Retirement Abroad

Retiring abroad has moved from fringe dream to mainstream financial strategy for Americans, with hundreds of thousands of retirees now collecting Social Security overseas. The appeal is straightforward: in the most popular destinations, a couple can live comfortably on $1,800–$3,000 per month — housing included — versus the $4,000–$5,000+ a typical American couple spends at home. International Living's 35th Annual Global Retirement Index (published December 2025 for 2026) reflects a shifting landscape: Greece claimed the #1 spot for the first time in the index's history, jumping from seventh place on the strength of affordability, strong private healthcare, Mediterranean climate, and accessible visas, followed by long-time favorites Panama, Costa Rica, and Portugal, with Italy climbing to sixth. The financial mechanics are more workable than many retirees assume, but they require planning. Social Security can be deposited to you in nearly every country in the world — the exceptions are Cuba and North Korea, plus restrictions in a handful of former Soviet states — and the SSA's Payments Abroad Screening Tool confirms eligibility country by country. The bigger gap is healthcare: Medicare does not cover care outside the United States, so retirees must budget for international health insurance (roughly $150–$800 per month depending on age and coverage) or qualify for a host country's national system, and should note that many international insurers cap first-time enrollment between ages 74 and 80. Meanwhile, dedicated retirement visas keep the door open at modest income levels: Portugal's D7 requires only about €920 per month in passive income, and Panama and Costa Rica's pensionado programs require just $1,000 per month in pension income. Taxes follow Americans wherever they go. The US taxes citizens on worldwide income, so 401(k) and IRA withdrawals, pensions, and Social Security remain reportable — and retirement distributions are unearned income that does not qualify for the Foreign Earned Income Exclusion. In practice, most retirees avoid true double taxation through bilateral tax treaties and the Foreign Tax Credit, but they must keep filing Form 1040 and, for foreign accounts, FBAR and FATCA reports. AARP's core advice for would-be expat retirees: rent for a 90-day trial stay before committing, look beyond cheap rent to total costs, and get professional cross-border tax advice before — not after — the move.

Key Points

• 1Greece ranked #1 in International Living's 2026 Annual Global Retirement Index — the first time in the index's 35-year history — jumping from #7, followed by Panama (#2), Costa Rica (#3), Portugal (#4), and Italy (#6).
• 2Cost advantage is substantial: couples report comfortable living on $1,800–$2,500/month in Panama (outside Panama City) and Mexico's expat hubs, versus $4,000–$5,000+ for a typical US retired couple; Portugal offers roughly 60% lower rents than major US cities.
• 3Social Security is payable by direct deposit in most countries — but not Cuba or North Korea, with restrictions in Azerbaijan, Belarus, Kazakhstan, and several other former Soviet states; the SSA sends expat beneficiaries an eligibility questionnaire every two years that must be returned to keep payments flowing.
• 4Medicare does not cover healthcare outside the US. International health insurance for retirees runs roughly $150–$800/month, and many insurers cap first-time enrollment between ages 74 and 80 — waiting too long can lock you out.
• 5Retirement visa income thresholds vary widely: Portugal's D7 requires ~€920/month in passive income, Panama's Pensionado and Costa Rica's Pensionado each require $1,000/month in pension income, while Mexico's temporary residency now demands roughly $4,200/month — pricing out many Social Security-only retirees.
• 6401(k) and IRA withdrawals are taxed by the US as ordinary income no matter where you live, and as unearned income they do not qualify for the Foreign Earned Income Exclusion; tax treaties and the Foreign Tax Credit are the main tools that prevent double taxation.
• 7Panama's Pensionado program adds ongoing discounts for resident retirees (healthcare, transportation, entertainment), and AARP notes retirement visas generally prohibit paid employment but are renewable and typically lead to permanent residency.