Social Security Cuts: 4 Countries Where You Could Still Live Large on a Reduced Check
With a looming Social Security shortfall less than 10 years away, policymakers are floating the idea of cutting benefits to plug the gap. That has some Americans looking abroad for ways to stretch their monthly check and live for less while still living large in retirement.
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“There’s a growing interest in destinations where one can maintain or even enhance their quality of life on a potentially reduced Social Security check,” said David L. Blain, CFA, founder and CEO of BlueSky Wealth Advisors, a fee-only, independent registered investment advisor (RIA).
Let’s dig a little deeper into some international retirement hotspots.
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Traveling abroad is one thing. But anyone retiring in a foreign country has a whole bunch of I’s to dot and T’s to cross — and cost is only one concern.
“It’s crucial to consider not only the cost of living but also the taxation of Social Security benefits and the potential implications on one’s financial plan, including health care costs and availability,” said Blain. “From a practical standpoint, ensuring continuous Social Security benefits while living abroad requires understanding the agreements between the U.S. and the host country. Most U.S. expats can receive their Social Security benefits worldwide, with a few exceptions. However, planning becomes more complex when considering Medicare, as it generally doesn’t provide coverage outside the U.S. Therefore, selecting a country with an affordable and robust healthcare system is vital.”
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Keep in mind that the U.S. Department of the Treasury forbids making payments to anyone in Cuba or North Korea, and, with a few rare exceptions, the SSA can’t send Social Security payments to retirees in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.
Presuming North Korea and Kyrgyzstan weren’t on your shortlist, these are the best countries to consider retiring abroad to get the most out of your benefits.
Spain
Fifty-three countries have higher living costs than Spain, where American expats can expect to spend $48.40 for every $100 they would have spent in New York City. Not only can they stretch their Social Security checks as honorary Spaniards, but they’ll live well in Europe’s southwest corner while they do it.
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“Spain offers retirees affordable housing, particularly in areas like Valencia or Andalucia,” said David Ciccarelli, a Harvard Business School graduate and the CEO and founder of the vacation rental platform Lake. “You also find affordable private health insurance and Golden Visas if you invest in Spanish real estate. The northwestern part of the country offers cooler temperatures and more greenery, while the Canary Islands see sun almost every day — it’s one of Europe’s sunniest regions.”
Dominican Republic
Much closer to home is the Dominican Republic, a tropical island paradise with more than 1,000 miles of pristine beaches on the Caribbean Sea and Atlantic Ocean. Life is cheaper there than in 82 other countries, and retirees can live on just $0.39 to the New York City dollar.
“With its warm climate, natural beauty and affordable cost of living, the Dominican Republic provides everything one may need for a peaceful and enjoyable retirement,” said travel expert Michael Donovan, a 20-year globetrotter and co-founder of Stay New England. “I can say from experience that retirees with limited budgets would find much to appreciate about living there. Expenses for housing, food, healthcare, and leisure activities tend to be significantly lower than in the United States.”
Donovan said apartments typically rent for half the price of comparable U.S. properties.
“An added benefit is that retirement incomes from Social Security or pensions remain untouched, without the tax obligations of the U.S. system,” said Donovan.
Donovan notes that some communities suffer from crime and violence, but the U.S. State Department gives the country a Level 2 travel advisory on a four-level system — one is safest, four is least safe — the same as Spain.
“Thousands of American expats have chosen to make the Dominican their retirement home,” said Donovan. “In the end, the natural attractions, warm climate, and generous cost of living far outweigh any isolated concerns about crime for retirees seeking an active and affordable lifestyle.”
Panama
With lower living costs than 56 other countries, Panama offers American retirees the opportunity to spend $47.40 for every $100 they might have spent in New York. The country also offers proximity to the States and perks for expats who relocate there.
“In addition to a low cost of living, Panama has a special visa program for retirees that provides incentives like discounts on imported goods,” said travel expert Elaine Warren, who has visited more than 60 countries and is the founder and CEO of The Family Cruise Companion and author of “The Family Cruise Companion’s Guide to Cruising with Kids.” “Both Panama City and small beach towns offer retirees transportation and housing options to suit different tastes. The country has taken strides to establish stability in recent decades, as well.”
The State Department gives Panama a Level 2 travel advisory, the same as Spain and the Dominican Republic.
Thailand
If you’re interested in retiring much farther from home than Central America, the Caribbean or Europe, Thailand is more affordable than 93 other countries — $0.36 there buys as much as $1 in New York. On top of that, the State Department issues it a Level 1 travel advisory, the safest possible ranking.
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“A comfortable lifestyle can be had there for approximately $1,100 to $1,600 per month,” said Sara Rodriguez, travel expert, founder of Madrid Traveling and a lifestyle content creator whose blogs welcome over 200,000 monthly visitors. “Thailand has world-class hospitals and procedures that cost a fraction of U.S. prices. The country also has a unique ‘Non-Immigrant O-A Retirement Visa’ program, especially for retirees. Chiang Mai stands out as an emerging hub in northern Thailand that still retains local charm, featuring beautiful temples and markets. Between bustling Bangkok and serene countryside villages, Thailand has retirement living for every lifestyle.”
Editor’s note: All cost-of-living data is from Numbeo, which uses New York City as the index’s 100 baseline.
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This article originally appeared on GOBankingRates.com: Social Security Cuts: 4 Countries Where You Could Still Live Large on a Reduced Check