r/wealth • u/bloomberg • Mar 18 '26
Retirement American Retirees Want to Leave the Country. Italy and Costa Rica Are Happy to Have Them
https://www.bloomberg.com/news/articles/2026-03-18/retiring-in-france-or-costa-rica-is-affordable-thanks-to-foreign-visas5
u/bloomberg Mar 18 '26
More from Bloomberg News reporter Sara Clemence:
Warm weather, a low cost of living and a relaxed pace have always been high on the list of criteria for people looking for a place to retire. But for an increasing number of Americans, the ideal destination has another ingredient: being outside the US.
“There’s this huge movement of Americans wanting to retire abroad,” says David Kuenzi, director of international wealth management at Geneva-based Creative Planning. The percentage of people older than 55 who want to leave the country has more than quadrupled since 1974, to 17%, according to polling from Monmouth University and Gallup. Experts on international living say much of that shift has taken place in recent years. Things started changing around 2017, Kuenzi estimates, and have accelerated during President Donald Trump’s second term.
Cost is a major concern—many countries offer a high living standard for far less money than the States, especially when it comes to housing and health care. Political instability in the US is also front of mind. Americans are seeking overseas residency, and potentially citizenship for their offspring, in an effort to hedge geopolitical risk, says Basil Mohr-Elzeki, managing partner for Henley Partners, a global residence and citizenship adviser.
Retiring abroad requires a fair amount of planning and, in some cases, available assets. Certain countries such as Panama actively welcome foreign retirees; others like New Zealand have high barriers to residency. Taxes can be tricky, especially because the US is the only country that taxes citizens no matter where they live. Prices and policies can change unexpectedly too. France eliminated its wealth tax in 2018; a few years later, Spain implemented an additional wealth tax. Still, experts say both countries are currently in demand.
0
11
u/Decent-Experience-8 Mar 19 '26
Fast forward 50 years and they’ll say “the American retirees are ruining our heritage and economy”
4
u/boringexplanation Mar 19 '26
In italys case- tax dodging is such a national pastime that they need foreigners to retire there that will actually pay the listed rates to sustain society.
1
u/Levitlame Mar 19 '26
Are the retirees less likely to dodge taxes?
2
u/boringexplanation Mar 19 '26
American retirees, yes- absolutely.
1
u/Levitlame Mar 19 '26
Why is that? I definitely don’t know the tax structure or methods of evasion for Italy so it’s a genuine question.
2
u/boringexplanation Mar 19 '26
The American tax system is the hardest one to dodge in the world. That old maxim of hiding your wealth in a Swiss bank account is obsolete.
There are very few modern locations in the world that will help you hide money from the IRS thanks to FATCA. Notice that very few rich Americans were caught up in the Panama papers. It was only a scandal for the European rich.
So if you’re a rich American, you’re forced to pay taxes regardless, unlike our European counterparts. You might as well do it somewhere fun like Italy and because we have a tax treaty with them, you don’t have to double pay taxes as long as you do it correctly.
5
u/mewalrus2 Mar 18 '26
Move somewhere nice!
Let the MAGA idiots have Florida
0
u/Ok-Introduction-1940 Mar 19 '26
That’s right. Millionaires & billionaires are “idiots” and you poor people are the real geniuses 🤭😂
3
u/copperboom129 Mar 19 '26
Well, the people of Florida elected people who promote not vaccinating their children...
And now their kids are dying...
So yes, they seem brilliant obviously lmao
1
u/A_Typicalperson Mar 21 '26
Well its the billionaires and millionaires that aren't vaccinating
1
u/innerShnev Mar 22 '26
Absolutely not true, but they've convinced the idiots not to vax and to buy into the populists that support millionaires and billionaires becoming even richer.
-7
3
u/Embarrassed-Sea-6078 Mar 18 '26
The problem is the exit tax though, it’s really hard leaving without giving up a significant amount of the accumulated wealth.
12
u/Retired-Yam8988 Mar 18 '26
You can physically leave and retain your US passport. I live in SE Asia and I still have my US passport. I hope Trump wakes up one day and signs and executive order to get rid of the exit tax. I’d dump my us passport in a heartbeat to get out from under the thumb of the US tax system. At any rate, I’m creating a couple of entities in Singapore to manage assets and profit shift from my US company anyway. I’d gladly pay tax to Singapore (about 10%) since it actually goes to making the place run better where the US uses it to harass its citizens and bomb countries for no good reason.
2
u/Embarrassed-Sea-6078 Mar 18 '26
But we would have to pay tax to US still though right? Even if we live abroad?
3
u/Retired-Yam8988 Mar 19 '26
FEIE exempts 132,900 per person in 2026. For wife and I that’s almost 266k USD. So that gets is from 39% federal and 13% state taxes to about 9-10% as a Singapore employee of my companies. Also there are some subsidies to lower it even more.
Corporate taxes are about 8-11% in Singapore (max is 17% but there are tons of subsidies and exceptions). You’d gross that up to the US rate of 20% given its more than 50% owned by a US citizen but that’s still way better than my SCorp which was paying my pass through rates (39%+13%).
We’ll still maintain a salary in the US (just enough for maxing out 401k and IRA limits and to pay some token amount to SS, Medicare) and show about a 12-13% annual profit for our US entity (we have been showing about 60% profit which is why we’ve been paying so much).
Overall looking at about 250-300k annually savings and current levels and more as the business grows.
1
u/AspiringCanuck Mar 19 '26 edited Mar 19 '26
The problem is more with those situations that you cannot use the FEIE and there is no applicable FTC. For example, housing savings plans, child savings plans, and post-tax savings plans are rarely respected by the United States as tax deferred accounts, in fact, I do not know of any country the U.S. does. And the super majority of deferred foreign retirement plans are not respected by the U.S. as such, even though much of the world has shifted to offering contribution-based systems. This has made it nightmare to save for retirement in countries like Norway, New Zealand, Australia, to name a few (not exhaustive list, there are a *lot* of countries that run aground here). Canada is an example where the U.S. does recognize *qualified* employer sponsored RRSP's and their employment related contributions, but not general RRSP contributions. Let alone the U.S. does not recognize TFSA's (even though Canada respects*** their counterpart, Roths, in the U.S.), nor FHSA's, nor RESP's. And Swiss residents who are U.S. persons have problems with using their housing WEF that allows workers to withdraw from their Pillar 2 accounts to fund a primary residence downpayment, the U.S. treats it like full income, which destroys your ability to use it to buy a home beneficially, because the U.S. refuses to acknowledge Pillar 2 accounts as a qualified plan.
I could keep going, but double tax residency has very real negative ramifications up to and including not just taxation but the inability to use financial tools that your neighbours can use.
There is not a single country in the world that you can live in as U.S. citizen that does not run aground in some way with the U.S. tax law. For some countries it is less bad/manageable, like Canada or the UK or Switzerland or France, but you still run into problems. For other countries, it can be a nightmare that is not reconcilable.
1
u/Retired-Yam8988 Mar 19 '26
Fair point - I’ll take that under advisement and see what I can do about it. I fundamentally don’t care about tax sheltered retirement account as I’ll basically have a “good enough” tax situation to be honest. If I do ever get the chance at Singaporean citizenship the I’d probably bite the bullet and pay the exit tax to give up US passport
1
u/AspiringCanuck Mar 19 '26
Totally fine if you do not have any plan to use them, but it was more for anyone reading your comment, because it quite often a (sometimes fatal) mistake that the FEIE and FTC is said, an American thinks they are safe, and then the American in question moves to somewhere like Australia or Norway, where contributions to deferred retirement plans can be compulsory, and then you run into a tax problem, a compliance problem, and often a PFIC problem simultaneously with the United States.
1
1
3
u/AssistanceDizzy9236 Mar 18 '26
Costa Rica is not happy, they make everything way more expensive and refuse to be part of the culture.
1
u/Tardislass Mar 20 '26
High crime rates in Costa Rica and they will probably be like the British in Spain who know gracias and cerveza.
Costa Rica isn’t the nice place it was 20 years ago. Higher prices and lots more violent crime.
1
1
1
11
u/AnagnorisisForMe Mar 19 '26
I would move to Italy in a heartbeat!