The Hidden Costs of Retiring Abroad That No One Warns You About

According to a 2024 survey by Monmouth University, about one-third of Americans would opt to settle in another country if they were free to do so. It’s both an appealing idea and one that is increasingly achievable: achievable thanks to technological advances that have made remote work easy, and appealing as retirees are proving that their pensions and Social Security payments can go further abroad. In fact, Social Security Administration data shows more than 700,000 people currently receive their benefits outside the U.S., showing just how many Americans have already made the leap.

Some retirees are choosing to chase island life and beachfront sunsets, trading in their old routines for something that feels like a permanent vacation. Others are picking their retirement destination more strategically, weighing the cost of living, healthcare, and safety into consideration. And while housing, food, and entertainment can feel affordable abroad, many retirees find themselves surprised by expenses they hadn’t planned for in their budget.

With advice from financial experts and input from a retiree on his first-hand experiences, here’s a look at the hidden costs worth knowing about before you make the move.

The Cost of a Good Lawyer

A critical line to add to your budget is a great lawyer to walk you through the entire visa process, according to Matthew Leisen, who retired from a career in finance and now lives in Portugal with his wife.

“Most people researching a move abroad already know there are government fees involved in getting a residence visa. What many don’t think through is the cost of hiring lawyers or relocation specialists to guide you through the paperwork,” Leisen shared. “Between legal advice, document preparation, translations, and renewals, the professional help can add up to thousands pretty quickly.”

Currency Fluctuations

Nicholas Parker of Creative Planning pointed out that if your income is in one currency and your spending is in another currency (including those all-important social security checks), you face the risk that unfavorable exchange rates could decrease your net income.

“This isn’t a bill you pay, but it’s something that we have definitely felt over time,” Leisen said. “The exchange rate has moved a bit over the past year. This has impacted all aspects of our original budget—sometimes in our favor, sometimes not.”

The Cost of Making Friends

Leisen added that he and his wife never even considered just how much it can cost to make new friends.

“One thing we underestimated is how much effort it takes to rebuild a social life in a new country,” he explained. “When we moved abroad, we needed to be more intentional (joining clubs, expat groups, etc.). These groups often require membership fees and/or event costs that weren’t necessarily part of our old budget.”

The Cost of Learning a New Language

Immersing yourself in a new destination often means learning a new language. And that, Leisen said, comes at a price, too.

“I tried using language apps like Duolingo and Babbel at first, and they’re helpful to a point. However, I realized that working with an in-person tutor was far more effective (for me), and those regular lessons became another expense,” Leisen shared.

The Increased Cost of Travel

“Travel doesn’t stop just because you live somewhere beautiful,” Leisen said. “I assumed that our travel budget would fall significantly once we moved to what is already a destination location. But the reality is that the desire to travel doesn’t go away; we still want to explore nearby countries and travel with friends.”

Additionally, you need to factor in visits home, which Leisen noted often “happen during expensive times of the year, like Christmas.”

The Unexpected Tax Liability

Elliott Bramham, an expat financial advisor with Creative Planning International, shared in an article that retirees need to be cautious about their residency, as if they do not take the necessary steps, they could remain liable for costly state taxes.

“Because residency rules vary from state to state, it’s critical for U.S. expats to understand state residency rules and how they may impact their tax bill,” he explained. For this tip, it’s also worth investing in a great accountant, who, in turn, will help you save in the long run.

The Cost of Earning Money Abroad

The Internal Revenue Service (IRS) requires U.S. taxpayers who own foreign financial accounts to report those accounts to the U.S. Treasury Department. (And don’t try to get out of it by converting everything to cryptocurrency. Taxpayers must also report things like Bitcoin transactions to the IRS on their tax returns, too.)

And, yes, this burden includes retirees who earn income overseas. According to SmartAsset, “You’re liable for income taxes no matter where you live, although several countries’ tax treaties with the United States can reduce your taxes on foreign income.” AARP echoed our point above, recommending that you “find an accountant or a tax attorney who specializes in relocations, or one based in your destination country to help you navigate this minefield.”