Record number of Americans are retiring abroad because the U.S. is too expensive

What he didn’t know is that that escape would become permanent. He met his now-wife, Elisabeth, shortly after he retired, and eventually took the leap to move permanently to Spain with her.

Fawcett, now 67 and a Spanish resident through marriage, couldn’t be happier about his decision. Though his wife still works, he spends his days playing tennis, reading, and going to the beach or cafés with expat friends in Barcelona. He and his wife are able to travel around the continent, even planning a trip to Paris for the Olympics this year.

The same lifestyle wouldn’t be possible in the U.S., Fawcett says. Housing is much more affordable, food is inexpensive, and the wine is even less so. The mass transit system is a godsend; Fawcett doesn’t have a car and doesn’t need one to get around. Walkability is also a major benefit.

“It’s a good life here,” says Fawcett, who became a resident in 2019. “Outdoor dining is everywhere, the weather is amazing. Everything is very cheap.”

Fawcett is part of a growing trend of retirees, spurred by America’s retirement crisis, who are moving abroad instead of spending their golden years in the U.S. In December 2022, there were over 700,800 people receiving Social Security payments abroad, according to the most recently available data from the Social Security Administration. In 2000, that figure was less than 400,000.

Some move abroad because they simply cannot comfortably live on a fixed retirement income in the U.S., where the costs of housing and healthcare, especially, are becoming increasingly unaffordable. A substantial number of retirees rely almost completely on Social Security payments to make ends meet in the U.S., which average around $1,900 per month. A growing portion of elderly Americans live in poverty, with social services few and far between, if they are accessible at all.

Others always dreamed of travel and immersing themselves in other cultures. And still others could afford to stay in the U.S. but realized how much more they could get for their money abroad.

‘It costs us next to nothing’

The latter is true for Susan Keenan Sweeney and her husband, Joe, who moved to Hungary in 2015 (Joe was born in Hungary, but moved away as a child). Though Sweeney, 69, had done well for herself in a career in banking software in the states and even retired early in Florida, she was put off by the increasingly high costs of housing and health care.

When she and her husband visited Hungary before the move, they looked at the affordable cost of living and slower pace of life and decided, almost “on a whim,” to move. They now own a home in the countryside, about two hours outside of Budapest, surrounded by vineyards. Sweeney gardens and revels in the seasonal fresh produce that’s available at the nearby market, making jams and jellies at home; the couple spends their winters in Spain, and travels extensively around Europe the rest of the year.

Sweeney also points to the extensive public transit system as a major plus—it is free to use for those over 65, and there is a train station at the base of the hill they live on—as is the sense of safety and community they feel. They save thousands a year in property taxes compared to Florida, and expat health insurance is a fraction of the cost of American health insurance, she says. One of their biggest monthly expenses is their U.S. Hulu subscription, which they watch via VPN.

“I’d like to think I’m on the cutting edge of where to retire,” says Sweeney. “It costs us next to nothing to live here.”

The trade-offs of living abroad

There are drawbacks, of course. The rest of Sweeney’s family is in the states, so they need to plan trips to see each other. The cultural differences can be difficult to manage, at least at first, and Sweeney is still learning the basics of Hungarian. There’s not the same level of individual wealth in Spain as in the U.S., Fawcett points out; the typical salary is far lower than the six-figure jobs you can find in the states. And of course, the income tax burden is much higher.

Sweeney and Fawcett wouldn’t have been able to save the amount of money they did throughout their high-paying careers in the U.S. had they spent their careers in Europe. Most of their investments are still in U.S. financial institutions because of the difficulty to move them. And there is plenty of other bureaucracy and red tape to move through to move abroad. Sweeney and her husband enlisted a lawyer to help them buy their home;

“The first couple of years are taking care of bureaucracy more than anything,” says Fawcett. “Anything you want in Spain requires a ton of paperwork.”

But the standard of living is much better for a wider swath of the population than it is in the U.S., Fawcett contends. There are the small things, like fresher, less expensive groceries and concert tickets being much more affordable and accessible. And then there are the larger benefits, like months of paid maternity leave, inexpensive secondary education, and affordable health care.

“It’s not the U.S.,” says Sweeney. “They do things differently here, and that’s why we’re here.”

And while universal health care systems like those in Hungary and Spain are often criticized for long waiting times and the potential for subpar care compared to the U.S., both Fawcett and Sweeney are satisfied with the standard of care they’ve received, including through surgeries and major procedures like colonoscopies. One drawback is that many providers don’t necessarily speak English; Sweeney says if something major happened, they’d consider flying back to the U.S. for care because of the language barrier.

“If you walked in here as an American and went to a doctor’s office, I’d have to pick you up off the floor,” says Sweeney of the culture shock. “There’s none of the dealing with the insurance. It’s walk in, see the doctor, walk out.”

Mindy Yu, director of investing at Betterment, warns those interested in retiring abroad to take the time to plan for the considerable financial, legal, and logistical pitfalls.

“It’s crucial to avoid seeing retiring abroad as the cheaper option and instead begin saving as early as possible, while diversifying your portfolio to avoid risk,” says Yu. “Consulting a tax professional with international expertise is crucial, as living abroad may also come with new tax obligations, both to the U.S. and your new country of residence.”

Fawcett plans to remain in Spain with his wife, especially as she is the caretaker for her 91-year-old mother and has grown children in the area. Sweeney, too, says she and her husband are in Hungary for the long haul, though they may eventually move from the vineyards to Budapest.

“I would urge anybody who is going to do it, go on vacation and rent a house and look around. You find yourself in some places where you never would have dreamed you’d be,” says Sweeney. “If you’re retired and you have a few months, what the hell?”