For many Americans, retiring abroad is a dream.
You can enjoy tropical beaches, a lower cost of living, and have a new adventure in your third act.
While there are challenges to retiring abroad, the benefits can certainly outweigh the costs for the right kind of person. Even better, some countries offer incentives for retirees who move there, including tax breaks and discounts. Keep reading to see four of them.
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1. Panama
The Central American country Panama has earned a well-deserved reputation as a retirement destination for Americans. It's relatively close to the U.S. mainland, just a three-hour flight to Miami, and the U.S. dollar is widely used there. In fact, it's pegged at parity to the Panamanian balboa, making currency conversions simple. With mountains and a tropical coastline, Panama also offers a variety of climates whether you're seeking the sun or searching for cooler climes. There's also a thriving community of 20,000 to 30,000 U.S. expats in the country already.
For retirees, Panama offers a Panama Retirement visa, a form of a permanent residency permit that offers import tax exemptions on household products up to $10,000, in addition to a new car every other year. Qualifying retirees can get significant discounts on things like utility bills, dental exams, transportation, and more.
To apply for the retirement visa, known as the Panama Pensionado, you have to prove you have a pension or income of at least $1,000 per month. You'll also need a Panamanian lawyer to assist you with the process.
2. Greece
Greece has long been a popular vacation destination. Known for its Mediterranean islands and cuisine, ancient ruins, and beautiful architecture, tourism plays a significant role in the Greek economy. Additionally, Greece is a more affordable place to live and visit than most of Europe.
For retirees who dream of living the Mediterranean lifestyle and have money to invest, Greece even offers incentives to move there. In 2013, the country introduced the Greece Golden Visa, offering five-year permanent residency to anyone investing at least $300,000 in local real estate, and you can apply for citizenship after seven years.
Additionally, and separate from the real estate program, the company offers a 7% flat tax rate for foreign citizens who transfer tax residence to Greece. For Americans, that can represent big savings, especially if you're in a higher tax bracket.
3. Portugal
Another popular European destination known for its Mediterranean climate and affordability is Portugal, and it's becoming more trendy with retirees.
Like Greece, Portugal also offers a Golden Visa. In this case, foreigners have to invest at least $550,000 in a property or other asset in Portugal to receive a two-year renewable residency for themselves and their immediate family. Portugal also offers a tax exemption and foreign income such as pensions, dividends, and real estate investments for up to 10 years. An investor can apply for permanent residence after five years.
Portugal offers another option called the D7 Passive Income Visa, which offers non-European citizens the ability to apply for residency as long as they have a reasonable passive income. It's open to pensioners, entrepreneurs who want to live in Portugal, retired foreign citizens, and ex-pats who have a stable income, giving retirees access to the above tax benefit.
There's also a digital nomad visa if you're not yet retired but have income as a remote worker.
4. Nicaragua
Not far from Panama in Central American, Nicaragua offers an enticing combination of rainforests, lakes, volcanoes, and tropical beaches, and it has an appealing collection of incentives for retirees.
If you're retired, you can import as much as $20,000 in household goods and a car worth up to $25,000. Even better, all foreign income in Nicaragua is tax-free.
Those are some of the benefits of the country's Pensionado Residency program, which is renewable every five years. If you're building a home in Nicaragua, you can even buy $50,000 in construction materials tax-free.
The program also starts at a young age, available to anyone at least 45 years old with a permanent passive income of $600 a month, plus $150 per month for each dependent. To qualify for the Pensionado Residency program, you need to spend at least half of the year in the country.
Retiring abroad isn't an easy decision, but it can be financially beneficial as well as an adventure. If you're considering making the move, the four countries above are a good place to start as you do your research.
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