chairman at Aspyre Wealth Partners, a financial planning firm in Boynton Beach, Fla. While Medicare doesn't typically provide coverage for retirees living abroad, returning to the U.S. for critical care is an option if you maintain Medicare Part A coverage, he said.
Koesten notes that some countries offer robust healthcare programs at reasonable costs, and several companies provide medical coverage specifically for Americans living abroad. He suggests investigating these options instead of Medicare Part B and seeking advice from a healthcare insurance specialist.
If you plan to travel back and forth between the U.S. and other countries, several Medigap plans can supplement Medicare Parts A and B.
“That includes foreign travel emergency coverage,” said Louise Norris, a health policy analyst at Medicareresources.org. “The benefit is capped at $50,000 over the person's lifetime, and the emergency care has to start within 60 days of the beginning of the trip.”
