How to Choose the Right Visa for Your Retirement

As International Living’s expert on global diversification, I meet many people who are planning to retire abroad. That’s given me unique insights into the decision-making process leading up to such a move.

Assuming you haven’t picked a country yet, here are some things to think about if retirement in a foreign country is on your agenda.

Money: All at Once, Or a Bit at a Time?

In most countries, getting a retirement visa boils down to money. That’s why countries invite retirees in the first place. How much money you have available and how you access it decides your options:

1. Invest in a Country and Get a Long-Term Residency Permit, A.K.A. A “Golden Visa.”

Until recently, several European countries accepted buying a home. Increasingly, your options are limited to financial or business investments. Although there are some cheaper pathways, the threshold is around €500,000. Several countries in the Western Hemisphere grant residency by buying residential property, with an investment threshold typically about half that.

2. Leverage Your Retirement Income to Get a Residency Permit

Most European countries with golden visas also offer this option. The minimum monthly income—which must be passive, i.e., from pension or investments—ranges from around €1,500 to €3,500. European countries will accept formal pensions, annuities, or bank deposits to guarantee that income. In the Western Hemisphere, countries tend to require an official government or private pension. That means it’s important to ensure your Social Security income will be enough to meet the requirement.

Bottom line: Start your journey by targeting countries that suit your financial situation.

Notable countries offering golden visas include Portugal, Spain, and Greece, providing a path to residency through investment opportunities.|©iStock/Kirk Fisher

Full-Time or Part-Time?

One advantage of golden visas is that they allow you to come and go as you please with a minimum time-in-country requirement every year. However, retirement and other passive income visas typically require you to spend at least six months of the year in the country to keep the permit. If you can’t or don’t want to do that, look for a country that doesn’t require significant time-in-country, or plan to use tourist or other visas when you’re there.

Bottom line: Target countries that meet your needs for time abroad.

Taxes

European countries tend to tax pension income once you trigger tax residency—not by coincidence, but by living there six months of the year. Some countries have mutual tax treaties with the US that either exempt Social Security income or impose lower rates on it, but distributions from private retirement funds are usually taxed as ordinary income. On the other hand, some of the most popular countries in the Western Hemisphere don’t tax foreign income at all.

Bottom line: Do your research before you decide where to go. If you don’t want to pay tax to a foreign country, choose a golden visa or country that doesn’t tax foreign source income. Another possibility is converting your private retirement funds into a Roth IRA before you move abroad, since most countries require regard withdrawals of principal as savings rather than income, and don’t tax it.

Understand the Cost of Living

European countries like Spain, France, and Italy offer strong healthcare systems, making them ideal for retirees.|©iStock/tunart

Closely related to the tax issue is your overall cost of living in a country. People with high incomes naturally try to avoid countries where taxation means they’ll have less disposable income. But for many folks on a pension, paying a bit extra tax to a foreign country is offset by the lower cost of living there. That's particularly true of countries with good public healthcare systems, like most of Europe. Even without healthcare, the overall cost of living in many countries is so low that paying a bit of extra tax doesn't hurt.

Bottom line: Again, do your research before you decide. Don't let foreign taxes scare you out of a good opportunity.

Many people I meet in my Global Citizen consultation service have preconceptions about their foreign retirement options. Sometimes they're on the right track, but often I'm able to help them avoid dead ends and red herrings by going through their situations and needs in detail.

I can do the same for you!